Sensible Economics
Rabbi Eliezer Melamed
Judaism Favors Capitalism Between the two extremes of capitalism and communism, the Torah generally tends to favor capitalism, given that freedom of choice and individual responsibility are the moral foundations of man's existence in the world. This is the essence of man's being created in the image of God – he was given the ability to think, decide, improve, or destroy, and to take responsibility for his actions. If he chooses well – he merits the World to Come; if he chooses evil – he inherits 'gehinom' (hell). This is equally true in this world: if one treats his family well – he'll have a good family life; if he ignores them – he'll destroy his relationship with them.
This is also true in connection to money and wealth. If a farmer is lazy – instead of produce, his field will yield thorns; if he is hard-working, he will harvest a healthy crop. If one is slack at work – he'll get fired, and have to pinch pennies. If he works diligently, he will reap the fruits of his labor. Just as a person is entitled to receive compensation for his physical labor, similarly, he is free to profit from his business initiative and natural talent of inventing and producing new products. The more popular his products are, the more profits he is entitled to make.
In contrast, the Communist system severs the connection between hard-work, initiative and production and their results, thereby causing people to be less responsible for their actions.
Thus, we find that in the Torah, the laws of ownership, and the prohibitions of stealing and robbery are based, in general, on the capitalist system, according to which the possessions one accumulates belong to him.
Hindsight
Today, nearly 100 years after the founding of the Communist system in Russia, in hindsight, we know that this method doesn't work. The removal of personal responsibility from the results of one's actions caused great damage to economic development. Consequently, countries that adopted the Communist system in order to provide welfare for its citizens, in the end, caused them appalling poverty. In a Communist economy, rather than working hard to improve and be more productive at work, the main effort is directed at obtaining larger slew of the public coffers. This is in addition to the awful tyranny and corruption this system creates by granting tremendous power to the rulers – besides being in charge of public funds, they also rule over private property, as well.
Socialism in Judaism
On top of the capitalist principle, the Torah commands the individual and society to care for the welfare of the poor, sick, and elderly who cannot provide for themselves. To this end, taxes were collected for the public fund. Care was taken not to encourage idleness and exploitation, which harms both society and the needy person himself, who gets used to living a life of shame.
In addition, the Sages also imposed upon the general public the responsibility of caring for the education of children whose parents couldn't afford to do so, according to the principles of the Torah which state that, first and foremost, it is the parents who are responsible for their children's Torah and vocational education.
The Boomerang-Effect of the Protests
If the government surrenders to the demands of the protesters, handing-out land for free to every citizen, then hundreds of thousands of families who invested their hard-earned money over the last twenty years by purchasing apartments in the center of the country will lose half of their assets, because two-thirds of the cost of an apartment in Tel Aviv stems from the price of the land. Such an extreme reduction of the cost of apartments is like pocketing money directly from the pension funds of the public.
The building process must be accelerated and wide-scale construction encouraged, making it easier for the needy to buy an apartment. However, it is forbidden to harm market prices in such a drastic way.
Market Logic
The rules of supply and demand which determine apartment prices are very logical. People earning higher salaries are able to purchase apartments in more exclusive neighborhoods, while people who earn less, buy apartments in less-desired areas. In the end, however, everyone has a place to live.
Market rules have another benefit: when the demand for apartments rises in the center of the country, prices also go up, creating a natural situation where families are driven to move to the periphery, and in this way, additional areas of the country are continually strengthened. When this natural process is interfered with, it creates a situation of national-disorder; the center of the country becomes over-loaded, crowded and choked, while at the same time, the cities and towns of the periphery are abandoned to poverty, crime, and seditious activities by internal and external foes.
Media Shame
In the coverage of these protests, the true face of the Israeli media has once again been revealed, as it enthusiastically offered its public relations' services to the protesters, and fanned the flames of the rallies. The media made it clear that, in its opinion, "the nation" is a specific, defined group, namely: secular leftists. In the media's eyes, a group of tens-of-thousands of young people from this category is considered a "people's protest, the likes of which have never seen before", while all the other millions of people mean nothing to them. This type of media event actually strengthens a commendable process, in which more and more people are waking-up from the fantasy that the media is reliable, and realizing that, in effect, it is simply a propaganda mouthpiece for leftist, secular, hostile view-points.
What Do the Protesters Want?
What do the protesters and the various media personalities want? Obviously, it's impossible to pass a law stating that anyone can prove that he or she hung-out for a number of hours in a Tel Aviv cafe or nightclub, is entitled to purchase an apartment there for half the price?!
If the government makes plans for the inexpensive sale of apartments in the center of the country, they will have to set criteria for those entitled to buy. Normally, the first in line are large families with low incomes. The protesters and media personalities will be the last one's on the list.
Apparently, the protesters are composed of three different groups. One group wants to topple the government – and it doesn't matter in which way, or for what reason. The second group supports Communist positions, repeating all the revolutionary slogans from over a hundred years ago. The third group are people who don't know exactly what they want, but, feeling distressed and without much thought, joins the 'revolution'.
