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Center for Public Policy (CPP)
CPP at JIMS disseminates position papers to Israel's lawmakers and the general public on economic
issues currently being debated in the Knesset. Our position papers are often cited in Knesset
committee discussions and in the popular Press.
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Keren Harel Harari
The government is responsible for the high price of automobiles in Israel because it reneged on a promise to lower the purchase tax on cars to 72% -
which would still be unusually high by world standards. Double taxation and high tariffs on privately imported cars and parts have raised prices for the
whole industry and also discourage proper care of cars. The government has encouraged and continues to support a leasing system that discounts its own
fleets but forces private consumers who do not lease to pay exorbitant prices.
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Yarden Gazit
The problems in the housing and dairy markets are a result of a failure of government policy, and not of market failures.
This paper examines several sectors that recently made headlines and finds that politicians and others tend to blame the market in
order to cover for their own failures.
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Keren Harel Harari
The paper explains how the government's own
budget and recent Knesset legislation are much to blame for the recent cottage
cheese crisis in Israel. The rising price of cottage cheese led to a consumer
boycott, which has led to a reduction in prices as well as an ongoing public
debate about market centralization in Israel. Since January 2008, the price
paid by consumers for cottage cheese has risen ten times as fast as the price
dairy producers have had to pay farmers for the milk they use.
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Yarden Gazit
The paper argues that the recent succession of public
sector strikes and labor disputes (of which teachers, university workers,
foreign ministry personnel, lawyers, social workers, railway and port employees
form only a partial list) causes severe damage to the Israeli economy.
In 2010, the economy lost some 168,000 working days due to strikes,
nearly 70 percent of them in the public sector. Based on IPSOD results 43%
of the public believes labor unions are too powerful, against only 20.5% who
believe they are not powerful enough. In particular, this
paper deals with mandatory arbitration of public sector labor disputes.
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Yarden Gazit
Most parents under 35 do not believe in public education, consider sending their children to private schools, a new survey reveals.
56% of Israelis under 35 believe that the quality of public education has deteriorated in recent years. JIMS found that 58% of parents under 35 either
send or have considered sending their children to private schools. In addition, 52% of young Israelis support a school voucher program, in which the state
education budget would be distributed among parents who would choose and fund their child's school.
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Yarden Gazit
The conditioning of three billion dollars of annual American
aid to Israel on similar aid to Egypt, Jordan, Saudi Arabia and
the Palestinians forces Israel to spend more than three billion
dollars on defense. In fact, US assistance is a net loss for Israel
and Israel would be better off without it.
According to JIMS' paper, the lion's share of US aid ends up
being spent on maintaining a qualitative edge over other countries
who also receive such aid. US assistance comes in a
bundle with assistance to Egypt, Jordan and other countries.
Egypt receives from the US two thirds of the sum granted to
Israel. But according to JIMS, every dollar granted to Egypt
requires Israel to spend between 1.6 and 2.1 dollars to
maintain the balance of power.
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Diana Zacks
The study warns of
the danger of having a biometric database in which the personal data
of all Israelis will be in the hands of at least 10,000 government
employees. The plan to establish a central biometric database, along
with the use of biometric identity cards, will make Israel the only
Western democracy to store biometric information about its own
citizens.
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Boaz Arad
The paper argues that misdirected economic policies
exacerbated the economic woes in Egypt and became one of the reasons
tens of thousands of people took to the streets. In addition to the
adverse effects of governmentmandated
use of biofuels in the West
on the economy of Egypt, recent Western bailouts have caused
inflation, hurting the poor in less developed countries far more than
elsewhere.
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Boaz Arad
The paper reveals that state subsidies
for culture offered by the Israeli government engender massive
inefficiencies. The paper details how theaters are losing customers while
receiving more and more money from Israelis taxpayers. The government
distributes subsidies in a way that rewards poor management, debt, and
loss of customers.
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Yarden Gazit
The Ministry of Industry allocates over NIS 600 million annually for training
programs whose efficiency has never been truly examined. Most of the
graduates of the state courses do not work in the professions for which they received
training. Nearly a third do not work at all. This paper reveals that a year and a half after the course only 44.7% of graduates work in
the profession in which they were trained. In some professions, the percent is less than
a third. About 30% do not work at all.
