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Enjoy your books while you can afford it!

At a time when Israelis are struggling to pay for their food and housing, the Knesset is about to adopt a new bill that would make reading a much more expensive hobby. The bill aims to prevent bookstores from offering discounts on new books for a certain number of years after their publication.
Increasing the price of books through legislation is probably one of the worst ideas of the year from our politicians.

The false logic behind this bill is to guarantee revenues to authors, so they can create and preserve the national literature. In reality, price fixing will most probably result in less books being sold and even less revenues for authors. After all, the law can prevent books being sold at low prices but cannot force individuals to buy books at any price. Banning discounts on books will also disproportionally hurt the less well off, reinforcing social inequalities through regulation.

Today, many families wait for special discounts (four for NIS 100) to buy books for their children. Tomorrow those same families will have to make do with fewer books. I found the refusal by high-profile Israeli writers such as David Grossman and Amos Oz to have their books discounted during book week to be simply shameful. It is a sad reality when successful authors equate accessibility with humiliation. I guess they would rather be read only by the elites.

The idea of price control on books isn’t new. Israel flirted with the idea a couple of years ago and similar laws have governed countries like France and Germany for a very long time.

Other countries like the United Kingdom and Finland had a policy of price fixing but decided to end it. Book market policies center around two issues: the demand for books and the supply. The most desirable outcomes are to increase the number of people that read and buy books and at the same time to encourage writer creativity to preserve national culture. Looking at international data, it is quite clear that the countries that best achieved those goals are the ones that adopted free pricing policies.

FROM AROUND 1900 to 1997, the UK had a policy of price fixing (very similar to the one proposed today in Israel), called Resale Price Maintenance on books (RPV). Since 1997, when the UK got rid of the RPM, the sale of books dramatically increased. This increase was due to the entry of new bookstores (online or supermarkets) driving the price of books down and therefore increasing sales.

The price of books in the UK decreased by 17 percent for bestsellers and 3.3% for “deep range” titles. More people bought more books regardless of their family income. I think we can all agree this is a positive outcome. If we did choose to introduce a price fixing in the Israeli market, the average price of books will go up and the average Israeli household will buy fewer books and therefore will have less exposure to literature and culture. This is a very important point in a society where youngsters fail in schools and are more prone to download a free movie from the Internet then spend 100 NIS on literature.

Author creativity is also stimulated in a free price environment. The number of new titles per capita a year, a common measure for creativity, is much higher in countries without a price fixing policy. Finland, which adopted a free price policy in 1970, has an average of 2.5 new titles per capita per year compared to countries with price fixing like France (0.6), Germany (0.9) and Italy (0.6). Finland is a good example for Israel; it has a comparable population size, has two official languages and few people around the world read Finnish.

Increasing the price of books through legislation is probably one the worst ideas of the year from our politicians. The most likely outcomes are a decrease in book sales and a reduction in creativity. Even if Israeli households were to keep their book budget constant, they will own fewer books and will become more bestseller- oriented. One may want to take a risk on a new author at a price X, but not at price X plus 30 percent.

The higher prices may also discourage book purchasing in general, with households substituting their book budget with another, cheaper form of entertainment. New authors and the ones that don’t make it to the bestseller list will be the first to be hurt by price fixing. I guess Grossman and Oz have done their homework.

Today, the book market in Israel is booming and Israelis read more now than ever before. Thirty-five million books are sold, and almost 7,500 new titles added annually, and the creativity ratio is 1.14. Yes, reading and literature have become affordable to all. It is a shame that Limor Livnat, and a few successful authors, find this result distasteful and miss the old days when access to culture was restricted to the very few that could afford it.

The writer is the director of the Jerusalem Institute for Market Studies (JIMS).