Dangers of Communism
It is forbidden to disregard the dangers posed by the Communist way of thinking and style. Precisely because they come in the name of 'idealism', they have no problem ridding themselves of any moral barriers. The end justifies the means. They allow themselves to use false propaganda. The mobilization of the media, whose roots run deep in the political left, is also part of this. At present, the media is trying to create a false perception, as if life here in Israel is extremely difficult, and the entire nation is up-in-arms. Just like in all the Communist revolutions, once again, we hear how the leaders of the protests incite the people against the wealthy and the government, while scattering false promises that if they have their way, the belongings of the rich will be divided amongst the public, and that from now on, everything will be free. Such claims are enticing; the problem, however, is that, in the end, the ruler's are the only ones' who enjoy the plundered spoils. Currently, it can still be seen how the Communist system in North Korea caused the nation to deteriorate to the point of famine, encouraging tyranny and corruption, while at the same time, in South Korea, people of the same nation created a prosperous society by means of a democratic, capitalistic system. Greece also adopted an extreme, socialist approach, and the result – national bankruptcy.
Levels of Social-Welfare
Within the framework of Judaism's approach, which obligates us to take care of the poor and the weak, it's possible to lean in the direction of the socialistic approach a little bit more, or a little bit less. In other words, we must obviously help those who are not able to take care of themselves, however, the aid can be basic, or it can be generous. Assistance can be given only to people who really can't exist on their own, or also to those who find it a bit difficult to get by. Grants can be given to middle-class home-purchasers, or instead, they can be directed to the periphery. There, it's easy to buy an apartment, even without assistance.
The Arab Problem
I must admit frankly, that under different circumstances, we would probably favor the socialist approach more readily. However, because of our current national situation, where we are forced to contend with a large and hostile Arab minority, who naturally, according to any social criterion agreed upon, would be the first to receive any type of benefits – we favor the approach of tightening-the-belt. This method also has its advantages, placing more responsibility on the individual, his family, and friends.
Invest in Infrastructure and Education
The tightening-the-belt approach, which is presently our appropriate path, should be strengthened by investing in education, health, and infrastructure. Such investments benefit all – including the lower-classes. By improving education, children with poor parents can also improve their social-economic status. The development of infrastructure and roads will allow residents of the periphery to commute easily and inexpensively to business centers. Also, investment should be made in our soldiers, during and after their military spell, in compensation for their army service.
Promoting Competition, Breaking Monopolies
The difficult problem with the Israeli economy is that there are still sections – the legacy of left-wing governments – which have not been opened to free and fair competition, where exaggerated prices are being charged. For example, the media, which is still controlled as a 'cartel' by the leftists, without free competition. Moreover, a number of factories and public assets were sold (privatized) to various 'tycoons' at rock-bottom prices in lieu of ridiculously low royalties. For example, when Labour Party Minister of Finance, Biega Shochat, sold the 'Dead Sea Factories' in a lousy deal for the country, but a bargain for the Ofer brothers. Not by chance, most of these deals occurred under the socialist Labour Party, since the leftist approach encourages, unintentionally, corruption, 'protectzia', and monopolies. This is also the reason why many of the 'tycoons' prefer the left-wing government, which nurtured them. With the leftists, they know to close deals, blocking their competitors, and continuing to rake-in huge profits at the expense of the public. That's why the 'tycoons' and the media – which they own – support the protesters.
Binyamin Netanyahu
I wouldn't be disappointed if Binyamin Netanyahu lost his "throne". He has failed in his role as Prime Minister. He promised to build in Jerusalem, Judea, and Samaria, and instead, he froze construction and promised the Arabs a state in the heart of our country. Admittedly, as far as the economy is concerned, Binyamin Netanyahu, together with Minister of Finance, Yuval Shteinitz, is very good. There are still many issues which need improvement, but the general direction is correct. The economic situation of Israeli citizens today is far better than it was ten or twenty years ago, even in comparison to other developed countries. Netanyahu's weakness is that he is easily influenced by pressure. He is liable to squander many accomplishments by capitulating to the protesters.
If, in the economic arena he overcomes his tendency of being easily pressured, perhaps the Prime Minister will also be strengthened politically, returning to the legacy of his fathers', and working diligently to build Jerusalem, Judea, and Samaria.
Rabbi Eliezer Melamed is the Dean of Yeshiva Har Bracha and a prolific author on Jewish Law. Rabbi Melamed is one of the most active leaders amongst the religious-Zionist public. This article was translated from his popular weekly column "Revivim" which appears in the "Basheva" newspaper. According to official media surveys, his column is the most widely read editorial amongst the religious and ultra-Orthodox public in Israel.
