Wednesday, January 03, 2007

Steal from the poor, give to the rich

Bank of Israel governor Stanley Fischer (Source: Bank of Israel)

UPDATE: The full interview is now up (Friday).

In an interview that will appear in the Ha'aretz Magazine on Friday, Stanley Fischer, the governor of the Bank of Israel (equivalent to America's Federal Reserve) confirms what many Israeli families have felt for a long time. Israeli banks are squeezing the little guy to offer better terms to the rich:
"In comparison to the international sphere, the big companies get credit at very good terms," he said. "Someone else pays for that. It's a case of cross-subsidization. The margin in one sector would appear to fund the margin in the second sector and subsidize it."
There is a widespread perception in Israeli society that the gap between ordinary people and members of the political and business elites has widened dramatically in the past decades. Many middle and working class families express frustration about the high levels of taxation (financial and social) that they have to endure, while a small class of very wealthy people drives around in American SUVs and sends its children to foreign universities.

The Tax Authority bribery scandal now in the news headlines will likely further strengthen this frustration. It is neither the first nor the last big-time corruption case involving the highest echelons of the state and big business.

2 comments:

Greg said...

Haven't you heard of economies of scale? Or buying power? Sounds like sour grapes to me.

Amos said...

Greg,
Yah, I've heard of them. I know the post sounded a bit populist, but the criticism about the banks was made by Stanley Fischer, not Fidel Castro. I don't know how familiar you are with life in Israel - it's a fact that many middle class families are feeling squeezed. In the case of the banking sector, the answer is more competition.