"The Israeli consumer will feel the work of the committee on economic concentration," declared Prime Minister Benjamin Netanyahu today with pride.
The committee's interim recommendations are revolutionary, courageous, and very necessary, but the Israeli consumer will not feel the committee's work overnight, or even after a year. Consumers will definitely not feel it directly in their pockets or supermarket bills. They will not get relief.
In time, the committee's work will depend on the quality of its implementation. Ultimately, its recommendations will be excellent for the economy and consumers will feel them in a several years, although they might not know why.
In contrast, consumers will feel the effect some of the Trajtenberg committee's recommendations immediately in their pockets, but there will still be a hue and cry, and they will say that it is not enough. This is because the responses will be direct and immediate, whether free daycare or subsidized rent.
Together, the recommendations of the committee on economic concentration and the Trajtenberg committee will result in a real revolution in the Israeli economy down the road. First of all by equalizing opportunities for entrepreneurs, which will boost business and competition so that there will be fairer and real. Conflicts of interest will also decline, or they may just change, which will mean that a new committee will be needed in a few years.
The concentration committee's recommendations will improve efficiency in the management of consumers' long-term savings. No more money from provident funds, insurance and pensions will be allocated on the basis of business interests of controlling shareholders who also have non-financial companies or to his cronies, as well as his enemies and rivals. A controlling shareholder will no longer have the power to weaken competitors and drive them from the market by drying up their finances.
Ultimately, the Israeli consumer will have more welfare and money and pensions, but until then, we can forget about concentration committee chairman Haim Shani and maybe from Manuel Trajtenberg, too.
This is how skyscrapers are built, floor atop floor. First, the market was opened to competition, followed by removing foreign currency controls, the Brodet committee, which took non-financial holdings away from the banks, the capital market reform, and the Bachar committee, which overturned the concentration in the financial and banking sector. But the fruits were not clearly seen, partly because the bankers concealed the actual management fees that they collected on their mutual and provident funds, and the funds' buyers also acquired the banks' greed. The Bachar reform still needs a thorough fixing.
Published by Globes [online], Israel business news - www.globes-online.com - on September 19, 2011
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