Should Israel Support Free Markets?

Should Israel Support Free Markets?

There is a notion that the definition of “free market” is an economy free from restrictions resulting in a buyer-seller "private transaction." However, a more fundamental definition should include any "voluntary economic activity" that is not bound to prime authorities. Nowadays, in Israel, the government is notorious for its influence on prices: food, housing, healthcare, executives’ salaries and the dollar. For example, The Jerusalem Post found a clear correlation between the increase in housing prices in 2009 and Netanyahu's policy of restricting Jewish building. However, Israel’s support of free markets may change the current economic situation.

One crucial advantage of free markets is the ability to provide alternative sources of supplies and substances which help avoid prices increase. This benefit is the outcome of free markets’ nature of relying on direct information from suppliers. Such a direct approach enables free markets to not only foresee and prevent a shortage of any source but also to avoid an increase in product pricing. Therefore, one can assume that a free market in Israel could have prevented the Israeli cottage cheese boycott in 2011 over high pricing. After being limited to only one source of cottage cheese, it is evident to the Israeli public that access to alternative sources can not come from top to bottom through centralized planning systems, rather from local workers and shopkeepers who create the free market.

Secondly, free distribution of goods according to market forces can serve the public better than the Israeli government. Since the dawn of history, the people who have changed the world for the better were the ones who came to the realization that the welfare state is harmful, and took actions similar to free markets. However, in contrast to any free market, there is the Israeli government. In early 2017, The Jerusalem Post exposed that right-wing Israeli politicians "skimp" on preventing construction-site accidents when at the same time they are willing to spend almost infinite resources on preventing terrorist acts. Allegedly, the politicians of a democratic country such as Israel work in the interests of the public. However, the Israeli politicians only represent their voters’ agenda. Thus, the government does not represent “the people”—only the “majority,” while free markets offer a better distribution that can work in the interests of “the people,” i.e. the Israeli public.

Thirdly, free markets give a greater role for the private sector and limit political power. The primary cause of Israel's economic suffering nowadays is the high concentration of political and economic power established in Israel over seventy years of socialist economy control. During Ben Gurion's left-winged Mapai period, virtually everything in Israel became nationalized and therefore, corrupt. For example, subsidized government bonds held all the savings, to later be passed to former government members. Naturally, the authorities that benefit from the corrupt situation pulled restriction to prevent opposed ideologies of the private sector. Thus, political power defeated small businesses in Israel by making them insignificant both economically and culturally. Nowadays, there is rising acknowledgment of free markets’ contribution to the economy in industrialized countries such as Israel. Therefore, without a doubt, Israel must make some changes that will allow free markets to be the generators of economic growth, as in any thriving economy.

With these advantages, the main disadvantage of a free market is that it may lead to greater economic crises in Israel. Over the course of history, whenever a new financial system was established globally, it resulted in market failure such as the Great Depression of 1930. Therefore, measures of government regulations are necessary for preventing another Great Depression. Thus, the free market is a paradox: it needs government regulations, but as soon as they become the standard, the concept of free market stops existing.

Furthermore, another possible disadvantage of the free market is an overproduction of goods. One can not adequately assure that the employee's payment in the open market would be enough to cover their expenses. In the era of automatization in Israel, when workers can not afford to play the role of customers, a gap between what they produce and what they can consume with their low wages is ever growing.

Finally, Israeli support of free markets meaning that governmental regulations would vanish over time. One of the notable regulations in Israel is subsidizing early childhood. Nowadays, in Israel, the state subsidizes early childhood through parental payments. Accordingly, the National Insurance Institute of Israel compensates working mothers with tax refunds. The National Insurance Institute of Israel explains that hard working mothers who get a higher paycheck benefit from this model; the more one gets paid, the more taxes one has to pay, the more tax refunds one can claim.

In conclusion, it is clear that the current centralized system in Israel has failed. Also, the current economic situation in Israel has left the Israeli public yearning for a better financial future for themselves (a future that more than likely has been "stolen" by the government from the Israelis’ pockets over the past 70 years). Nowadays, the Israeli public despises the current situation of the sharp rise in housing prices, a situation which was created by the government. Therefore, the Israeli public is constantly taking this topic to both social media and the streets to influence politicians to lower the pricing. However, politicians’ intervention, such as Yair Lapid in 2014, only made the increase in housing prices keep growing. To say the least, it is clear that the Israeli politicians are not economists by any means. I strongly believe that whether they are left-wing, right-wing or center, Israeli politicians run the economy in Israel with corruption and pointless policies, from the very beginning of this country’s existence. Whether or not free markets could magically fix the past century's economic mistakes, only time can tell. However, I fully believe that Israel
should support free markets growth without any delay.