Bank of Israel Governor: Israel's standard of living one third lower than the US
This should come as no surprise to anyone who travels back and forth between Israel and the US. Bank of Israel Governor Stanley Fischer told a conference on Sunday that Israel's standard of living is one third lower than that of the United States. Speaking at the Conference on Corporate Governance, Family Firms, and Economic Concentration at Hebrew University, Fischer said, "The Israeli economy is open, but there are aspects that are closed. It is very hard to find inexpensive cheese. Our real income is high, but our standard of living is not the same as in the US. There is a feeling that this is a result of over-concentration, but it is also connected to agriculture that is not over-concentrated, but that does benefit from much protection."What Fischer is alluding to is the fact that we spend a much higher percentage of our income on food than is spent in the US. It is often the case that you spend as much as one third of your net income here on food - and that's largely a result of the fact that there are relatively few imports, we are a small country, and there are a limited number of suppliers. I don't know why Fischer doesn't consider that over-concentration. In most cases the food import concessions are held by the same companies that produce the domestic food products who then keep the prices high. And it's not just cheese - it's everything.
Fischer said that the problem of over-concentration is not characteristic of Israel alone, but rather of many countries around the world, and that Israel is similar to Singapore on this issue. He quoted an article he read in 2005 that claims that outside the US and the UK, there are large corporations controlled by powerful families that are making realistic and financial investments.
"This is the situation in Israel as well," Fischer said. "Israel is between Belgium and Hong Kong, just below Singapore. This is not an unusual situation, but that does not mean that it is the desired one. Even if you are like all the rest, that doesn't mean that you shouldn't aspire to be better."
Fischer continued, "There is a feeling that prices are too high, and this is connected to concerns that social gaps in Israel are widening, although the situation in the US is not too different."
The other issue Fischer does not address is over-taxation of consumption. Every time the government cuts one tax, it raises another rather than cut spending. Car import taxes still start at the same 116% that they did when I arrived here 20 years ago. The value added tax is a regressive tax that is at 16% and has ranged from 15.5% to 18% in the time I have been here (as bad as that sounds, in England it's 20%). It's a tax that turns every service provider into a tax collector and every purchase into a major decision. I realize that Fischer has little to say about tax policy, but he does have influence. I'd like to see him exercise it more.
Labels: Israeli economy, Stanley Fischer
posted by Carl in Jerusalem @ 2:52 PM
1 Comments:
The main issue that Fischer does not address is that a major swath of people in the U.S. have taken on a "standard of living" that their earnings cannot maintain. Many govt programs, media brainwashing, and, most of all, idiocy among actually smart people, have resulted in people moving up, moving up, moving up and committing to pay for things they can't afford. I was in Israel and you guys live fine. Work on policies, etc., but don't let the governists make you envy and covet so that they can control you and rob the public till and lead you to be dependent on govt handouts (when your own finances collapse). BTW, I have never understood how Israelis afford the traveling you guys do... Don't let them fool you about these things.
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