That concludes Rabbi Melamed's piece. Here is my letter:
Hello. I'd like to make some brief comments about Rabbi Melamed's article, "Sensible Economics". In general, I was very pleased by this piece, and very much enjoyed it. I have some comments and criticisms, however, and I will make them piece-by-piece, in the same order as Rabbi Melamed made his statements.
I am merely a student who learned for three years in Machon Meir and is preparing to begin a BA in political science at the Hebrew University of Jerusalem, and who has been reading up on politics and economics in his free time. I claim no expertise, and I offer only what little I know, in the hope that it will help.
Judaism Favors Capitalism
I am very glad that Rabbi Melamed made the argument that generally speaking, Judaism believes in personal responsibility and free will and living with the consequences of one's own actions. The fact that socialism disincentivizes personal responsibility is a very crucial one, and I am glad that Rabbi Melamed recognizes and notifies his readers that Judaism would stand with capitalism in preaching personal responsibility.
Hindsight
Here too, I am very pleased with Rabbi Melamed. I will note that there a term in game theory (talk to Professor Aumann about this) for the fact that socialism disincentivizes personal responsibility: it is called the "tragedy of the commons". This phenomenon was named after the observation that common grazing land was almost invariably overgrazed to destruction, whereas privatized, fenced land was not. The reason is that whenever anything is made public, i.e. with equal access for everyone, then no one has any incentive to guard its long-term capital value, because everyone knows that if he does personally guard it, someone else will abuse it anyway, and so everyone figures that he himself ought to try to milk it for all it's worth before someone else does. In other words, if you do not personally own it, then you cannot personally ensure its long-term safety, and so you know that someone else will destroy it anyway, and so you figure, you may as well be the one to destroy it, and reap the profits, before someone else does. This is why, for example, we pollute the air and water: these, being public, are beyond any individual's control, and so everyone realizes that even if he, say, stops driving his car and rides a bike instead, everyone else will keep driving, and so pollution will stay virtually the same, but you will pay the cost of a longer commute, and so, you figure, you may as well drive a car too. But if you privatize something, then you personally own it, and you personally have full control over it, and so suddenly, your own efforts at conserving its long-term safety are rewarded. Imagine if everyone on earth were given his own personal supply of air and water. We would surely see everyone take special care to keep it clean and unpolluted. Similarly, fencing the common grazing lands resulted in individual owners of the divided plots taking special care to avoid overgrazing. Likewise, when forests are divided into discrete, privately-owned plots, loggers take special care to avoid chopping down too many trees, and they voluntarily will plant new trees to replace the ones they chop down.
In short, when a person must personally live with the consequences of his own actions, and when he personally is able to ensure whether something is used well or abused, he will take greater care, then when the consequences of his actions and the abuses of his neighbors are all socialized, i.e. spread equally. This is the tragedy of the commons. In short, socializing (making public) anything causes the tragedy of the commons, while privatizing it averts the tragedy. Giving the government control over the economy turns the economy from a network of individual, private transactions, into one giant public one, causing the tragedy to appear. Contrariwise, if we could figure out a way to privatize all the air and water on earth, then suddenly, pollution would be a thing of the past.
In general, humans are poor at cooperating with each other. This is a simple factor of the yetzer ha-ra, and it is no hiddush. Obviously, we must work to overcome this, but we cannot rely on miracles, and in the meantime, we should accept reality and man's nature, and deal with it. The best solutions are those that accept the yetzer ha-ra and harness it for good. So if people are poor at cooperating regarding public matters, then we ought to privatize things, and leave them up to personal responsibility. We will see that relying on human selfishness and greed will produce more wealth and prosperity than relying on altruism. Even the poor will benefit, because a businessman can profit only by selling goods that others want. The businessman will see the poor as a profitable market, and he will have to innovate and produce goods that the poor will want to buy. Any market transaction takes place only if the buyer and the seller both believe that they will personally benefit. So if a businessman wants to become rich, for example, he might invent a new car that is tremendously cheap, and all the poor people will buy one. The rich man will rake in profits, and the poor people will all have cars. Everybody wins. That is why America was historically the richest country on earth, not only for the rich, but even for the poor. To quote American free-market economist Walter E. Williams, "I praise lassez-faire capitalism as being the most moral and most productive system man has ever devised. Capitalism is relatively new in human history. Prior to capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man." Think about how Henry Ford made the automobile so inexpensive that his own factory workers were able to afford it. That was capitalism, not socialism. For another argument of how capitalism naturally results in the rich serving the needs of the poor and making the poor richer than they were before, see "Would You Give Up The Internet For 1 Million Dollars?" by The Fund for American Studies at http://www.youtube.com/watch?v=0FB0EhPM_M4 :
{Quote}
It's cheap to get online and getting cheaper all the time. We see the same pattern with many other products. Take the cell phone. When it first arrived in the 1980s, the cell phone had no apps, no music, and no Internet access--it was pretty much a brick with buttons. Yet that brick cost about $4,000, and that's why only the super rich could afford them (think Gordon Gekko in Wall Street). Today, it takes only about 40 bucks to walk home with an iPhone.{End quote}
Turns out capitalism has its own built in welfare transfer system.
