The Challenge of Wealth
By Dr. Meir Tamari
RESPONSA, NASO for the week, 1-6 Sivan, 5763.
It may well be that the general pro-free entry attitude that we have seen
in the previous responsa, would alter when considering the free entry of
foreign firms or entrepreneurs. One could argue that the principle of each
person being entitled to do with their property as they like, that is the
basis for free entry, would only apply to local citizens, who after all
have the equal rights of neighbors. Foreigners, from another neighborhood,
another city or another country, should not necessarily enjoy these same
rights. They can be presented as taking away jobs or businesses from the
locals. This is the argument used to-day, to protect local industry through
tariffs, quotas or exaggerated quality requirements. It is also used to
prevent immigration and trading bloc agreements.
The problem in essence is whether the local people and entrepreneurs have
acquired a moral or property right that would prevent foreigners from
competing with them. If so, then such competition would be considered
theft. Additionally, even if this is so, there is the question of whether
it is to the public's benefit to uphold such competition.
Already in Talmudic days, the opinion of Rabbi Huna the son of Yehoshua had
become the halakhic decision (Baba Bathra 21b). This opinion was that a
foreigner had the full rights of residence including those of an economic
nature, provided he paid the taxes applicable in that community. Still,
even given the opinion that they had the right to trade, still left open
the question of the competition through the lower wages or the lower prices
of the foreigners.
Although it is easy to see these responsa as pertaining to small
communities and to question their applicability in our modern global
village, yet there are general principles that make them extremely
relevant. After all, basically the issues remain the same a typical
responsum regarding the price competition offered by new foreign firms is
that of Rabbi Avraham ben Moshe di Boton of 16th century Salonika.
Reuven, a tailor from one of the neighboring villages has come to settle in
our town. In the village his expenses were minimal and the average cost of
living low, so he is accustomed to working cheaply. Now he undertakes work
in our town 50% below the prevailing price. The other tailors now complain
that they are unable to match his prices because their costs are high and
he is therefore stealing their livelihood. Can they prevent him from
operating here or order him to charge the same prices as they are doing?
From a legal point of your view, the townspeople cannot prevent him from
lowering his prices. This is the opinion of Rabbi Yosef ibn Migas.
[This opinion expressed in his commentary on the Talmud (Chidushin Baba
Bathra,21b) is based on the understanding that locals can prevent outsiders
from opening similar businesses, even if they pay the applicable taxes,
only on condition that there is no loss caused to consumers. If, however,
they offer the same goods more cheaply or provide goods and services of
better quality, then they cannot be prevented from operating. The reason
for this is that one cannot make a ruling that will benefit a minority part
of the population, in this case the local businessmen, at the expense of
the majority, the consumers. The opinion of Ri Migas remains the benchmark
ruling to this day, and is understandable in view of the communal-national
character of Judaism).
Even according to the Nimukei Yosef that this rule only applies where the
price differential is very great, surely there cannot be a greater one than
in our case. It is true that it is arguable that there are authorities who
offer an opposing view. Still these arguments are insufficient to prevent
Lechem Rav, section 216.
The right to of the foreigners to compete with the locals, provided they
paid the local taxes, is enshrined in all the Codes. To of allowed freedom
of entry without the corresponding tax liability, would be immoral as well
as unfair. Applied to contemporary context, this ruling would argue in
favor of payment of out-of-state taxes or city taxes, by those from other
localities who wished to earn their livelihood in another particular state
There were certain types of competition that were allowed even if the
entrepreneurs did not participate in the tax burden. The relevant section
in the Talmud (Baba Bathra 21b) mentions that in the days of Ezra the
Scribe [circa 500 B.C.E], peddlers were allowed to wander freely from city
to city without paying taxes, "so that the daughters of Israel should not
lack for jewelry and cosmetics". On market days, out-of-city merchants
were allowed to display their goods without becoming liable for municipal
taxes, despite the complaints of local merchants. In view of the status
accorded to Torah scholars in Judaism and in order to encourage the study
of Torah by providing the economic basis for their settlement in the town,
such scholars enjoyed free competition without the constraint of taxes.
Copyright © 2002 by Rabbi Meir Tamari and Project Genesis, Inc.
Dr. Tamari is a renowned economist, Jewish scholar, and founder of the Center For Business Ethics (www.besr.org) in Jerusalem.