The Israeli Water Desalination sector is based on private or semiprivate enterprises. Mekorot National Water Company, a government corporation, had been excluded from the desalination market. Mekorot operates on a cost-plus basis, and the Government pays its bills. Mekorot was found time after time cooking the books but the Finance Ministry is powerless to discipline the firm. Mekorot has been waging a publicity war against the Government's decision to exclude it from the desalination industry, accusing it of being in the pay of the "tycoons" (private groups). In the end, the Govenment agreed to allow Mekorot to build a desalination plant on the condition that its price will be equal or lower than the private plants. Mekorot found that it cannot produce water with the same efficiency and at the same cost, so increased its populist hate propaganda against private enterprise. The salaries of the CEO were published, fomenting a very ugly wave of envy against the capitalists. Shelly Yehimowitch, a left wing parlamentarian, headed a campaign against "delivering the water industry into the hands of the exploiters". It worked.
Mekorot has won its battle against the Ministry of Finance to build the Ashdod desalination plant. After refusing to accept the ministry's demand to lower the price of water from the plant to NIS 2.36 per cubic meter, the ministry today accepted Mekorot's final offer of NIS 2.40 per cubic meter of fresh water produced. The difference of NIS 0.04 per cubic meter amounts to tens of millions of shekels over Mekorot's 25-year operating license for the plant. Two weeks ago, the cabinet rejected the Ministry of Finance's request to revoke Mekorot's franchise to build the 100 million cubic meter a year Ashdod desalination plant, and ordered the ministry to settle its dispute with Mekorot.
Why the Israeli Government is granting a 25 years water supply contract to the highest bidder? Why it is favouring an inefficient State-subsidized company vis-a-vis efficient private enterprises? Is Netaniyahu socialist? He sure is not, but even he could not resist the populist forces of anticapitalism. Yehimowitch is celebrating "the saving of Israeli water industry falling into the hands of greedy capitalists". We are going to pay for her victory during the next 25 years.
2 comments:
It is increasingly clear (if it ever wasn't to those with their eyes open) that the "non-profit" or "public" sectors of the world economy operate according to the same rules of greed and enrichment of their management and stakeholders (union bosses, etc.) as ordinary "capitalist" businesses but in many ways are even worse, because A. they are effectively able to hide their greed behind a mask of "public service" which appeals to the ignorant and B. They are able to tap directly into the vein of the public's money in a way that no private business can. If the management of a private company is inept and the company shows a loss, they are replaced or the company is liquidated and its assets redeployed by someone more competent. Public entities have perpetual life and any shortfalls are made up by taxpayers or the public (in the form of higher rates which they have no choice but to pay). Instead of being the slaves of the capitalists, the public are the slaves of the government.
The US is approaching a crisis because of this - extravagant pensions and health benefits, which no longer exist in the private sector , have been promised to millions of public employees and there is no prospect of actually paying those benefits under current economic conditions. There is not even a mechanism in the bankruptcy laws for dealing with the bankruptcy of states.
K
Why should we have a non-profit (Government-owned) industrial enterprise competing with private-owned business? Moreover, when the costs of the government-owned enterprise are higher from the start?
Shelly Yehimowitch has "saved" an industry from being dominated by the hated "tycoons". The tycoons were getting too wealthy and that had to be stopped at any cost.
Post a Comment