"When a new product comes out we all get in line for it," says Cox. "The wealthiest people are in the front of the line and they pay the highest price for the worst version of a product." Real life Gordon Gekkos buy the products when they're expensive, and that lets the rest of us enjoy the cheaper, better versions.
Even in a lousy economy we all enjoy things, from smart phones to aspirin to air conditioning, that weren't available to the world's wealthiest people just a short while ago. And if we have access [for such a low price] to something like the Internet, something that's worth so much to us [and worth far more to us] than the price we actually pay for it], we just might be richer than we realize.
There is a second reason why socialism fails, that I believe is worth noting. This is the problem of economic calculation, first shown by economists Max Weber and Ludwig von Mises. Max Weber was a statist, a member of the German Historical School, and a proponent of big government. Nevertheless, he was a methodological individualist, meaning that he recognized that as an objective fact, humans exist while society does not. That is, contrary to his colleagues in the Historical School, who argued that society is real while humans are nothing but products of society, Weber argued that only individuals exist, and that society is a product of all the individual decisions of free-willed people. Therefore, Weber argued that as a matter of simple, scientific fact, all sociology and history and economics must be analyzed at the level of the actions of individuals, with all societies being nothing more than aggregations of individuals. Therefore, while he was a statist and a proponent of centralized government like his fellow Historical School members, he had much in common, in theory at least, with Ludwig von Mises, a free-market economist who believed in limited government based on the same theory of methodological individualism, which theory Mises called "praxeology", the study of individual human action. Weber and Mises disagreed on whether government ought to be big or small, but they both agreed on the reality that society is a product of individuals, not the other way around.
Mises and Weber both innovated the dilemma of economic calculation, which they claimed would cause socialism to collapse, and they made this prediction approximately around the end of WWII, the same time that everyone else was celebrating socialism as the wave of the future. Already at that time, however, Weber and Mises argued socialism was impossible. The reason was this: no central planner is able to know what everyone in society wants. Everyone has different needs and wants, and no one person can know it. So how can anyone centrally plan anything? The reason the economy works is that there are PRICES. Prices are how people indicate what they want. People spend their money on what they want, and avoiding buying what they do not. So people can indicate what they desire for their own happiness, by showing what they are willing to spend money one. Meanwhile, prices indicate relative scarcity of a good. A scarce good will have few suppliers and producers, and be high in price. An abundant good will have many suppliers and producers, and be low in price. So prices indicate both what people want, and how much of something there is to go around.
We do not live in the Garden of Eden, and government cannot produce something from nothing. Prices indicate what actually exists, and how much of it does. When the government artificially changes prices, it disrupts this, and creates a false signal. If it lowers the price, it will artificially signal abundance, and people will overconsume, believing there is more than there really is. For example, if the government artificially lowers the price of food, then everyone will eat too much, thinking there is more food than there really is, and so instead of rationing and scrimping and saving, people will overconsume, and we will end up with a famine, because people will discover the lie only when it is too late, and all the food is gone. If the government artificially raises the price, then people will consume less than they could, and surpluses will pointlessly pile up, with resources available but unused. Prices must be dictated by the market, so that they indicate what really is. Scarcity and abundance are caused by whatever really exists in the real world, due to God's curse on the earth, and government tampering with prices only hides this fact.
Meanwhile, prices indicate what people personally desire. Whether you pay $5 for rice or $10 for wheat, shows whether you prefer cheap rice or expensive wheat. Whether you pay $10 for wheat or $10 for a new piece of clothing, shows whether you prefer to be fed or kept warm. Whether you spend $10,000 on a used car or $20,000 on a new car, shows how much you value the newness of a car versus its simple functionality. All of our myriads of needs and desires, we indicate at the cash register, and all six billion people on earth have different needs and wants. No central government planner can know them. Entrepreneurs look at prices, and using them as indicators of customer demand, will enter markets where demand is high and they can make a profit, and leave markets where demand is low and they cannot make a profit. If prices are high, it means consumers demand that product (relative to other products, comparing by price), and so new suppliers will enter the market, increasing supply and lowering the price. If prices are low, it means that consumers do not demand that product, and so suppliers will leave that market, lowering supply and raising the price. In short, then, prices tell us not only how much of that good exists (supply), but also how much consumers desire it (demand). An equilibrium results, where supply and demand come to equal each other, and consumers purchase and consume as much of a product as actually exists (indicated by prices), and entrepreneurs strive to fill the markets with high demand and abandon the markets with low demand. If food is expensive, it means that food is scarce and in high demand, with supply falling short of demand, and so people will become farmers. If new technology makes food more abundant, then prices will fall, and some farmers will stop being farmers and find something else more profitable.
