Commentary: Adopting the tools of financial destruction

The opposite of communism is not capitalism, it's human nature.

bolshevism (photo credit: )
(photo credit: )
Two seemingly unrelated events took place in the Knesset last week that should worry Israeli citizens. The first, and most severe, was final approval of the package deal between the Treasury and the Histadrut, as part of the Economic Arrangements Law 2009-2010. In an historic irony, unprecedented Bolshevik laws were adopted and legislated by a Likud-led right-wing government. While the free world is celebrating 20 years since the fall of the Berlin wall and the communist bloc, the Knesset approved a law that will give labor unions more prerogatives than the police have. Histadrut representatives will have the right to appear at any work place, without notice and without the employer's consent, to assemble workers and preach to them about their rights and, of course, try to convince them to join the union. A criminal offense This will take place during working hours - at the employer's expense, regardless of how urgent and important the workers' job is. If the employer refuses entry to the Histadrut representative, he can be fined NIS 200,000 and be indicted on criminal charges. Not even a police officer has the right to enter a business without a court warrant. Under the new law, an employer who fails to pay workers on time can be indicted on criminal charges. That is not to say we take this kind of offense lightly. Holding back wages is a moral sin, inhuman and the Torah is full of warnings about this issue. But making this a criminal offense is an even bigger sin. After all, it is a civil dispute about a payment of debt. The employer owes money to the employee due to his labor service. What is the moral difference between a boss not paying his worker on time and a customer who is delaying payment to a supplier? Why isn't the latter considered to be a criminal offense? But even if you think this is reasonable, wait and see how our politicians will abuse the new law and only apply it to private businesses. The Knesset Labor Committee, which still has to ratify the law, sent it back for "corrections." Care to guess why? Because most of the places where wages are being held back are the municipalities and religious committees, branches of the government itself. So the politicians in the Labor Committee want to change the law to exempt their friends in city hall from criminal offenses. This way most of the people who suffer will probably be owners of small businesses on the verge of collapse. On top of that, they will now be considered criminals and might face jail time. Is there a bigger distortion of justice than that? On the road to serfdom The second event that took place in our noble Knesset is also connected to the communist atmosphere gaining ground in our public sphere. The Knesset's so-called "culture lobby" is very concerned about a new marketing method by one of the nation's leading chains of bookstores. A customer can now walk into one of Tzomet Sfarim's stores, buy one of its promoted books at the regular price and get a second one for only NIS 10. The lobby hosted author Yoram Kaniock, who complained that these promotions have cut his income to NIS 1.5 per book. The MKs decided to be the saviors of our nation's literary world. They are pushing a law that will dictate a fixed 10 percent maximum discount on new books, together with a fixed share of the store's revenue, which will be paid to the author and the publishing house. You might say this is a minor issue that affects a very small part of our lives, and even think authors should earn more than the miserable NIS 1.5 Kaniock says he does. But this issue isn't minor at all. Every journey starts with a small step, and this small step is the first one on the road to serfdom. How dare those politicians even think about dictating the price and the distribution of revenues for a private entrepreneur who invested his money and talent in his own business? It is the basic right of any business to sell a product at any price it chooses, and to pay suppliers based on free negotiations. Tzomet Sfarim is not a monopoly, and if Kaniock isn't pleased with his share, he can go and sell his books elsewhere. The proposed law is the start of a communist campaign whose target is to gain more and more control over our commercial lives. History has taught us that such control is doomed to lead to control over every other aspect of life as well. A Bolshevik trend This Bolshevik trend is not only the result of a weak government that depends on the Labor Party's votes. It seems the current economic crisis has seriously cracked the belief in the virtues of free-market ideas. Governments all over the world are nationalizing banks and businesses. Calls for public intervention are being sounded everywhere; public opinion has accepted the notion that it is the government's responsibility to correct chaotic economical cycles. This is the best time for socialist mice to crawl out of the holes they've been hiding in for 20 years. "Capitalism has failed," they say; "It's time to raise the red flag again." The debate over these notions is too comprehensive to be squeezed into one article. Let's just remind ourselves that communism is a normative philosophy, proved to be false by a huge human experience that involved billions of people over a period of several decades. But capitalism has been a positive force. In simpler words: the opposite of communism isn't capitalism, it's human nature. Human nature Human nature is greedy. Indeed, it was the greed of the world's leading bankers that got us into this mess. This traditional greed turned extremely dangerous when it met the ability to create complex financial instruments such as mortgage-backed securities, which enabled banks to package loans they made and sell them to other financial institutions. Banks were encouraged to make as many loans as possible, regardless of their quality, package them and sell them. The loans were no longer under anyone's direct responsibility and the profits were instant. When this "musical chairs" game stopped, everything collapsed. You can't run a true free market without an understanding of personal responsibility for one's actions. The notion that it is some super-entity that should be responsible for everything is itself a communist belief. This is why the financial system collapsed. And this is why I was shocked to learn a few days ago that our central bank is about to import this poisonous pill to our financial markets. A special Bank of Israel committee is working on a law that will enable banks to make the same mistakes that destroyed the United States' financial system: issue mortgage-backed securities. The justification for this move is the same as it was in the US: "It's a sophistication of the markets that will enable more people to own their own houses." Didn't they learn anything in the BoI? What we need isn't more sophisticated tools but simpler ones. And the idea of letting anyone own a house is exactly what destroyed the US housing market. If you are a waitress receiving minimum wage, you shouldn't be able to buy a $200,000 house with a 95% mortgage. Its bad for you, bad for the bank and bad for the economy. Many bankers and home builders are pushing these new mortgage-backed-securities regulations. Let's just hope that the central bank's noble regulators will regain their senses and abolish this stupid and dangerous "reform."