digital disruption

“Ruinous Competition” and the Jewish future

Recently, a rabbi based many hundreds of miles from American Jewish University in Los Angeles (where I am President) called my colleague Rabbi Adam Greenwald to complain. A congregant, the rabbi explained, was taking an online course from AJU’s Miller Introduction to Judaism Program that Rabbi Greenwald (a vice president of our University) directs instead of a similar course taught by his synagogue. The distant rabbi argued that AJU was violating the precept of “hassagat gevul” (literally “removal of a landmark”) which originally applied to moving land dividers but has been extended over the centuries to warn against “ruinous competition” that threatens the property and commercial rights of others.

Of course, for a university based on Jewish teachings and values to be accused of violating an ancient precept is disturbing. It is especially so because the Miller Program is the most popular path for conversion in North America. While we work with more than sixty affiliated Jewish institutions (congregations and Jewish community centers) who teach the material we provide (at heavily subsidized prices) to their own members, the courses we offer directly are open to anyone. 

In fact, in the future, we plan to significantly increase the online courses offered out of Los Angeles because of the extraordinary demand that we have had for online offerings since the start of the pandemic. Our B’Yachad/Together digital platform—created in the first weeks of the pandemic to provide general education—went from nothing to more than sixty thousand registrations from people across the country and in forty-one nations, demonstrating the ability of digital programs to reach previously distant large populations in a short period of time. The probability of further tension between our digital offerings, which instantly cross boundaries and time zones, and location-based congregations seems high.

The rabbi’s complaint also raises a larger issue about how Jewish institutions like congregations that are defined geographically and that draw from local populations should respond to the disruptive forces of ubiquitous digital offerings. This is a drama that has played out repeatedly in the national economy since the dawn of the internet: Local newspapers have been bankrupted by Facebook and Google while the neighborhood bookstore has been replaced by Amazon. When I was President and CEO of the Newseum in Washington, DC, I observed how the news industry was completely unprepared for the digital disruption and responded from a position of weakness. We now know that the internet attacks local intermediaries situated between the “product” and the “consumer” with services generated at enormous scale out of Menlo Park, Mountain View and Seattle. Whether local Jewish institutions that serve as such intermediaries, now that they have been warned and observed the ruins of other neighborhood institutions, can do better is a central question for the Jewish future.

Finally, the prohibition on ruinous competition is at odds with the idea of “creative destruction” championed by Joseph Schumpeter and which is at the heart of American capitalism. The prosperity of the United States has often been tied to destruction of old industries by new enterprises and practices, to promote efficiency, better products, and lower prices. The Silicon Valley mantra of “move fast and break things” is simply the most recent update of Schumpeter’s vision, albeit with even greater expectations of the velocity of change. While Judaism has warnings against some excesses of Schumpeter’s vision, it can easily be argued that no group has profited more from the dynamism of the American economy than have the Jews. Indeed, Judaism itself has benefitted from an openness to experimentation and adaptation of new approaches, in America and in Israel.

It is useful to explore the concept of hassagat gevul because it exemplifies the tensions produced by the new economy.  The phrase was originally meant to apply to moving boundary stones or markers to take the property of others. “You shall not move your countryman’s landmark, set up by previous generations, in the property that will be allotted to you in the land that the Lord your God is giving you to possess” says Deuteronomy 19:14.  “Cursed be one who moves their fellow’s landmark” is included in the list of admonitions on Mount Ebal (Deuteronomy 27:17).

Over time, the idea of not seizing a neighbor’s land expanded to include otherwise-legitimate restrictions on competition. The Central Conference of American Rabbis noted, “Although the Biblical sources do not apply this concept to matters outside the realm of property law, it does receive such an interpretation in the classical Midrash and the Geonic literature. By the late medieval period, halachic authorities use the phrase hassagat gevul to describe unauthorized economic competition, that is, transgression against an individual’s legally valid claim to the control of a particular office or market.”

The prohibition against what came to be called “ruinous competition” evolved. Thus, it is forbidden in Bava Batra 21B for someone to open a mill near an existing store because the new venture might disrupt the livelihood of the original owner. Accordingly, in 2017, in Brooklyn, one kosher pizza owner took the owner of a new pizza restaurant to the Beit Din because the new entrant threatened his enterprise. The rabbis ordered the newer purveyor of the Italian specialty to serve “regular pizza” to differentiate it from the offerings of the original restaurant.

The issues around competition have suddenly become extremely relevant to the Jewish communal world. The pandemic has made digital learning and observance far more common than before, opening the possibility for many for the first time to participate in institutions far beyond their own communities. A fascinating statement titled “On Live Streaming and Competition,” posted by Rabbi Ariel Stofenmacher on the Rabbinical Assembly’s web site in June 2020 noted, “A new reality emerges, as the ease of cyberspace generates closeness, and every ‘virtual minyan’ and ‘virtual classroom’ is at the distance of a click in any and every computer all over the world, breaking physical boundaries and barriers. We are all now in the same neighborhood.” The post notes that the new competition gives more choices to congregants but also throws synagogues into a newly competitive world. “It is crystal clear” Rabbi Stofenmacher wrote, “that there is a tension between offering people more diverse options and allowing congregations to serve their own constituencies and to maintain their sources of institutional livelihood.”

