Featured Post
Free The Hostages! Bring Them Home!
(this is a featured post and will stay at the top for the foreseeable future.. scroll down for new posts) -------------------------------...
Aug 7, 2011
Where are the tent protests going?
The tent protests create a serious dilemma.
While I would like to support the protests, as the cost of living has increased significantly and so many people simply cant make it to the end of the month even on decent salaries it just seems like a protest that is proper.
On the other hand, the protests are basically calling for government intervention in prices, be it in housing, be it in basic goods, be it in a host of other products and services that are pointed to. Once the government meddles with the prices, it is no longer a free market. If we don't operate in a free market, there goes our international economic benefits and credit ratings Who is to say that once we operate not in a free market, what we will expect the government to pay for, or intervene in, next. Eventually the government will have to raise taxes to be able to pay for all the price controls and subsidies that will be demanded.
So, while the protest is "just", on a certain level, I don't see or understand what they expect the government to do while keeping the market free. In housing and construction more land can be released, bureaucracy can be lessened to attain building permits, but in general cost of living items, there is not much that can be done.
An example of this is the recommendation of the Minister of Interior Eli Yishai. Yishai today recommended that the government pass a law that would maximize the rent charged by owners of rental apartments to a maximum of 2% annually of the real estate value of the apartment. Why should the government put a limit on how much money I can make off an investment I put my money into? And if they do, that will kill the real estate market, as people wont bother investing in homes for rentals. That will take many homes off the rental market, again probably driving up prices of rentals.
The tent protests have an element of justice to them, I just don't see what they expect to happen. And that si without even dealing with the mixing of politics into it.
While I would like to support the protests, as the cost of living has increased significantly and so many people simply cant make it to the end of the month even on decent salaries it just seems like a protest that is proper.
On the other hand, the protests are basically calling for government intervention in prices, be it in housing, be it in basic goods, be it in a host of other products and services that are pointed to. Once the government meddles with the prices, it is no longer a free market. If we don't operate in a free market, there goes our international economic benefits and credit ratings Who is to say that once we operate not in a free market, what we will expect the government to pay for, or intervene in, next. Eventually the government will have to raise taxes to be able to pay for all the price controls and subsidies that will be demanded.
So, while the protest is "just", on a certain level, I don't see or understand what they expect the government to do while keeping the market free. In housing and construction more land can be released, bureaucracy can be lessened to attain building permits, but in general cost of living items, there is not much that can be done.
An example of this is the recommendation of the Minister of Interior Eli Yishai. Yishai today recommended that the government pass a law that would maximize the rent charged by owners of rental apartments to a maximum of 2% annually of the real estate value of the apartment. Why should the government put a limit on how much money I can make off an investment I put my money into? And if they do, that will kill the real estate market, as people wont bother investing in homes for rentals. That will take many homes off the rental market, again probably driving up prices of rentals.
The tent protests have an element of justice to them, I just don't see what they expect to happen. And that si without even dealing with the mixing of politics into it.
Labels:
housing crisis,
tent protest
Subscribe to:
Post Comments (Atom)
Related Posts
but in general cost of living items, there is not much that can be done.
ReplyDeleteThere's only ONE thing that MUST be done - eliminate the cartels and open the market up to competition. The problem is that the government, any government, can't do this because they are "controlled" (financed, hired after public service, etc) by those ~10 families that own/run the cartels (and are coincidentally the wealthiest families in Israel).
The housing issue can be solved on the supply side. Problem is the process to release and sell land takes so long and is so corrupt it will take years to solve.
ReplyDeleteThe rest of the price issues in this country can be solved my breaking up the monopolies and cartels. Mckinsey did a study for Strauss (or Tnuva, can't remember) a few years ago and basically concluded that dairy prices here are inelastic, meaning charge what you want. Apparently they were wrong as 8 nis for cottage cheese was the breaking point.
Did you know that Nesher has a 85% monopoly on the cement market? Or that Osem or Wissosky products are sold cheaper in New York (FACT)?
I agree that we need to keep this a free market, but just like in the USA, monopoly laws need to be enforced.
link to Globes article on Mckinsey study.
ReplyDeletehttp://www.globes.co.il/serveen/globes/docview.asp?did=1000657979&fid=1725