The Bottom Line / Let Them Eat Words

The price of a standard loaf of bread went up 20 agorot this week, from NIS 3.25 to NIS 3.45. MK Zevulun Orlev (National Religious Party) called the decision "stupid and obtuse." MK Shaul Yahalom (NRP) said the price rise proves that the government's war on poverty was simply lip service. MK Yuli Tamir (Labor) said that her party could not just avert its eyes and shirk responsibility for this price increase. Deputy minister Orit Noked (Labor) called the move scandalous, a case of "stealing the poor man's sheep." Is there no limit to this demagoguery?

Unlike welfare, the standard loaf in Israel hasn't been subsidized for 15 years. The price is set by the Industry and Trade Ministry according to a formula updated to match cost inflation; and since the update is irregular and not continuous - the last update was in February 2004 - the result is that prices can leap quite sharply at one time, this time due to the fuel price rise.

So what do the "social-minded" want? That the bakers go bankrupt? That they stop making standard loaves? They are only getting reimbursed for what they've already paid. Maybe they want the government to return to subsidizing bread, back to the good ol' days when they fed standard loaves and exported them to Jordan, leading to astronomical waste.

There are no limits to Orlev and Tamir's paternalism. They would prefer that the government set up bakeries, produce bread, and deliver it as well. That's the efficiency they're after; the system that will make us all equal - equally miserably poor. Just like in the former Soviet Union with the endless lines for bread. Yahalom and Noked are divorced from reality. They don't even know what CEO of Angel Bakeries, Yaron Angel, knows: "The public that cannot afford it does not necessarily buy standard loaves. There are whole sectors that eat pita, even among the poorest."

The solution is exactly the opposite: free bread from regulation. The moment state regulation ends, bread prices will drop. The moment the price is not set from on high, competition will do the talking. Fact: food is not regulated, and prices have been dropping in recent years; inflation in the past 12 months has been only 2 percent, while fuel has increased by 50 percent!

If the government stops regulating, the quality of a standard loaf will rise; it won't be thrown into dirty cartons, but wrapped in decent paper. Fact: that's what happened when they stopped regulating oil. Stop interfering with the price of bread, and it will no longer be a topic. But what will Orlev, Yahalom, Tamir and Noked do then, poor things?

Driving miss crazy

Eight years ago, the Knesset passed a law deregulating the compulsory car insurance market. But insurance companies claimed this was dangerous and not worthwhile, and would harm car owners, increase risk, and raise prices. They frightened MKs so much that they turned to experts like former commissioner of insurance, Meir Shavit, who "proved" that development town residents would be hurt by such a reform, and who wants to hurt them?

Therefore, the companies managed to put off the reform time and again until it was partially implemented in April 2001. And by 2003, the regulated Avner insurance company was closed and competition began.

Now the customer is king. All of a sudden everyone wants him, offering him discounts, letting him pay premiums in 12 monthly, interest-free installments. Drivers with a history of no claims receive large discounts, which encourages safer driving.

This week, premiums dropped by an additional 10 percent. All told, premiums have dropped 40 percent in the past four years. So where are the doomsayers? Where is the head of Clal Insurance, Avigdor Kaplan, who repeatedly warned that it was impossible to lower premiums, and that the reform was "unreasonable, impossible and will not achieve its goals." Doesn't the public deserve an apology now?