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Boaz Arad
The Israeli army long ago ceased being a citizens' army. The pretense of it still being so hurts military preparedness and causes a loss of NIS 9
billion annually to the Israeli economy. It also increases tensions between different sectors of the Israeli population. According to statistics
published by JIMS, approximately 23% of draft age individuals do not serve at all. 40% of draft-age women are exempted. Another 18% of those drafted do
not complete their service. Only 20% of the males who serve, do so in combat roles. 20% serve in administrative roles. About 10 different programs are
used to allow terms of service to be shortened; when all is considered, less than a third of each year's draftees completes a full term of service.
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Yarden Gazit
A first-ever examination of actual and long-term poverty in Israel reveals that
statistics issued annually by the Institute for Social Security are misleading. The first
annual Report on Poverty of the Jerusalem Institute for Market Studies shows that
Israel has made great strides in reducing poverty over the past ten years.
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Yarden Gazit, Corinne Sauer and Robert Sauer
The Jerusalem Institute for Market Studies' national survey of politeness reveals for the first time who are the most polite and most impolite among Israelis,
and shows that being polite has a large payoff in terms of income (being polite substantially increases one's earnings). The survey shows that there is no
correlation between education and politeness, indicating that focusing almost exclusively on improving grades and cognitive skills, does not at the same time
succeed in improving non-cognitive skills such as manners, self-control, and persistence. And since the survey shows that income substantially increases with
politeness, Israeli employers highly value these non-cognitive skills.
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Boaz Arad
JIMS' paper, estimates that approximately
210,000 survivors live in Israel today. The study finds that no official tally of
survivors exists in Israel, and only about half receive special benefits or even know
about them. The Israeli bureaucracy is inefficient and delinquent when it comes to
survivors. Two-thirds of Holocaust survivors in Israel have not received
disability reparations. Those who received payments from the Israeli Treasury,
received on average NIS 1.6 million less than survivors who received payments
directly from Germany.
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Yarden Gazit
The government's support for the business sector does not achieve its goals. Ultimately, it buttresses the concentration of economic power.
That is because the main beneficiaries of the assistance are giant corporations such as Nochi Dankner's IDB or Ofer family companies. The study
finds that over the years, large corporations won the lion's share of government grants and tax breaks, which unfairly increased their market power
at the expense of smaller companies. The report recommends that the government should simply abolish the current system of grants for corporate investment.
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Yarden Gazit and Zev Golan
Israeli land policy has been state-led and centralized for decades. The state owns 93 percent of the land. In recent years, the centralization of land policy
in the hands of a few bureaucrats has made it difficult to establish new townships in Israel's periphery (the Negev and Galilee). JIMS’ paper identifies the
key obstacles for development and recommends ways to address them.
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Boaz Arad
In recent years, court rulings have induced large expenditures from the government and have had significant economic consequences. The courts hand down
rulings that lead to the spending of hundreds of millions, sometimes billions, of shekels from the public purse.
JIMS’ paper reviews several economic rulings of the courts and calculates their costs. Although the analysis is only partial, in the
sense that only five projects were studied, the total cost already reaches 29 billion shekels.
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Yarden Gazit
Legislation to curb executive pay has been suggested by members of Knesset, and a ministerial committee has been set up to study the issue.
The paper reviews the academic literature in Israel and abroad on executive pay, and determines that executive pay is strongly correlated to firm performance.
Furthermore, the paper shows that the sharp rise in executive pay in recent decades can be fully explained by market-driven reasons.
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Yarden Gazit
Israeli insurance companies are often criticized for treating their customers unfairly. The paper examines the market for automobile property
insurance and suggests ways to improve its functioning. After surveying the characteristics of the market, it concludes that tight and inefficient
regulation puts barriers to entry, raises premiums and doesn't allow companies to compete.
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Yarden Gazit
Public television has few viewers and a large annual budget deficit likely to reach 100 million shekels by 2010. The Israeli government wants
"to rescue" public broadcasting, forcing the public to pay obligatory fees and taxes to cover public television channels. In this position paper,
JIMS argues against the rescue and questions the value of public television from both an economic and democratic point of view.
