On coupons and anti-social politicians

The accusations is heard often: The prime minister is the most antisocial of all Israeli politicians.

By YARDEN GAZIT
August 27, 2013 22:46
4 minute read.
Prime Minister Binyamin Netanyahu.

Netanyahu looking menacing 370. (photo credit: Marc Israel Sellem/The Jerusalem Post)

The accusations is heard often: The prime minister is the most antisocial of all Israeli politicians.

No, Binyamin Netanyahu does not shun the company of others, nor is he impolite, disrespectful, or hostile to the social order.

He is anti-social in a different manner.

Following the end of the Knesset’s summer session earlier this month, the Social Guard, an offspring of the 2011 social protest movement, announced that the prime minister was ranked last of all 120 MKs in the “Social Index.” The index ranks politicians based on how they voted on “social legislation” during the session.

But just what is social legislation? According to the Social Guard, the index assesses politicians’ votes based on whether or not they promote the guaranteeing of “social rights” for all.

Such rights include housing, employment, food and water, healthcare, education and social security. In addition, voting “socially” means promoting democratic participation and preventing discrimination. MKs have been busy during the summer session voting on dozens of bills dubbed “social” by the Social Guard.

The late Margaret Thatcher is often mocked for saying that there is “no such thing as society.” Taken out of context, that does seem like a strange thing to say. But what the former British prime minister actually told her interviewer was that “because there is no such thing as an entitlement unless someone has first met an obligation,” and because “no government can do anything except through people,” the burden of providing social rights ultimately falls not upon society or government but upon “individual men and women and...families.”

“Society” does not bear the cost of government actions, individual taxpaying members of society do. In Israel, according to the Jerusalem Institute for Market Studies, the average taxpayer already pays 54 percent of her income in taxes. Further social legislation will mean most Israelis will be left with a smaller portion of their salary after the government collects its due.

Some readers may support tax increases as long as revenues are used to help the poor. In addition to increasing the tax burden, however, social legislation has other unintended consequences.

Most ends up harming middle- and low-income families.

Take coupons, for example.

Many workers will receive gift coupons from their employer for the upcoming holidays. The coupons often come with restrictions such as expiration dates or exclusion of discounted products. While that may be annoying if you are a recipient of coupons, those restrictions give retailers some certainty regarding future sales and profits. In return, they are willing to sell coupons to your employer at a discount, allowing you to get up to 20% more value out of your holiday gift from your employer. If, for example, your employer is willing to spend 400 NIS on a holiday gift, retailers may give her coupons with a noted value of NIS 500.

One of the dozens of votes included in the Social Index was on a bill proposed by MK Yoni Chetboun (Bayit Yehudi) to forbid restrictions on coupons. If the bill becomes law, as the “socials” would have it, retailers will not be able to add restrictions to their coupons.

Coupons will then be almost as good as money, since they will have no expiration date or restriction other than the stores they can be redeemed at. That is the intended consequence of the law.

But such a law will most likely also have unintended consequences. It will reduce retailers’ incentive to discount coupons. Your employer will no longer be able to get an NIS 500 coupon for NIS 400. Since your employer is only willing to spend NIS 400 on a holiday gift, instead of receiving a NIS 500 coupon, you may receive a coupon of lower value, say NIS 450, next year.

In addition, employees who use coupons are typically those most in need of money, who are willing to spend time and go to the shops where coupons are redeemable. Better-off workers often don’t find it worthwhile to change their shopping habits in order to redeem coupons. Under the proposed bill, the average and poorer workers will lose NIS 50, while the better-off will gain.

The coupon example teaches us that legislation ought not to be judged by its intention but by its effect.

Social legislation intends, or at least pretends, to help the poor, but in practice it often leaves them worse off.

Our legislators are busy promoting laws that distort incentives, hamper growth and reduce the disposable income of lower- and middle- income families, even though their intentions may be to help society. One can only wish they were a bit more anti-social.

The writer is a Research Fellow at the Jerusalem Institute for Market Studies.


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