The wealth gap and the housing bubble

|
With all the publicity that the housing protests in Tel Aviv have been getting over the past few weeks, you'd think the story behind them would have crystallized by now into something resembling coherence or at least consistency.  It hasn't.

The tent cities are a spontaneous and apolitical expression of frustration by Israelis who can no longer afford decent housing.  No, they're a camouflage designed to sneak an increasingly marginalized left-wing agenda back toward center stage.  The protests are irrelevant to the concerns of the Arab and ultra-Orthodox poor in Israel.  No, the haredim, at least, support them but are deliberately keeping a low profile.  The "real" impetus behind the protests is the rapidly increasing gap between rich and poor, remediation of which requires a return to a welfare economy via substantial increases in both entitlements for the middle class and taxes on the "tycoons."  Because that's worked out so well for Europe, you see.  And it's still not clear whether Daphne Leef, who apparently started the whole thing on Facebook, was hit with a rent increase she felt she couldn't afford or forced out of her apartment due to upcoming renovations.

I expect there is some truth to all of the above, but most accounts now point to these protests having been initiated, at least, by a few bored middle class Tel Avivis who were being priced out of the hip TA market (largely, I suspect, by foreigners who don't even live there more than a few weeks a year and speculators who are deliberately driving prices up).  Dafne Leef herself, a video editor for the New Israel Fund, is an interesting case in point.  I saw an article recently (unfortunately, I can't find it now) that basically said the vast majority of the protesters will be gone as soon as the summer ends and the truly poor will not participate in any benefits that are extracted.  That sounds about right to me.

But regardless of the original motives for the protests, the media and the left fringe have jumped all over this thing like flies on honey and many are (no surprise here) using it to push a different agenda.  "Pivoting," one might say: While we're on the subject of social justice in Israel ... how about those settlements?

As for the wealth gap, yes, it is real and it is a problem.  This report, published in 2009, showed Israel running fourth (behind Hong Kong, Singapore and ... the U.S.) in income inequality among advanced economies.  But the fact is that these statistics are grossly distorted as well as manipulated.  A significant percentage of the impoverished in Israel are ultra-Orthodox (haredim) who do not work but have up to a dozen or more kids.  There is also a huge underground economy, especially in the Arab sector (and some say in the haredi sector as well), that doesn't get counted in these surveys.  That's not to say that the wealth gap isn't a serious problem (again, it is) but the left, including the very wealthy left, are using it very cynically as a tool to get their agenda back on the table and the deployment of these statistics to do it is both disingenuous and hypocritical.

And even with the housing bubble, also without question a real, serious problem, there is more than immediately meets the eye.  This report, from last January, shows that the spike in prices has been anything but steady and attributes much of it to speculation, lower interest rates and insufficient supply to meet the growing demand.  One does not dare to suggest to the tent protesters that the solution to the latter problem lies not in increasing housing subsidies but in providing incentives (and removing obstacles) to increased construction. 

A closing observation.  Any number of reports on these protests cite the increasing difficulty of finding affordable housing for young couples.  As I recall, that was a problem back in the 70s as well.  In fact, at that time it was common for newly married urban Israelis to wait a year or more before they could even think about moving into their own space (unless, of course, they were willing to relocate to a development town) and then a few more months before they could hope to have phone service.  (Almost) everything old is new again.  But back then, people didn't complain nearly as much.  This says both good and not-so-good things about the path Israeli society has taken in the last thirty years. 

About this Entry

This page contains a single entry by Lynn B. published on August 15, 2011 6:15 PM.

Stranger than fiction was the previous entry in this blog.

Kudos to Barry Rubin is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.

Contact

email: lynn-b at this domain name
IS IT PEACE YET???

Monthly Archives

Pages

Powered by Movable Type 4.31-en