Corruption may be spreading, becoming more entrenched and subtle. But the causes of corruption remain embarrassingly simple. The lack of legally well defined and enforced property rights enables bureaucrats to make their cronies fabulously wealthy by transferring to them assets and rights that are publicly “owned” – namely are not protected by personal property rights from political plunder. This is a great invitation to corruption.

After several decades the Treasury finally noticed that lack of competition not only costs Israeli consumers hundreds of million, probably billions, in “monopoly rents”, but is also a major reason for economic stagnation.

In his “Estimates of The Damage Caused by Lack of Competition in Several Major Sectors,” treasury economist Dr. Eldad Shidlovsky has documented, chapter and verse, the grave damage caused by lack of competition in the ports, electricity, fuel, banking, local telephony and in milk. His study “revealed” large cost differences between Israel and abroad, and a gross lack of efficiency resulting in low return on capital and large income gaps between workers employed in non-competitive enterprises and others.

The stock market voted its confidence in Benjamin Netanyahu’s appointment as Minister of Finance with a considerable rise. More surprisingly, most economic movers and shakers and many media pundits echoed this confidence, a crowd not usually friendly to Netanyahu (before every election our so called “Captains of the Economy” gather to raise funds for Labor).

Everyone praised Netanyahu’s abilities, and even the fact that he has a very definite economic philosophy, a belief in free markets that usually sends shivers through their spines, since so many of them profit from the Israeli monopolies that are anathema to free markets.

The just-inaugurated Lauder School of Government’s conference on Assessing Israel’s National Strength comes at a propitious moment. Israel faces grave problems, and both its internal and external policies seem confused and wavering. It is therefore vital for key government, defense, industry and public figures to reconsider such basic issues as the components of national strength, the strategic environment, and what the peace process has achieved.