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Boaz Arad
When it comes to teaching environment and climate change, the State of Israel, as many other western States has adopted the view of the Intergovernmental Panel on Climate Change (IPCC).
In this paper, JIMS shows that the IPCC theories have been scientifically questioned by other theories of climate change and therefore Israeli students should be taught all
existing competing theories.
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Boaz Arad
JIMS' Position Paper examines the economic and environmental benefits accruing from small homesteads in the Negev and urges the government
to resolve specific legal and zoning issues preventing their future development.
Zev Golan and Boaz Arad presented this paper at the Knesset during committee deliberations.
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Hana Dar Starowicz
In light of the impending sale of 15% of the shares of the ports of Ashdod and Haifa to private parties, JIMS assessed the economic feasibility of
partial privatization. Unfortunately, JIMS' findings show that the continued degradation of the ports' management over the last few years has greatly
reduced the attractiveness of the ports. The lack of economic efficiency is clear: the number of workers has increased by around 9% over the past few years
and the volume of economic activity has been at best stagnant.
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Boaz Arad
The Knesset discussed a new bill that would prevent foreign ownership of daily newspapers. This initiative seems to be directed against
Sheldon Adelson, the owner of "Israel Today" a free daily with a readership that has increased by 112% within the past year.JIMS' Position Paper warns
against the dangers of such an initiative for the freedom of the press and democracy in Israel.
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Boaz Arad
Of the 275,000 foreigners working in Israel, about half are here illegally and over 100,000 entered Israel as tourists.
In this JIMS Position Paper, analyst Boaz Arad critiques the government efforts to pay Israelis to take their jobs and suggests a
reform in the method used to bring them to Israel. The paper also argues that foreign workers are good for Israel's and
that reducing their numbers will harm the local economy.
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Boaz Arad
The Bank of Israel policy of buying dollars to keep the exchange rate artificially higher than the market price is a risky business. In the past
6 months the dollar has lost about 15% of its value against the Swiss franc, about 10% against the Japanese Yen and about 30% against
the Australian dollar, about 14% against the euro and -- 15% against the shekel. According to JIMS' lastest study, this policy subsidies
the export industry but hurts the other sectors of the economy.
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Zev Golan
The chief scientist program is designed to support
Israeli technological projects. The level of subsidization,
as revealed in JIMS' position paper, is much higher than
the level used by OECD members. In fact,the Chief Scientist office distributes freely taxpayers' money
without filtering and sorting the best projects.
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Zev Golan
The Ministry of Finance is thinking of raising the VAT
on all other products from 16.5% to 17.5%, or increasing
income taxes to cover their "overdraft." JIMS' research
paper explains why such proposals are bad for Israel's
economy and for the ministry of finance.
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Keren Harel Harari
The Israeli government intends to raise 200 billion ₪ this year and in 2010
(100 billion each year) by issuing government bonds. From this,
140 billion shekels would be raise on the domestic market and 60 billion on the
international market. Some of these funds will be used to re-finance the debt
taken in 2002 -2003, but 80 billion are new debt.
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Keren Harel Harari
"The Wisconsin Program" currently called Orot Letasuka (Lights for Employment)
in Israel was intended to assist the recipients of welfare grants to integrate in
the labor market and reduce the extent of welfare grants that constitute a burden on
the state treasury.According to the Ministry of Finance, the program has proven itself,
because in the regions where the program is currently operating the number of those
who receive income supplements has declined by 52% as opposed to a decline of only 7.2%
in those regions where only the State Employment service is functioning.
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Keren Harel Harari
As early as 1990 an attempt was made to cancel the 0% VAT rate on fruits and vegetables.
As a result of fierce opposition and problems that were raised at the time concerning
implementation, it was ultimately decided to leave the situation as it was. Today,
after almost 20 years, the Finance Ministry is once again attempting to revoke the
VAT exemption on fruits and vegetables. Additionally, the Finance Ministry suggests
raising the VAT rate by 1% for a year and a half (from 15.5% to 16.5%), despite
promises last year to lower VAT by 1%. However, these decisions would only take effect
after preliminary approval by the Knesset Finance Committee, and currently, a majority
in opposition to the measure is forming in the committee.
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