> The social cost of the occupation > by Nehemia Strasler > Ha'aretz > > This week the parliamentary commission that investigated social disparities > in Israel published a 55-page report dealing with the reasons for the > increase in the socioeconomic gaps in Israel over the past 20 years. Even > though the commission included all the Knesset members who describe > themselves as "socially oriented" - from the chairman, Ran Cohen (Meretz) > to the militant Amir Peretz (One Nation) - they arrived at the same > conclusion as the wicked economists did years ago: The Israeli economy has > exhausted its ability to raise taxes on work and to increase the transfer > payments. > > It turns out that even though the social service budgets (education, > health, housing, immigrant absorption and National Insurance Institute > allowances) increased dramatically in the past 20 years (from 28 percent of > the state budget 20 years ago to 54 percent today), the social gaps only > became wider, with the result that Israel now finds itself in an especially > bad place in terms of inequality between rich and poor. > > About 30 or 40 years ago, Israeli society was marked by greater equality. > But the past 20 years saw a very large increase in the gaps in economic > income - meaning income from work, capital and pensions. In 1979 the index > that measures the level of inequality stood at 0.43, whereas in 2001, it > had risen to the dangerous level of 0.53. How did this happen? > > l The territories. Israel invests prodigious sums in the territories, in > building settlements, constructing bypass roads, maintaining the security > of the settlers, and giving them benefits of various kinds and tax breaks. > Obviously, if a preferred group is given surplus resources, there is no > money left for the other missions. Owing to political limitations resulting > from the composition of the parliamentary commission headed by MK Cohen, it > did not address this central point. > > l The war. The situation in which the economy has found itself in the past > two years precludes the renewal of growth. As a result, unemployment will > increase and with it, inequality. When the state of war continues, and even > gets worse, there is no chance that the economy will be able to escape the > recession. In other words, the political-security situation is highly > instrumental in causing the gaps in the society. > > l The infrastructure. Owing to the huge investments in the territories and > the administration of the war, not enough money remains to invest in the > physical infrastructure - highways, interchanges, sewerage, water - > creating a situation in which the periphery (mainly the south of the > country) lags behind, cut off from the center, adversely affecting quality > of life and making it very difficult for residents there to find good jobs > in the center. > > l Education. Not enough money remains to improve the educational level in > the periphery. The farther one gets from the center, the lower the level of > education. The direct connection between level of education and level of > income has already been proved. > > l The foreign workers. The entry of large numbers of foreign workers into > Israel in the mid-1990s, instead of the Palestinians, had the effect of > lowering the wages of manual workers, as the foreigners were willing to > work for extremely low pay. The result was that the foreign workers pushed > the manual workers into the cycle of unemployment, in which they became > recipients of guaranteed income payments. Instead of the state ensuring > that hiring a foreign worker would be expensive and not worthwhile, the > current situation is the exact opposite. Today it is 40 percent cheaper to > employ a foreign worker than to employ an Israeli, and just a few days ago, > the Knesset's Labor and Social Affairs Committee blocked a proposal to > impose a levy on the hiring of a foreign worker, because the interests of > the manpower companies (some of whose owners have close ties to > government), the contractors and the farmers are stronger than all the talk > about the battle against unemployment. > > l The ultra-Orthodox. Eighty percent of ultra-Orthodox men do not work - a > dramatic increase from 50 percent in the 1980s. They live in poverty as > yeshiva students at the expense of the state budget. Indeed, even if they > want to do productive work they are unable to fulfill their wish, as the > schools they attended did not teach them the essential subjects for earning > a respectable living: neither English nor mathematics, neither history nor > the sciences. > > When the gaps between the rich and the poor constantly increased during the > past two decades, the state came up with a clever idea to salve its > conscience: raising taxes on work and diverting the money to increasing the > transfer payments, especially the National Insurance Institute (social > security) allowances. > > However, it turns out that this far-fetched solution failed. Despite the > high taxes that are imposed mainly on the two highest socioeconomic > percentiles, and despite the very large transfer payments to the lower > percentiles, the level of inequality in terms of available income was also > aggravated in the past 20 years. The result is that today, the taxes paid > by a working person are so high that they undermine the desire to work and > initiate business, and they encourage emigration, too. At the same time, a > generation has grown up here that has become accustomed to living on > allowances and on guaranteed income without working - and these gaps are > still increasing and thus unraveling the delicate fabric of the society. > > > > > > > > > > > > > > > > >
