• Gilad Alper

Why Continue to Pay a Lot for Fruits and Vegetables?

Cell phones play a vital role in the personal and business life of the State of Israel. There is probably not a single person reading this article who is not using a smartphone. And over time we can assume that cell phones will become even more important and central to our lives. Given the critical importance of this product - which is widely used even in the military, one wonders whether it is to the benefit of the state for all cell phones to be imported? In other words, isn't it time for the State of Israel to develop an independent cellular industry? Theoretically, it could be done. The State of Israel could impose a very high tariff on telephones. For example, it's possible to propose a customs duty of 1,000%. It is clear that in such a situation, imports would be so expensive that local manufacturers would build Israeli phones, and these phones would be sold in Israel at a price lower than the price of an imported telephone. This would have some results. The quality of the phones would be poor - since Israeli manufacturers wouldn't have to compete with imported phones. Mobile phones have security significance, so manufacturers would have to get production licenses from the state - licenses that would probably only be given to insiders, and perhaps a marketing council for phones would be set up in order to regulate the market. It's clear that only the wealthiest would be able to buy advanced phones from Apple or Samsung, because price isn't a problem for the rich. One can assume that after a few years, the quality of the telephones in Israel would deteriorate to such a level that it would no longer be possible to ignore the fact that citizens of the state are using inferior and expensive phones compared to those in other countries. At this point, there might be a public movement aimed at abolishing customs duties on imported telephones. Except that in the meantime, the local industry would already have been established, with its lobbyists and with the manufacturers/insiders, who would be making money on the backs of the citizens. These manufacturers would already be able to invent stories about the importance of local industry to production workers, the importance of security, and the importance of cellular independence to the Zionist movement. What's the difference between this imaginary story and the food and agriculture industry? The state imposes strict restrictions on the import of fruits and vegetables and other agricultural products from abroad, including tariffs, quotas, and other measures that prevent Israeli citizens from buying cheap and high quality products, as anyone who has visited a supermarket in Europe or the US knows. How do they justify such blatant discrimination against 8 million Israeli citizens? It turns out there is no moral justification, and there is no economic logic - but there are many excuses. One of the most common of these is the issue of nutritional independence - since the State of Israel must maintain the ability to produce food in light of our always shaky security situation. This excuse is absurd. The State of Israel imports almost all the wheat we consume, since we have neither the space nor the climate to produce wheat on our own. Besides, the independent viability of the local dairy, egg, and meat industry is also an illusion, since almost all the fodder is imported, for exactly the same reason we import wheat - unsuitable climate and lack of space. True, it is proper to have strategic reserves of powdered milk and other food products - as the state holds strategic oil reserves - but this and the existence of an entire industry have nothing whatsoever to do with one another. Supporters of agriculture often praise the security importance of agricultural work in preserving borders and preserving state lands. This is perhaps the strangest excuse. It is the army's job to maintain the borders. Greenhouses and agricultural workers aren't able to fulfill this role. At least until genetically engineered peaches that know how to crush themselves on enemy soldiers. And what about state lands? Apparently, the state is indeed partially failing to protect itself against illegal takeover of its lands, and agricultural work may be a certain barrier to this takeover. But note the chutzpah of this argument: despite the inflated security budgets we all have to finance with our tax money, the government has failed in the very basic task of protecting state land. To this we double down: not only is the system that we finance a failure - we must also pay for expensive agricultural products to compensate for the security failure. Isn't it clear that the solution is for the state to begin to respect our tax money, and for the defense establishment and the police to finally do their job? Should we prevent the opening of agriculture to free competition out of concern for the fate of workers in this industry? The same question can be asked about the smartphone industry workers from the beginning of this article. And the answer is always the same: Every industry that exists because of restrictions on free competition exists at the expense of anyone who does not work in the industry. Do Israel's 8 million citizens have a moral obligation to financially support workers in the fictional smartphone industry or agricultural workers? Are we destined to buy expensive products to pay for their livelihood? In my opinion, the answer is no. I don't underestimate the problems that may arise in the agricultural industry if it opens up to competition, but the workers will find other jobs over time, as happened in the textile industry and other industries in Israel that opened up to competition. Are the profit margins the real source of problems in the agricultural market? Well, keep in mind that in every industry there are profit margins, even in the smartphone industry. There are always marketers, advertisers, distribution channels, and store owners who also have to make a profit. That said, contrary to a free industry like the smartphone industry, the agricultural industry in Israel is run by marketing boards, such as the Poultry Council and the Dairy Council, which are state creations that are not part of a real free market. As part of the opening of the agricultural industry to free competition, steps such as the abolition of tariffs and quotas should be accompanied by breaking up all state marketing boards. Farmers should have the freedom to run their businesses as they wish. It's important to clarify that the goal of opening the agricultural market to free competition is not the elimination of the agricultural industry in Israel. The only goal is for the 8 million citizens of the country to be able to buy quality products cheaply - which happens in free markets like the smartphone market and does not happen in markets managed by the state, such as the agricultural market. If at the end of the process of opening the agricultural industry to competition the local agricultural economy flourishes - then the opposite is true. Finally, some justify the structure of the agricultural market in Israel in that other countries subsidize and support their agricultural industries. The obvious answer to this is that other countries misjudging and subjugating their entire populations to support a particular industry with good political connections doesn't mean we have to imitate this mistake. Moreover, if other countries subsidize the agriculture industry and export products that are artificially cheap, why does the State of Israel deprive its citizens the benefit of buying these cheap products? The feeling of many of us that Israel is expensive compared to other countries is anchored in reality. The studies by Gilad Brand, a researcher at the Taub Center, show this, and even point to food prices as a major factor that creates the cost of living problem. Morally and economically, the best solution is to open the agricultural and food market to free competition - and the sooner the better. (Translated from https://www.globes.co.il/news/article.aspx?did=1001156969)


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