Wednesday, 9 November 2011

Should do better. See me after class

This summer was one of social protest, and our politicians, now refreshed and returned to the trough for the winter session of parliament, are keen to appear as if they are all part of this social revolution.
Meir Sheetrit, a member of Knesset who has never worked in the private sector in his life, came up with a brilliant idea. He proposed a law that would exempt young couples, and singles, from paying VAT on their first homes. (If it sounds a little odd to say "young couples and singles", well that's the odd wording of his proposal. I can just imagine he first wrote "young couples" until someone pointed out how that was discriminatory, so he added in "and singles"). Well that’s fabulous, and who knows how many thousands of votes that will... I mean how many thousands of young couples that will help get on the first rung of the property ladder. Respect Meir! Way to go!

Now you’ve been nodding and thinking “Well that is good news. It would really help.” If that’s the case, then I would suggest that you too consider becoming a politician, because our MKs - particularly life-long careerists like Sheetrit - are full of such knee-jerk reactions, but are too hurried/exhausted/stupid to actually investigate their own suggestions. All knees and no brains. [Not that I'm implying that you are..., heaven forbid.]

This bill, if you look at it, will result in the exact opposite of what it purportedly set out to achieve, in this case help potential homebuyers in a very expensive market.

A market consists of buyers and sellers (that is demand and supply). Currently our housing market is overheated; many thousands of people in the market are fighting over too few properties, or at least not enough in the areas of highest demand. Hence the high prices. And Sheetrit’s solution is to shave the cost for young homebuyers. Will this allow some couples, who currently are struggling to get enough funds together to buy a flat, put in a bid for a home? Yes, of course it would. That’s what the bill is there for. The result? Well, whereas before you may have had three couples bidding for a flat in downtown Petah Tikva, now you’ll have five couples (the extra two are those facing no VAT, thanks to Meir). Prices were high when three fought over the property. What will happen when five are in the game? Prices will go up. I predict (and this is all on my ownsome, with no monstrous BankofIsrael econometric model pumping out statistics for me) I predict, as I say, that if this bill gets passed, then house prices will go up, ceteris paribus. (STOP THERE! Latin alert! Yes, now some of you, who may not have had the benefits of a fine English education, may be flummoxed somewhat by Latin expressions. Don’t be. They are not there to perturb, per se. They serve a purpose. They can explain succinctly what it was you wanted to say. And in this case, I meant “all other things being equal”. In other words (id est) if nothing else changes that also affects housing, then this will result in higher house prices.)

And it doesn’t surprise me.

Knesset, that venerable, risible institution, is full of charlatans, and I mean that in a nice way. I mean they are amateurs. They discover a problem on Monday, suggest a solution on Tuesday, and pass a new law on it by Thursday. The following week, they discover that instead of helping, the new law has actually made things worse.

Here’s another example of a half-baked law by half-baked politicians. Back in 2000, the Knesset adopted an amendment to the Law on Employing Workers through Manpower Agencies. The change in the law stated that "A worker via a manpower agency shall not be employed by an employer for a period of more than nine months." The aim, supposedly, was to change the status of thousands of agency workers, very often employed for months if not years, sitting next to inhouse workers, possibly doing the same work, but for less pay, and on shakier grounds in terms of conditions, pensions or perks.
Only the result was clear for all to see. Employers were likely to dismiss workers just as the nine-month deadline approached. The implementation of the law was postponed FOUR times, and finally came into force in 2008. It has caused disruption, instability, and heartache for the very people it was intended to help. One case involving a manpower agency used by the Israel Antiquities Authority has reached the courts after 21 workers were dismissed, and then immediately replaced by other agency workers.

Maybe our politicians should do a little more homework. Parliamentary bills in England are routinely sent to everybody that might be affected—individuals, companies, unions, trade organizations, professional bodies—for their feedback and input, and this preparatory stage takes at least a year. The result? Laws that work, are respected, and stick around for ages.

Sheetrit's bill by the way was chucked out of Knesset this week by 44 votes to 32. There is hope yet. 

1 comment:

  1. Excellent post again! You sound a little bit too pro-England and not-so-pro-Israel. You're asking for someone to tell you to go back to where you came from ;)