The problem with socialism, said Weber and Mises, is that destroys this entire process. Socialism destroys price mechanisms, by having not consumers, but the government, decide who should have what. Should a cow's leather be made into shoes or into belts instead? The government decides. No longer do consumers advertise their desires by paying prices, nor do prices indicate relative scarcity. No, the government decides what you ought to have. Besides being arrogant and Nimrodian, it is also impossible. No one in the government is so omniscient as to be able to know what billions of people need. The result is shortages and poverty. Not knowing what people want, there is absurd overproduction of some goods and underproduction of others. People might be swimming in shoes but be starving, because the government has no way of knowing whether people prefer shoes or food. Henry Hazlitt wrote an entire novel illustrating this problem, and the introduction to his novel, summarizing the theory of Mises, is very helpful, and is online: http://mises.org/daily/2457
That is why government generally fails to satisfy consumers. A businessman must make a profit, meaning he must satisfy actual market needs, and find actual people willing to buy from him. He must accurately gauge supply and demand, and fill a genuine market need. If he fails, he will go bankrupt. By contrast, the government taxes you, meaning it extracts the money whether you like it or not, and so it has no need to make a profit. The government has no way of knowing whether it is fulfilling genuine market needs. Ask anyone whether he believes he gets his money's worth from what his taxation pays for. Chances are, he does not. The reason is that the government cannot go bankrupt (because it can tax you against your will, and so make money without actually doing anything worthwhile or productive), so it has no way of knowing whether it is spending the money efficiently, on what people would actually like it to spend on. Maybe the government will build a grand, fine bridge. It might be a wonderful, stupendous bridge. But maybe people, if they got to keep their own money, would prefer something else instead of a bridge. The government has no way of knowing. In fact, by definition, taxation is when the government takes your money and spends it on something different than what you yourself would. That is why government never satisfies the people, except those people who receive more benefits from the government than they pay in; they are always happy.
Socialism in Judaism
Here, discussing social-welfare policies for the poor, and public education, I disagree with Rabbi Melamed. I recognize his only repeating what Jewish tradition says, and so I do not fault him. Nevertheless, I believe he is wrong. Let me explain:
The problem with government oversight of poverty-relief and education, is that *someone* must make the decisions. *Someone* must decide what must be done. And what if others disagree? Will you punish them? If you want the government to work, then yes, you must. Max Weber (whom we have already discussed) wrote, in his essay, "Politics as a Vocation", that the government is nothing more than the territorial monopoly on the legitimate use of force. That is, government is the only entity that uses physical force within a geographic area; the world is carved up into governments, with each government having one territory, and within each territory, the government has a monopoly on deciding who is allowed to wield physical power and force, and to what end. Therefore, Weber says, being a politician means using physical force against those who disagree with you. That is, if government is force, and all laws are backed by threats of punishment, then government means punishing dissidents who do not obey the law.
Weber concludes that it is *impossible* for a government to be moral and ethical. Why? Imagine you establish public education. You, of course, must enforce *your* personal standards of what good education is. But what if some disagree? Perhaps you are religious, and they are secular, or perhaps you are Haredi and they are Dati-Leumi. One way or another, someone dislikes your educational curriculum, and they do not want to pay. They merely want to keep their own money and hire their own private tutor, or send their children to a private school. But no, you cannot allow that. Being government means having a monopoly. You cannot have public education unless you have a monopoly on education. Even if you permit parents to use private schools, you must still tax them to pay for public schools. If you let them opt-out of the whole public schooling system, then your public system is really a private, voluntary one, that anyone can opt-out of. So maintaining your status as government and your public schooling system means punishing anyone who refuses to go along with your system and pay taxes to contribute to it. Even if the dissidents are justified, you must punish them anyway.
The truth is that *any* educational curriculum is parochial and biased. Whatever your weltanschauung (hashqafa) is, will be reflected in the system you establish. Perhaps for Hazal this was not clear, because everyone was a Pharisee, except for the obviously corrupt and Hellenistic and pro-Roman Sadduccees. It was therefore not clear to Hazal that public schooling is inherently tyrannical. No matter what system you establish, *someone* will disagree with it, and will not want to pay. Why do hilonim, haredim, and dati'im all send their children to different schools? Because they have different desires for education. Public schooling means forcing everyone to pay for the decisions and desires of only one party, whichever party happens to be in power. That party in power will use the force and power of government to punish anyone who refuses to comply. That is why, according to Weber, it is impossible to have moral and ethical government, because government is nothing more than using physical force against those with whom you have ideological disagreements. Punishing parents who refuse to pay taxes to a school system they dislike, is essentially the same as banning an entire religion; you are punishing disagreement in matters of belief.
