What does the Torah say about social justice?

September 2, 2011

ORIGINALLY PUBLISHED IN THE JERUSALEM POST, August 26, 2011
http://www.jpost.com/Magazine/Opinion/Article.aspx?id=235398 

By Rabbi Barry Leff

What does the Torah say about social justice?

The largely secular protesters may not know it, but they have Torah on their side.

Would the rabbis of the Talmud be out on the streets – and in the tents – with the protesters? Or would they be defending the government and the status quo? I believe they would be out in the streets and parks with the demonstrators.

The largely secular protesters may not know it, but they have Torah on their side.

It is well known that the Talmud favors a strong “safety net” for taking care of the poor. Jews have always collected and disbursed charity for their less fortunate brethren. But the current protests are not so much about the state of the safety net as they are about the cost of living. Does the Jewish tradition have something to say about that? It does. The Talmud favors an economic system that I would call “fettered capitalism.” It’s capitalism with a lot of rules and restrictions to prevent the abuses that the rabbis saw could occur when greedy people were free to exploit others because of a shortage.

And we know people are greedy; after all, the Torah cautions us that “a man’s inclination is evil from his youth.”

The Torah calls for the marketplace to be fair. There are requirements to have true and just weights. Not only that, but in Leviticus we are commanded, “You shall not defraud one another.”

The rabbis of the Talmud understand this verse as telling us that prices should be fair. A seller cannot charge more than one-sixth (15 percent) more than the market price. If he does, the sale is considered illegal and can be voided.

Of course, location, service, warranties, etc. are all part of the product and could influence what the price should be. In the interest of fairness, the rabbis of the Talmud were also concerned about under-charging. Not only is it prohibited to pay more than 15% above market value, it is prohibited to pay more than 15% less than market value. The sellers are also protected.

The Talmud also says the maximum profit should be 15%. In today’s world, any company selling consumer “necessities” that can make a 15% profit after all expenses and taxes is making quite a reasonable rate of return. Proctor and Gamble, for instance, one of the leading consumer goods companies in the world, has a 14% profit margin. Osem, one of Israel’s leading food producers, has a profit margin of less than 10%.

Hi-tech and pharmaceutical companies often earn higher returns, but they are also higher-risk.

The 15% guidelines developed by the rabbis of 2,000 years ago cannot directly be translated into a complex, modern, global economy. But the underlying principles – the values the rabbis teach us – certainly still apply.

Consumers are entitled to “reasonable” prices and protection from gouging, and vendors are entitled to make a living.

HOW DO we decide what is a reasonable price? In a global economy, we can compare the cost of living here to the cost of living in other places. By that measure, it is clear that something is broken in the Israeli economy. We are at the bottom of the affordability index for developed countries in terms of buying power compared to salaries.

Immigrants from America, such as myself, often feel taxes here are very high, but the truth is that the overall tax burden in Israel is no higher than the OECD average. Our cost-of-living problems cannot be explained simply by saying “taxes are too high.” The high cost of living is driven partly by the structure of the tax system (owning a car here costs six times as much as it does in most other countries), partly by economic concentration (the small number of family enterprises that control huge parts of the economy), and partly by governmental problems such as excessive bureaucracy, needless regulation, and flawed policies relating to releasing land for realestate development.

When there is a small number of competitors, it makes it easier to fix prices and manipulate supply chains.

As the great 18th-century economist Adam Smith said, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

The rabbis recognized this problem, and ruled that prices for staples, like wine and oil, should be fixed by an official superintendent of prices. Only for luxury goods, like spices, should prices be solely set by the market.

While most contemporary economists would say that government price-fixing is not beneficial in the long run, again we can learn from the principle: Prices for necessities are more important than for luxuries. In modern terms, this would translate into policies such as a reduction or elimination of VAT on necessities such as food.

The rabbis clearly did not approve of those who would raise prices in the marketplace. The Talmud teaches: “What was their reason for placing the [prayer for the] blessing of the years ninth [in the 18 blessings of the Shmona Esrei prayer]? R. Alexandri said: This was directed against those who raise the market price [of foodstuffs], as it is written, break the arm of the wicked; and when David said this, he said it in the ninth Psalm.”

The rabbis also frowned on people who hoarded goods, keeping them off the market to make them scarce and raise prices, and they were opposed to middlemen, because they recognized that a dealer selling to a dealer means there will be price inflation, as everyone wants to make money.

From these examples, I think it is clear that if they were alive today, the rabbis of the Talmud would be out on the front lines with protesters complaining about the cost of living. So why don’t we have more rabbis of today in the leadership of the social justice movement?

The writer is a business executive and rabbi. He serves as chairman of the Board of Directors of Rabbis for Human Rights. Opinions expressed here are his own.

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