Privatization Is Good

It is no coincidence the economy weathered the Second Lebanon War without a crash; private management is more efficient and better than public management.

Populism is taking over our lives. It controls the cabinet, Knesset, media and even the courts. Content is not so important. Image and public relations are what counts. Leaders do not lead. Instead they ingratiate themselves and tell the public what it wants to hear.

It is impossible to pass reforms today. Interested parties immediately pop up and put their lobbyists to work. The social-welfare lobby will once again scream the poor are getting screwed. And privatization has become a dirty word. Knesset members attack it, social-welfare organizations ridicule it and columnists trash it. "The original sin lies in privatization," wrote Ari Shavit in Haaretz last Thursday ("Wealth, Government and Sanity" on August 8). Nothing could be farther from the truth.

Privatization is not the original sin; it is actually the economy's lifeline, the primary fuel for growth and development. It advances competition. Without privatization, today's economy would have been held back and poorer, with more unemployment and a lower standard of living. We are lucky that in the 1980s we had courageous leaders, not populists, who did the right things without checking opinion polls. They made decisions, privatized, pushed through reforms and put the economy on the growth and development track - which we are enjoying to this day.

Until the mid-1980s, the economy was far more centralized than today. Anyone crying over the present situation where 19 families control the economy - which is not really true since they control only 20 percent of the economy - no longer bothers to recall that 25 years ago three institutions ruled the economy: the state, the Histadrut labor federation and the banks. That was a Bolshevik economy with import restrictions, credit quotas, subsidies and limits that caused poverty, emigration and a low standard of living. But like every Bolshevik system, it, too, collapsed. The bloated government brought on hyper-inflation, the banks almost went bankrupt and the Histadrut actually did go bust. It had no alternative but to sell off assets, and that is how the privatization was born.

As a result, today we have a more decentralized economy, which is stronger and more stable. There is a good reason why the global economic crisis passed Israel by relatively lightly. It is no coincidence the economy weathered the Second Lebanon War without a crash; private management is more efficient and better than public management. But that should not keep us from fighting the unacceptable exploitation of the ties between wealth and power.

Government companies (and the Histadrut) are not intended to profit. They want only to up the number of their employees and improve their salaries, until they collapse. Take Koor, for example, or the defense industries. They are not looking for new markets and don't dare look overseas. Their decision making is political, their senior appointments come from proteksia (connections), not from talent. The unions control these companies, and what they say goes.

Take, for example, the Israel Electric Corporation, the Mekorot water company, the ports and the Airports Authority. Have we forgotten the days when Bezeq was a government ministry and we waited in a 200,000 person-long line just to get a phone? Have we forgotten that a phone call overseas was considered a luxury? Doesn't anyone remember the terrible service at gas stations before privatization? And what about public transport prices everywhere a private company replaced Egged? Does anyone want to go back to the El Al strikes and its chronic delays?

Instead of besmirching privatization, we should remind the government it still owns 67 active companies, and it is worth selling them. Yes, sell the IEC, Mekorot, the ports and airports, Israel Military Industries, Industrial Development Bank, Israel Post, Israel Oceanographic and Limnological Research, Geophysical Institute and more and more and more.

This will bring about a sharp improvement in employment, growth and service to the public. Privatization is the most efficient means to improve all our standards of living. But how can we convince people in a country where populism is king, politicians don't lead, content is not important and everything is just image and public relations?