Perhaps Hazal did not realize this, because in their day, there was perhaps less disagreement. Perhaps also, people in power (i.e. the rabbis in charge of education) were more moral and upstanding than they are today, and did not abuse their power. Also, it was perhaps because kehillot were smaller and more local: according to game theory, the tragedy of the commons manifests itself less in small groups, because it is easier for people to cooperate and admonish freeriders and abusers, when the group is small. In a community of only a few hundred people, it is easy to see when the rabbi is abusing his power, for example, and oust him. But in a large community, it is harder to see when someone is being lazy and freeriding, and it is more difficult to check the powers of a corrupt ruler. So today, perhaps due to yeridat ha-dorot, or perhaps because societies are so much larger and more complex than they were in the agrarian, rural past, I think it is obvious that power corrupt, and absolute power corrupts absolutely, as Lord Acton said. To allow anyone the power of deciding what ought to be taught by children, by taxing parents to support the government school system, is tyrannical, I believe.
All the same arguments go for social-welfare to help the poor, as well. Someone must decide who deserves help, and he will punish anyone who disagrees with him, anyone who wants to do tzedaqa on his own, independently.
Even if the government is right and its dissenters and opponents are wrong, those dissenters and opponents are b'shogeg. Rabbi David ibn Abi Zimra says even a heretic is not truly a heretic, if he believes what he believes, not as a pretext to sin, but as a result of honest, sincere inquiry. Those who disagree with the government on matters of public policy are honest and sincere searchers after truth, not sinners b'yad ramah. Therefore, as shogegim, it is forbidden to punish them, even if they are wrong. Only if the government can prove that someone is knowingly sinning, can they be punished. Two witnesses must say to a man, "Do you realize that by not supporting the public school system, you are harming the poor?", and he must answer, "Yes, I know, but I shall sin anyway." If, however, he answers, "I disagree. I think the public school system is flawed (for whatever reason; maybe because it misspends money inefficiently and he thinks he could do better on his own, or maybe because his religious hashqafa is different than the government's) and therefore, I do not support it", he is, at most, erring b'shogeg, and may not be punished. The halakhah has laws about when people may be punished, meant to ensure that only meizidim, not shogegim, are punished. Only if one says, "Yes, I know, but I shall sin anyway" may he be punished. For us to ignore these laws is bal tosif.
Furthermore, the Torah says individuals must help the poor, and individuals must teach their children. Nowhere does the Torah say the civil government may tax people to help the poor or support schooling. Therefore, I believe, all such systems are, once again, violations of bal tosif. The Torah says for individuals to help the needy and educate their children, not for the government to do so. If you see someone in need, whether they cannot afford bread or they cannot afford to educate their children, it is your own personal responsibility, not the government's, to rectify this. Public schooling and government welfare rob individuals of their opportunities to do mitzvot, and are furthermore violations of bal tosif.
So there are two counts of bal tosif: using the government to do things the Torah never commands the government to do, and punishing people contrary to the laws of testimony, under the halakhah.
The Boomerang-Effect of the Protests
This area is more difficult for me to assess, because I am not an economist, and so I am unqualified to provide practical solutions to economic problems. But these are my tentative thoughts:
Firstly, if the government has been robbing people and committing theft, via the Israel Land Authorities, then this must be stopped now, regardless of the consequences. If this robs people of their investments, then so be it. Justice must be done. The ILA is nothing more than a criminal band of thieves. You don't ask about the economic consequences of punishing thieves; you simply do what is just and right.
Secondly, however, we must honor the teachings of economist Frederic Bastiat, and look not only at what is seen, but also at what is unseen. What do we see? That abolishing the ILA would cause property values to plummet. Apparently, this would harm those who have already invested in real estate. But what is unseen? The fact that those who already own real estate, would not only be hurt by the fall in the value of their own property, but would also be helped by the fall in the value of everyone else's property too. For example, if you have invested in real estate, then, abolishing the ILA would cause you to lose money, but it would also make buying more property cheaper too. In the end, you could sell your own property and move somewhere else, just the same, because not only did your property fall in value, but so did everyone else's. Furthermore, the food factory would pay less money in rent, so their food prices would fall. In the end, the drop in property values would spread across the economy, affecting everyone equally. We must look not only at what is seen, but also at what is unseen.
But note that I am *not* calling for a Rome-esque distribution of free bread and circuses. I am *not* calling for land to be *free*. I am calling for the ILA to be abolished, and have land be priced by the free market, with anyone free to buy any available land for a market price. To quote the actor playing economic F. A. Hayek in the video "'Fight of the Century' Hayek vs. Keynes Rap Round 2" at http://hayekcenter.org/?p=4804, "We need stable rules and real market prices so prosperity emerges and cuts short the crisis. Give us a chance so we can discover the most valuable ways to serve one another."
Rabbi Melamed, you say, it is forbidden to harm market prices in such a drastic way". But the truth is, we do *not* have market prices. We have only the prices that the monopolistic ILA artificially sets (see what I said above, about economic calculation, and it being impossible for a central planner to know what people really want and what things are really worth). Abolishing the ILA would not harm market prices, but rather, would allow market prices to finally come into existence.
