Lights and Shadows in the Market Economy

The introduction summarizes some of the main issues and findings covered in the book. The first section relates this volume to its two predecessors, arguing that while the last two decades signaled the fulfillment of many of the hopes raised in the previous volumes, the economy still suffers from many of the maladies highlighted in them, including low levels of productivity and high levels of inequality. Section 1.2 is concerned with the background to local economic developments, including the massive immigration wave of the 1990s and fluctuations in the conflict with the Palestinians and in the global economy. Section 1.3 discusses the reduction in government expenditures and taxes and the reaction of monetary policy to the global financial crisis. Section 1.4 summarizes the main structural reforms aiming to reduce government intervention and increase business sector competition, as well as the attempt to reduce economy-wide concentration. Section 1.5 focuses on economic growth and its determinants: changes in employment, physical and human capital, and productivity. The final section highlights two issues: (a) the improvement of Israel’s level of economic freedom and its position relative to other rich countries and (b) the increase of inequality in income and the deterioration of social services.