Sunday, July 31, 2011

Social unrest

It was the best of times, it was the worst of times. OK, I know that's been used before, but it neatly sums up our situation. The Israeli economy has been going gang-busters, with the shekel strengthening against the dollar and other currencies and the hi-tech sector booming. But, at the same time, we are the victim of our own success. The cost of apartments has been sky-rocketing and there is significant social unprest.

Currently there are three main sources of unrest, the high cost of real estate, the low pay of doctors and nurses and the high cost of milk products, including the high cost of bringing up babies. The real-estate problem has spawned a series of tent-cities in our towns, huge ones in Tel Aviv and Jerusalem and most other big cities. The doctors have been on strike on and off for a few weeks, and there is a march of some doctors to Jerusalem, with the Head of the doctor's union on hunger strike until the problem of salaries is solved. Today there was the first march of the strollers in Tel Aviv, where a few hundred mothers with strollers paraded to demand lower costs for the bringing up of babies. To an outsider it might look as if Israeli society is in crisis and that is certainly what the student's groups and unions would have you believe. But, it's not that bad. Perhaps, the advent of summer, the fact that the students are not occupied, and that the idea of the "Arab Spring" has led to the "Israeli summer." But, these are not desperate demonstrations, like those occuring in Syria where people are desperate for change and where the Army is shooting people down at will.

Since we live in a capitalist democracy, anyone can demonstrate whenever they like and strike. Last night approximately 150,000 people marched in Tel Aviv and Jerusalem to demand the Government intervene to satisfy their demands: lower taxes, increased salaries, affordable housing, reduced gas taxes, lower milk costs, cheaper medicine, etc., etc. But, no Government can overnight make 100,000 cheap rent apartments available, and this crisis started long before the current Government's tenure. The response of the Netanyahu Government has been measured and practical, making Government land available at cheaper cost, mandating that a certain proportion of low cost housing be included in every development, requiring the universities to build more dormitory apartments, and so on. The fact that most of the demonstrators reject these responses out-of-had shows that this has become a politcally motivated movement, with the unions actively involved in trying to bring down the Netanyahu Government. At present the Labor Party is moribund, with its leader Ehud Barak (currently visiting the US) havng broken off and formed his own faction called "Independence." Maybe this social movement will result in the recovery of the Labor Party along its original lines. But, who can tell.

One reason the cost of apartments is so high in Israel, apart from the economy, are the foreign buyers. This is not unique to Israel, but is a strong feature of the Israeli situation. Currently many Jewish foreigners, particularly the French, are buying apartments here, either as holiday homes, or for investment, or as a hedge against future anti-Semitic trends. This leaves many apartments owned but empty for up to years at a time. Whole buildings in Netanya and Jerusalem stand empty because of this, while students cannot afford rents anywhere. But, nothing can be done about this while contractors are building apartment blocks and can sell them at high prices.

If Netanyahu can survive the storm and the summer ends, by the Autumn the students will return to class, the mothers will go back to tending their babies, and people will start to calculate again how much they need to buy an apartment. If enough people can't afford to buy them, then the prices will ultimately come down. It's the hard lesson of the open market, supply and demand.


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