Israel's 'scrambled' economic system

Rosenthal's film Shitat hashakshuka is part of the problem and not of the solution.

miki rosenthal 248.88 (photo credit: Channel 2)
miki rosenthal 248.88
(photo credit: Channel 2)
The film Shitat Hashakshuka (The Shakshuka System - Shakshuka being a Mediterrean egg-and-tomato dish, in everyday use it means 'scrambled'), which recently aired on Channel 1, has provoked a stormy debate around a vital issue: the close connections between our oligarchy, the dozen and a half families that control the country's economy, and our top politicians and bureaucrats. The media generally deal with this sensitive issue only periodically, in general terms, without naming names or exposing concrete instances. Miki Rosenthal, the maverick producer-director of Shitat Hashakshuka, has focused on the Ofer brothers, among the country's most powerful oligarchs, and their relations with the government. He has done so with great courage but in the worst possible manner. Once the scandal his film unleashed subsides, all will be quiet again. Shitat Hashakshuka paints a simplistic worldview (the film's name reflects a quote from one of Israel's top lawyer-machers, who describes how when negotiating with government officials on behalf of his mogul clients he "scrambles all the offers together and gets a sort of an average, usually slightly favoring his clients"). On the one side are the good guys, justice-seeking fellows like Rosenthal's late father, who allowed his carpentry business to go bankrupt because he would not fire workers during a recession (he subsequently died of a broken heart). On the other side are the bad guys - all the money-grubbing businesspeople, who cheat, exploit and even endanger consumers' lives in their obscene pursuit of profits. THE WORLD of creative enterprise, of millions of devoted, hard-working entrepreneurs and workers who sustain the phenomenal advance in the well-being of billions of people, is entirely absent from Rosenthal's Manichean world. They simply do not exist in a world fashioned by the Marxist pornography that most Israelis still endorse. Israelis believe that profit inevitably comes from exploitation. Therefore money-making is born in sin (Marxism has embraced this Christian belief and dressed it in pseudo-scientific terms). The mere fact that someone is making money is proof that he is evil. This is, of course, a self -fulfilling prophecy. If one believes that business rests on fraud and exploitation, one will act so, as some Israeli businesspeople and oligarchs indeed do. Rosenthal's film therefore perpetuates very pernicious prejudices about business. Such attitudes prevent us from addressing this serious problem of collusion between capital and government. Few bother to ask how a situation arose in which politicians and a bunch of government bureaucrats, high and mighty as they may be, could dispense with properties and privileges worth billions? How is it that they are allowed to allocate huge benefits in monopoly rights, tax exemptions and such, to the politicians' cronies at the taxpayers' expense? IT WAS not by accident, of course, that our government and the Histadrut Labor Federation possessed all those huge assets that were "privatized" in bargain-fire sales to well-connected oligarchs who paid for them with credit they received from our nationalized banks. It was the inevitable result of the huge concentration of economic power in the hands of government and the Histadrut that was created by almost 100 years of socialist dominance of the Israeli economy. This huge concentration of economic power in the hands of politicians and oligarchs led to the corruption both of our politics and our economy. It was also not by chance that true privatization - which means a decentralization of ownership and the enhancing of competition - has never happened in Israel. Most of the "privatized" government or Histadrut enterprises were "sold" to cronies at bargain prices and, as a result, the concentration of assets increased in the hands of the few and competition was stifled. Nor is it by chance that big businesses have been winning most government tenders offered at very low bids, after which they employ a battery of lawyers and accountants to jack up the prices of the projects for which they bid on. Is it, furthermore, just a coincidence that almost all former Bank of Israel regulators are now working for the banks which they earlier regulated; that they help them maintain their rapacious oligopolistic practices under the pretext that it helps "bank stability"? Is it only a coincidence that many former senior government officials are hired by our monopolies, paid fabulous salaries and offered perks to help them exploit the poorly-paid Israeli consumer by overcharging them on practically everything? Is it by chance that in an economy where labor rules have been dictated by the Histadrut - the workers' federation that represents mostly public labor unions - a "work ethic" was created in which the capable Israeli worker produces about half the amount of an American worker? Is it by chance that the Histadrut has politicized the workplace by perverting the way Israelis work, with the result that they are paid wages so shamefully low that most families can't make ends meet? No, it was not by accident that the huge Workers' Enterprises Union (Hevrat Ovdim) as well as the kibbutzim and moshavim were the first to go bankrupt despite the enormous privileges they enjoyed. In the childish dichotomous world of Shitat Hashakshuka there are only evil businessmen versus virtuous workers. The corrupt political system that is crucial to promoting government-oligarch relations is neither explained nor analyzed. This is why the film is part of the problem and not of the solution. The writer is director of the Israel Center for Social and Economic Progress (ICSEP).