Politically Incorrect – Social Protest, Competition Advocacy, and Political Economy in Israel

Shlomi Parizat, May 29, 2012

In the summer of 2011, “Social Justice” became a rallying point for over 400,000 people in one of the largest protests seen in Israel. The movement began with a small group of friends in Tel Aviv who found housing prices way too high and were outraged by the government’s (un)social agenda. The movement spread quickly, and soon there were protests in every major city. Activists took to the streets in a non-violent and non-political demonstration of frustration, setting up tent cities in all the major streets and parks. Their demands were many and varied. Some focused on costs-of-living in Israel; others on fair employment conditions and on social inequality. Because the movement was truly spontaneous, the actual demands of the protesters, other than the somewhat vague notion of “social justice,” were unclear and amorphous.

In response to this massive protest movement, the government commissioned the Committee for Economic and Social Change, otherwise known as the “Trajtenberg Committee,” in order to uncover the major concerns behind the protests and suggest ways to address them.

This paper will describe the work and findings of the “Competition and Cost-of-living” team of the Committee. The first section delineates changes in the cost-of-living in Israel over the last decade. In the second section, the probable direct causes of those changes are discussed. Lastly, the paper suggests a clear link between those findings and a political-regulatory failure; in particular, that regulatory systems in Israel had mostly failed to protect public welfare in the face of special interest groups and big businesses. The main conclusion of the sub-committee is that intense competition advocacy, together with stronger consumer organizations, are the best tools to “level the playing field” and serve the public interest.

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