‘Israel Must Rein in Avarice’

Dan Propper, chairman of the Osem food company, tells "The Jerusalem Report" that he is angry at the lack of vision shown by Israel’s leadership.

Public attention is yet again focusing on the prevailing economic climate and the disturbingly close relationships between capital and politics. New corruption scandals involving public figures and politicians, rising prices for basic commodities and the vicious campaign waged against the Sheshinski Committee, charged with reassessing the rates of taxation on gas and oil exploitation (see “Battling for Sunken Treasure,” page 6) have Israelis worried about the fiscal and ethical health of their economy.

“The greed that is overtaking us is the root of all evil,” warns industrialist Dan Propper.

Propper, 70, chairman of the Osem food company that he inherited from his grandfather and father, is one of the country’s most senior and well-respected industrialists and the former chairman of the Israel Manufacturer’s Association. He recently surprised the business community when he voluntarily resigned from a prestigious and lucrative position on the board of directors of the Teva pharmaceutical company, due to what he referred to as an ethical conflict of interests.

Propper tells The Jerusalem Report that he is angry at the lack of vision shown by Israel’s leadership and disappointed by the failure of regulatory measures to curb corruption and greed. “We have succumbed to avaricious capitalism,” he states. But he also adds, “The fact that the Israeli economy grew at close to eight percent in the last quarter of the year is a sign that our economy is healthy. There are corners to be cleaned out and problems we must fix and much is wrong, but we should never forget our achievements. I have great hope for a great future here in Israel.”
The Jerusalem Report: You have stated that Israel is suffering from unrestrained greed. What do you mean by this?
Dan Propper:
First, we must qualify that statement: it is not all of Israeli society. But some parts of society are indeed suffering from the illness of greed, and it can spread like a plague. We have adopted the extreme form of capitalism prevalent in the United States, especially in financial markets. Wall Street and other financial institutions became increasingly greedy. Motivated by large bonuses, managers and directors made lots of money for their companies, but these were merely paper achievements and shortsighted profits, earned at the expense of their customers. I had hoped that the 2008 world financial crisis had taught the finance community a lesson, but it has not. Greed is a basic human characteristic, and it will not be curbed without regulation and institutionalized restrictions.
It is unusual for an industrialist to call for curbs and restrictions.
I am not calling for a curb or restraint on profits, but rather on the incomes of some of the employees. When we look at the income of managers of public companies, we see no relation between income and achievement. They are motivated by short-term profits and this is destructive to the economy. This must be regulated.
What about the problematic relationship between capitalists and politicians?
Democracy needs politicians and society needs capitalists, and there are good and honest capitalists and politicians. But both sides have also sprouted weeds, and we must get rid of them before they take over the entire field. Criminal actions should be punished severely.
What do you think of Prime Minister Benjamin Netanyahu’s taxation policies?
There is a common perception that the prime minister is not taxing the rich. That is wrong. But taxes should not be so high that they dampen the motivation of the rich, which is not good for the economy.
Don’t lower taxes for the wealthy mean a higher burden on the poor and middle class?
That is not the only source of money. Vast sums of money are given to placate the coalition parties and this does not serve the general good. Every party in the coalition demands its pound of flesh – this system was not invented solely by the ultra-Orthodox or the right wing. We must change the structure of our democracy in order to decrease the prime minister’s dependence on tiny, sectarian parties.
What about the working poor?
Over the past 30 years, many of Israel’s traditional industries, such as the textile industry, have vanished because they cannot compete with the cheap labor in other countries. Actually, I hope that it will become increasingly difficult to find cheap labor in Israel – so that people will be able to earn a living wage and so that the social gaps in Israel will be decreased.
To solve the problem of the working poor, the minimum wage should be increased, as it was, but this should be accomplished in negotiations between the unions and the employers, because, together, they are able to consider all of the implications. I also support the negative income tax for low-wage earners that the government has instituted. This provides workers with, as the saying goes, fishing rods rather than with fish and enables them to become increasingly independent.

What do you think about the recommendations of the Sheshinski Committee?
Generally speaking, I am in favor and I think the committee structured the taxation properly. But I am not in favor of extending this retroactively to agreements that were made prior to the discoveries.

How did Israel transform from a country with a socialist, egalitarian ethic to a country with tremendous social gaps?
I am glad we are no longer a socialist country – look at where socialist countries have ended up. And Israel is not an isolated country – we are part of the West. But in addition to taking in much of the good from the West, we have taken in some of the negative, including extreme, greedy capitalism.