But again, I am not an economist. Hopefully, if we can all agree then on the general principles of free-markets, then we can all come together and determine a capitalistic, free-market way to solve the problem. I know more about theory than I do about how to practically solve the problems caused by socialistic violation of the theory; I know more about how capitalism works, than about how to transition from socialism to capitalism. I do not deny any of this. And in all likelihood, there *will* be pains associated with the transition. As Rav Kook tells us in Orot ha-Teshuva, change is never easy.
Market Logic
This section is a perfect illustration of the problem of economic calculation. When the ILA arbitrarily decides where to build apartments and how many, then we end up with over- and under-production in different areas. The market is not allowed to determine how many apartments are needed, and whether people prefer a high-priced apartment in the middle of the city, or else prefer a lower-priced apartment with a longer commute to the city. Without market prices, socialism results in misapprehension of what people really want, and so we end up with overproduction of what people do not want and underproduction of what they do want. Rabbi Melamed has hit the nail on the head. The ILA's policies are a perfect illustration of how government tampering with markets and market prices causes over- and under-production, surpluses and shortages, because prices indicate scarcity and abundance, supply and demand, and government interference merely obscures reality and replaces it with fiction, and by definition, therefore, can do nothing but harm.
Media Shame
and
What Do the Protesters Want?
and
Dangers of Communism
Indeed. I have no objections to Rabbi Melamed's words.
Levels of Social-Welfare
Here, I disagree with Rabbi Melamed, because, as I already argued, I find government-run social welfare to be inherently tyrannical. *Someone* must decide the standards for welfare, and he must punish all who disagree with him, even those who merely wish to nonviolently and peacefully spend their own money without hurting anyone. Max Weber is right: it is impossible to morally and ethically run a system whereby non-violent, peaceful, loving people are violently punished merely for politely disagreeing with the government, and telling it that they wish to do tzedaqa or the education of their children in their own way. I have a friend in America, a frum man - a ba'al teshuva, in fact - who tells me that he personally became a libertarian (a proponent of limited, minimalistic government) when his professor in law school told him that "all law is force". That is, every law carries a penalty for disobedience. This is fine when the law forbids murder and theft, but when the law mandates sending your money to the government's list of poor people and the government's school system, and violation of the law means sending your money to your own personal list of poor people and educating your own children yourself or assisting those of your own personal choice with the education of their children, then the use of force is not justified. It is not justified to use law and the force of punishment of violation of law, to punish those who commit non-violent, peaceful violations of the government's personal opinion. Being that all law is force, it behooves us to use the law to forbid only those things whose violations merit punishment. Murderers and thieves deserve to be punished, but those who refuse to support the public school system do not, so a law about one but not the other is in order. And again, we violate bal tosif when we punish those who honestly believe that their disobedience of the government is justified and not sinful.
The Arab Problem
I disagree with Rabbi Melamed here too. What is right is right, and what is wrong is wrong. If social welfare is good, then it is good. If it is bad, then it is bad. Either we should or else we should not have social welfare policies. Whether Arabs wish to kill us or not, is irrelevant.
Furthermore, some Arabs are Noahides, while others are not. Those who wish to commit murder are not Noahides, but those who wish to live in peace are gerim toshavim, and Vayiqra 25:35 explicitly tells us that in matters of tzedaqa, the ger toshav is equal to the Jew. So whether or not social welfare is justified or not, it makes no difference whether one is an Arab. What matters is whether he is a Noahide or not. Arabs who wish to kill us are not Noahides, but those who wish to live in peace are Noahides. Rabbi Meir Kahane already said explicitly that we must not discriminate against the authentic Noahides amongst the Arabs.
Of course, maybe it is not simple to tell which Arabs tell the truth, and which tell lies, when they claim they want peace. The same Rabbi Kahane said we may tragically have to discriminate against even the peaceful Noahides amongst the Arabs, simply because we cannot tell who is who, and for the sake of piquah nefesh, we must unfortunately paint with a broad brush. Or maybe the secular Israeli government does not care, and it will make no effort to determine which Arabs are which. Perhaps any aid to the poor, if it exists, will go equally to both kinds of Arabs, and the religious will have no ability to ensure the government keeps the halakhah in this matter. These are of course difficult and tragic issues.
Invest in Infrastructure and Education
Here, I must disagree with the rabbi. We should let consumers invest in what they really want, not in what the government thinks they ought to want. If consumers want education and healthcare and roads, then let them invest in those areas. Let consumers have what they believe will make their own lives happier.
The government cannot know what will make people happy, so either it must guess haphazardly, or else it must ignore the people. That is why governments fight so many wars: it is difficult to make the people happy, because the government cannot know what they want, but it is very easy for the government to make itself happy, and centrally-plan its own happiness. To send all the food and clothing of a whole nation off to soldiers fighting elsewhere is comparatively easy to plan and orchestrate, and the logistics are simple. Meanwhile, it increases the amount of power wielded by government authorities, and makes it easier for them to get big wages and fat kickbacks, and the joy of simply wielding power over others. Therefore, socialist John Dewey celebrated WWI and how it led to socialism in the United States, in his essay, "The Social Possibilities of War", and his once-upon-a-time-follower-and-student Randolph Bourne abandoned his teacher in disgust and said, in "The State", that "war is the health of the state", recognizing that the chief occupation of most governments is to fight wars, in order to increase the government's power.
