Professor Yossi Spiegel: Israel’s Real Economic Problem Lies With Government, Not 'Deep State'

Professor Moshe Cohen-Eliya recently argued in Maariv that despite Israel's strong macroeconomic indicators, ordinary Israelis feel financially strained due to high costs of food, housing, and cars. He attributes this to a structural issue he terms the "economic deep state," a network of entrenched interests, regulations, and institutional ties that protect established players and hinder competition. Cohen-Eliya criticizes the selective nature of the 2011 Kaplan protest movement, which he says failed to address these economic power centers effectively, thereby allowing monopolistic forces to persist.

However, Professor Yossi Spiegel counters that the real locus of power to change these economic conditions lies with the government, not an opaque "deep state." He points out that the government is responsible for opening markets to imports, lowering entry barriers, dismantling concentration, regulating revolving doors, accelerating planning and construction, and fostering competition. Since 2009, Benjamin Netanyahu has led the government (except for a brief 18-month break), supported by ministers like Israel Katz, Haim Katz, Yariv Levin, Miri Regev, and Gila Gamliel, all part of what Cohen-Eliya calls the "old hegemony."

Spiegel argues that if the government had acted decisively on these issues, the cost of living would not be as high as it is today. He emphasizes that the government, not protest movements or citizens, holds the power and responsibility to address the economic challenges. Given Netanyahu’s long tenure and his own admission that reforms should be done early in a term, Spiegel suggests it is unlikely the current government will resolve these problems. Ultimately, the economic deep state is visible in everyday expenses and media, where government representatives are prominent, underscoring that the government is the proper target for accountability and reform.