The State Is Rich, the Citizens Pay: How the 'Economic Deep State' Works

The article argues that despite impressive macroeconomic data, Israelis do not feel wealthy due to the 'economic deep state'—a power structure of interests, regulation, and entry barriers. It cites OECD data on food market concentration, import price gaps, banking concentration, and housing problems. The article criticizes the Kaplan protest for being selective in addressing economic power centers.

The article, authored by Prof. Moshe Cohen-Eliya, argues that despite impressive macroeconomic data—4% growth and 1.8% inflation forecast by the Bank of Israel for 2026—Israelis do not feel wealthy due to the 'economic deep state.' This refers to a power structure of interests, regulation, entry barriers, and ties between institutions that has formed over decades and protects itself. The author stresses this is not a conspiracy but a seemingly legitimate power structure. He cites data: the OECD found that in 20 food categories, three suppliers account for about 84% of sales; the State Comptroller found gaps of up to 226% between prices of identical products in direct versus parallel imports; in the car market, direct importers held over 97% of the market in 2023; the five largest banking groups hold nearly all system assets, and the Competition Authority declared them a 'concentration group.' In housing, it can take 13 years from planning to occupancy. The article criticizes the Kaplan protest for being selective: it showed sensitivity to the political power of the right but sanctified unelected economic forces identified with the old hegemony. It calls for treating the cost of living as a struggle against a power structure, including opening imports, lowering entry barriers, and breaking up concentration.