The same John Dewey was also a pioneer in the area of education. Typically, government involvement in education will result in the government promoting a curriculum that celebrates the government. Rabbi Melamed, do you think that a government that writes the educational curriculum, will choose textbooks that mourn the Gaza Expulsion and celebrate the rabbis who demanded disobedience? Of course not. The government will write the curriculum that casts itself in the best light. According to William L. Shirer, The Rise and Fall of the Third Reich, pp. 248-249, Hitler wrote, in Mein Kampf, about "the importance of winning over and then training the youth in the service 'of a new national state.'" Shirer adds,
{Quote}
"When an opponent declares, 'I will not come over to your side,'" he [Hitler] said in a speech on November 6, 1933, "I calmly say, 'Your child belongs to us already...What are you? You will pass on. Your descendants, however, now stand in the new camp. In a short time they will know nothing else but this new community.'" And on May 1, 1937, he declared, "This new Reich will give its youth to no one, but will itself take youth and give to youth its own education and its own upbringing."{End quote}
So much for education. But let us speak a bit more about social welfare policies, and how the government will use force to ensure obedience to them: the same Shirer, writing about the same Hitler, has something to say about this too, in the same book, p. 96: "To combat socialism [in Germany, Otto von] Bismarck put through between 1883 and 1889 a program for social security far beyond anything known in other countries. It included compulsory insurance for workers against old age, sickness, accident and incapacity, and though organized by the State it was financed by employers and employees. It cannot be said that it stopped the rise of the Social Democrats or the trade unions, but it did have a profound influence on the working class in that it gradually made them value security over political freedom and caused them to see in the State, however conservative, a benefactor and a protector. Hitler, as we shall see, took full advantage of this state of mind. In this, as in other matters, he learned much from Bismarck. 'I studied Bismarck’s socialist legislation,' Hitler remarks in Mein Kampf (p. 155), 'in its intention, struggle and success.'"
So with both education and social welfare, Shirer tells us that state control over them eventually led to total tyranny. The government uses education to indoctrinate students to love the government, and it uses social welfare to ensure once again that the people love the government and rely on it as one relies on one's parents.
See also Three New Deals: Reflections on Roosevelt's America, Mussolini's Italy, and Hitler's Germany, 1933-1939, by Wolfgang Schivelbusch, showing how Roosevelt, Mussolini, and Hitler were all very similar and often praised each other; and Omnipotent Government: The Rise of the Total State and Total War, by Ludwig von Mises (the same who elsewhere pioneered the economic calculation problem), arguing that fascism and socialism are essentially the same (Nazism, i.e. National Socialism, is merely a patriotic, nationalist form of Soviet International Socialism).
Promoting Competition, Breaking Monopolies
Beautiful. Simply beautiful.
Binyamin Netanyahu
Amen.
I might add that there is a very nice and excellent piece on the issue of land shortage and high rent, at http://thesystemworks.wordpress.com/2011/07/28/why-free-markets-will-make-more-room-in-israel/
And with that, I conclude. Thank you sincerely for your attention.
P. S. I believe Rabbi Melamed would enjoy the article "Jewish Economics in the Light of Maimonides" by Dr. Walter Block, at http://www.walterblock.com/wp-content/uploads/publications/block_jewish-economics-maimonedes-1990.pdf . There, Dr. Block shows that from the standpoint of modern economics, many of the Talmud's economic provisions are unfortunately flawed. Personally, I would say that if Dr. Block is correct, then we could say that as with medicine, Hazal did not receive economics from Sinai. Hazal knew of the prohibition of theft and the commandment to be healthy, and set for their own personal, human opinions of how to be healthy and how to avoid theft, based on the medical and economic science of their day. Compare the dispute between Rambam and Rashba about tereifot; I would say we should follow the Rambam (except that with tereifot, Rambam said that we must obey the Talmud even when we know it is wrong, according to science; I would say that by contrast, with economics, there are issues of piquah nefesh that would demand we violate the Talmud if we know it is wrong, whereas with kashrut and tereifot, there is not such a danger). Therefore, in my own humble opinion, today, we ought to follow the best medical and economic science we have available, in pursuit of those very same mitzvot of saving lives and avoiding theft. Not that we should, God-forbid, abandon Torah morality for secular morality, but rather, that we should follow whatever secular science might have to say about how to follow Torah morality (assuming that science is accurate and true, and not false, as Rabbi S. R. Hirsch reminds us). We should be m'qabel et ha-emet mi-mi she-amrah, just as Hazal admitted when gentile astronomy was superior to Jewish astronomy.
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