Fix Israel's high prices, cost of living with true free-market system - opinion

Published date25 January 2023
The real issue in the Israeli market is that it is not a capitalist system but an oligopoly. A combination of Israel's communist heritage and incomplete economic liberalization has led to the emergence of an oligopolistic market structure in which a small number of firms dominate vital industries

The actions of Israeli governments over the past three decades, such as a lack of regulation and protection of dominant firms from the competition which has ultimately crippled the country's growth and development potential. While prices are rising all over the world, politicians constantly remind the public of the worldwide rise.

Israel's oligopoly has kept prices high

Nevertheless, prices in Israel before COVID and the Ukraine war were already high. The worldwide economic crisis has quickened the pace. The current crisis in Israel is the result of long-standing, unresolved economic issues that are now exacerbated by inflation's echo chamber effect.

Companies like Osem, Strauss and Tnuva, among others, have ensured long ago that their prospective industries remain close, ensuring that the competition will remain limited, up to non-existent. Thus, a lack of competition is preventing companies from lowering prices, and ensuring that the Israeli population will have very limited options. Enabling those very few companies to exert substantial control over consumer needs.

Customers may not hold these businesses accountable for their actions because they have limited alternatives. Last year's Strauss poisoning affair is the perfect example of the weakness of Israeli consumers, as it demonstrates the absence of proper oversight and regulation, as well as the failure to hold companies accountable for their actions, resulting in the sale of unsafe products.

Israeli politicians have used the economic crisis as a political tool. Politicians have traditionally leveraged the economic crisis to blame right-wing or left-wing economic attitudes to the problem. However, what politicians have failed to mention to the public, is that the monopolistic system is endorsed by both right-wing and left-wing parties. Politicians have always ensured the protection of these large Israeli corporations, and the wealth of the owners of these companies, the primary beneficiaries of this oligopoly system.

It is essential to notice the Israeli regulatory administration's practice of taxing each product, rather than focusing on monopolistic or oligopolistic structures, allows these systems to...

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