Not surprisingly, Rabbi Stofenmacher is especially worried that the streaming of High Holiday ceremonies would challenge the finances of many synagogues  that raise much of their funds during the Days of Awe. He noted that the Talmud encouraged competition but also emphasizes the common good. He therefore invokes the concept of hassagat gevul to protect the interests of  existing synagogues.  In conclusion, “On Live Streaming and Competition,” included several suggestions, the first of which is that synagogues in an area coordinate fees to prevent price competition.  

Similarly, the Central Conference of American Rabbis, the leadership organization of the Reform Rabbinate, considered the issues around competition in a responsum titled “Solicitation of Synagogue Members by Other Jewish Organizations.” The rabbis query, “When another Jewish organization asks our members for financial support or seeks their participation in its programs or activities, does it ‘violate the boundaries’  that define and protect our synagogue community?”

They answered the potential violation of hassagat gevul by arguing that “Under certain conditions, Jewish law allows an existing business to restrain the entry into its market of a potential competitor, on the grounds that the competitor would destroy the livelihood (mekape’ach et parnasato) of the existing business. If the level of competition is not  ‘ruinous’  – that is, if the entry of the competitor would not necessarily drive the existing merchant or artisan out of business – this restriction does not apply.” The Reform rabbis argued that, short of ruinous competition, it was inappropriate to establish barriers to entry: “When we actively discourage the participation of our own members in the work of other Jewish organizations (and, indeed, in the work of agencies in the general community that feed the hungry and care for the needy), we declare that our congregation is somehow isolated from the concerns that those groups address. A good synagogue, one that is truly committed to the cause of Torah, mitzvot, gemilut chasadim, and tikun ha`olam would not send such a message to its own members and to the community at large.”

It is, of course, understandable why legacy institutions would want to assess whether the ancient prohibition on moving boundaries would  protect their core interests against new entrants. However, it is also problematic. It is very hard, as Rabbi Stofenmacher implied, to encourage innovation, especially of the scale that occurred almost instantly during the pandemic (with virtual minyans, shivas and the like), while arguing against competition. It is not only existing institutions that can innovate; indeed, they are the least likely to be successful in changing the way of doing business precisely because they have been successful in the past and will find it hard to evolve. 

Further, there is no clear definition of “ruinous competition.” If a new entrant causes a synagogue to lose 90% of its revenue, that is certainly ruinous. What about twenty or forty percent? Such declines in revenue over a short period of time would certainly be an enormous challenge and would greatly weaken many organizations, but would they be “ruinous”?  The Central Conference seemed skeptical that in most cases competition from other Jewish organizations would be truly “ruinous.” American Jewish University, or any other institution offering digital services, could not possibly calibrate its programs to only marginally hurt synagogues given that digital offerings go out to members  of literally thousands of organizations across the world. We are far from the world of two shops competing against each other on the same street.

More importantly, something is missed in the translation from moving land boundaries to preventing competition. Land ownership is certainly a zero-sum game where if the boundaries are moved, one wins and one loses in direct proportion. However, in economic competition a third actor appears:  the consumer or congregant. One organization’s ruinous competition is simply another offering a price reduction or potentially more attractive services for the consumer.  Jews or those who seek to learn more about Judaism flocking to new providers of learning is partially a sign that they have not been adequately served by the status quo. The best response by incumbents is to ask what is missing rather than suppressing the signal by contemplating limiting the competition.

The problem is especially acute because of Judaism’s existential concerns about the unaffiliated. The much cited Pew study found that only about four in ten Jews in the reported that they belong to a household where someone was a member of a synagogue. Addressing those who have not found moorings in traditional local Jewish institutions is obviously important. Yet, by trying to devise barriers to entry, legacy institutions are most likely hurting those who are currently outside the market now but who might join in if offered services by a new provider in a new way. Indeed, the statements cited above are directed to existing congregants rather than those who are not affiliated. This is hardly surprising—the existing congregants are known to the rabbis who lead them while the prospective joiners are only theoretical—but it goes to the heart of why even considering restricting competition is so deleterious to mobilizing precisely those Jews—the unaffiliated—who have incited the most concern.

A better approach would be to examine what the value proposition is of individual synagogues. They provide, or will again when the pandemic is over, face-to-face  relationships that convey empathy and support in a way that Zoom sessions cannot. No one believes that an online shiva is superior to a gathering of mourners.  On the other hand, many synagogues will be challenged to provide digital outreach for general education that has been a success during the pandemic and will undoubtedly become a permanent feature of the Jewish landscape. AJU hopes to partner with local synagogues so that the rabbis and cantors can serve their constituents on a personal basis while relying on a jointly developed digital platform that can serve a large, worldwide population. 

One of the exemptions to the ban on moving boundaries was, in fact, for the teaching of Torah (but not other religious services). It went under the wonderful expression of “kin’at sofrim marbah hokhmah,” literally, “jealousy among scribes increases wisdom.” What is needed is more competition rather than less. Rather than possessively erecting boundaries, we should be constructing abundant onramps  for people who are searching and who can be enticed to enlist, enjoy, and embrace our institutions. The Miller Program enrolled the congregant in question not because we wanted to harm the distant synagogue but because it is so important to be as accommodating as possible to someone seeking an even greater understanding of Judaism. Recasting competition in spreading Jewish knowledge as a service to an ever more diverse population that may not see their future with traditional institutions rather than a threat is one of the best ways to serve the Jewish future.

Jeffrey Herbst is President of American Jewish University in Los Angeles.