Yoav Fisher
Father, Economist

This Is Your Future

Wars are intensely emotional.  They bring out the rawest gut reactions like sadness, despair, fear, panic, or revenge.  These emotions are immediate and urgent, but they cloud or perceptions, entrenching us in base ideologies about the situation.

Naturally it is difficult to think about the future in a logical, objective way.  But it is exactly during times of crisis that it is important to try and think rationally about the long term, lest we make potentially damaging decisions based on our gut and not our heads.  So let’s leave aside our emotions and ideologies for a second and thing about the long term from a purely logical, almost economic, point of view.

But what is this future?  As David Horowitz reported, according to Netanyahu the future is pretty much the status quo.  Netanyahu casually admitted that due to rapidly expanding Islamic extremism, Israel cannot afford to leave the West Bank.  Jeffrey Goldberg correctly pointed out in his follow up article in The Atlantic:  “Netanyahu’s comments are the rhetorical equivalent of settlement expansion in the West Bank.”

But what does it really mean if the current settlement policy plays out for the next ten, fifteen, or twenty years?

In order to maintain a growing Israeli presence in the West Bank, more money will be poured into the infrastructure to maintain the population.  Ten billion dollars were poured into the settlements between 1967 and 2003 for an estimated population of 230,000.  An addition 170,000 settlers joined between 2003 and 2010, which cost the government an additional seven billion dollars.  If past growth rates continued for the next fifteen years, the total population of Israelis settlers would reach one million people, at an additional cost of twenty-five billion dollars.

This additional population will undoubtedly increase the friction with the Palestinian population, which means a continuous military presence and billions of shekels more to defense.

But where will this money come from?  The Israeli coffer is only so large.  Money has been allocated directly (and sometimes covertly) to the settlements for years, arguably to the detriment of other national interests.  The once-lauded educational system of Israel has drastically decreased in quality of the recent years.  Expenditure per student is far below the OECD average, and the most recent survey results paint a fairly bleak future, particularly pertaining to educational opportunities between the rich and the poor.

But not just education will suffer.  As the Taub Center reported in 2010, total public expenditure, excluding defense and interest payments, has continuously decreased over the past decade.  Even the seemingly infallible health system has been showing cracks.

Undoubtedly, some of the money will come in the form of taxes from the working population.  Unfortunately, the long term future of Israel is worrying from this perspective as well.  A study by the Ministry of Industry, Trade, and Labor found that labor force participation will decrease by 6% by 2030, meaning that if current labor and demographic trends remain, the secular and non-Haredi population in Israel will have to support an increasing amount of Haredi and Arab citizens.  Though there are plans in motion to increase labor force participation for these two groups, (full disclosure – as an economic consultant I have worked on some of the projects currently being proposed in the government) they will barely make a dent in the future tax burden of the working population.

There is no question that maintaining the status quo of Netanyahu’s policy regarding the settlements will require significant financial support.  This will greatly strain the average Israeli through increased personal and corporate taxes, and will further decay the quality of the remaining national interests.

The only alternative is to change the status quo.  There are four options: the end of Israel, the end of the Palestinians, a one-state solution, or a two-state solution.  The first two options are so extreme as to be irrelevant.  Binationalism, in the form of one state, is impractical.  As Goldberg points out, it is highly doubtful that Palestinians will agree to be second-class Israeli citizens.  It is also highly doubtful that Israelis are willing to risk their Jewish majority.  By process of elimination, the only viable option is a two-state solution, the details of which have been hashed out enough times to be tangible.

Those who have read this far will rightly point out that the West Bank is very different from the current conflict in Gaza with Hamas.  But any change in policy in the West Bank will have immediate repercussions in Gaza as well.  As William Saletan notes in Slate, many of the countries criticizing Israel have never “put their money where their mouth is” regarding Hamas.  A policy shift over settlements would create an unavoidable paradigm shift whereby Israel would no longer be on the receiving end of widespread scorn, whether deserved or not.  Concrete evidence of a move toward a two-state solution would undoubtedly give Israel support in their claims against Hamas and a legitimate bargaining chip in their dealings with other countries.

The question remains, when will those politicians who push for continued settlement activity, and the people who support them, realize that their ideology is ultimately unsustainable for the future of Israel.  From an objective and economic perspective, the prognosis for the average Israeli is bleak in the coming twenty years, and every day that the status quo remains brings Israel that much closer to being unlivable.  Removing Israelis from their homes is in the settlements is tragic, but we are quickly reaching the point of no return.  We must decide today whether Netanyahu’s status quo, and the ideology behind it, is worth sacrificing the long term future of the country as a whole.

About the Author
Yoav Fisher lives and works in Israel.