Taking Stock / Don't Subsidize the Printed Press

Government intervention should be confined to cases of market failure.

The war against the tycoons is a bitter one and its cost is heavy. The tycoons control the printed press. They have extraordinary access to government corridors and veritable armies of lawyers, accountants, lobbyists and economic experts willing to sell their integrity for money, power, influence or a job.

No wonder then that the technocrats at the treasury and the various regulators in Jerusalem think twice or more before pushing for reforms that would unbalance the status quo - the tycoons' control over various cartels and monopolies.

The hottest potato at the moment is resting at the doorstep of Communications Minister Moshe Kahlon. Will the minister indeed drive a reform that opens all of Israel's communications networks to competing companies, which could in turn introduce genuine competition into the insular market? Or will he settle for lip service and no more, as did all his predecessors?

At the end of 2010, will Israel have more companies providing telecom services at lower prices, offering innovative services, too - or will it have nothing but the same old players and some more committees holding meetings and hearings without end?

Meanwhile, Kahlon had a brainwave. Instead of confronting the scary tycoons, he decided to ride another horse entirely: to field a proposal that everybody would applaud, mainly, the ones who write about it in the press.

Last week, speaking to Maariv, Kahlon disclosed that he has a new initiative brewing: to subsidize the printed press, or exempt it from tax. Why? To strengthen this sector because of its importance to democracy and education in Israel.

We can assume that Kahlon will find plenty of support for his idea. Every Knesset member wanting good press will leap like a gazelle onto the bandwagon. Pundits will joyfully praise Kahlon and his cronies for doing holy work.

This may be what the method of governance boils down to: instead of confronting rich, powerful people who own concessions, by all means harness the taxpayer's money to give them more goodies.

Instead of creating a fairer market with competition on behalf of 7 million Israelis or at least the next generation, by all means give presents to the rich and powerful. Why pick fights?

Giving subsidies or tax breaks to the printed press wouldn't require government intervention. It's part of a global trend. In France the very same concept is being promoted by President Nicolas Sarkozy, and it looks mainly like an attempt to find favor with certain segments of society.

The government shouldn't create artificial demand for the papers or give them tax breaks. To do so would merely weaken the press, which is supposed to be the chief critic of government.

Government intervention should be confined to cases of market failure, such as cartels, monopolies and anti-competitive arrangements. The government should keep criminal elements out of the telecoms sphere.

The main problem of Israel's press is its groveling before powerful economic interests. Most of the papers have become tools in the hands of their owners, who use them directly or indirectly to advance their personal affairs, or to foil reforms that would hurt their business.

Government subsidies for the press wouldn't stop the process of Israel's papers turning into mere tools of a few big business concerns and families, as has been happening in developing countries such as Turkey and Russia.

America's third president, Thomas Jefferson, famously quipped: "If I had to choose between government without newspapers, and newspapers without government, I wouldn't hesitate to choose the latter." Along the same lines, one could say, If I had to choose between a corrupt press serving its powerful masters and a weaker press serving what it perceives to be the public interest, I wouldn't hesitate to choose the latter.

If Kahlon really does fear for the future of Israel's newspapers, if he worries about the iron grip of the rich over the public agenda, if he trembles for democracy, let him start with that part of the media that already lives off the taxpayer, the Israel Broadcasting Authority. Kahlon knows the IBA well from his former stint in the Knesset, when he headed the Knesset Economics Committee, which discussed the IBA.

The IBA is funded by charging the public a fee. It operates on all platforms, can easily reach every household in the land, and doesn't rely on advertising. The IBA could become a major power in journalism, handling topics that the popular press and commercial television don't touch; for instance, the foul connections between wealth and government.

Two months ago the IBA did make a stab in that direction, deciding to broadcast the documentary called "The Shakshuka System," followed by a discussion in the studio. That night, Channel 1's ratings shot up to three times the average for that time slot.

But to become a true bastion of powerful journalism, the IBA has to turn into a flexible, fair meritocracy. It has to be dismantled and rebuilt from scratch, based on talent alone, divorced from the pressures of politicians and the unions.

In his interview with Maariv, Kahlon talked about his childhood in a poor household with seven sisters and brothers. "When we'd get ahold of something, as children, you'd have to cut my hand off to open it. No, I wouldn't let go. Because if you take something I have in hand, there'd be nothing to replace it. If mine was taken, I didn't get anymore." So he learned to hold on grimly, he explained.

We have news for Kahlon. The tycoons sending their emissaries out there to tell us why reforms are all wrong and competition even worse are just like Moshe Kahlon the child, scion of an impoverished family dwelling in a camp. They grabbed hold of the Israeli economy, they're sitting on concessions that they either developed or inherited, and they're holding on for dear life. They won't let go. Mr Kahlon, can you take them on?