Taking From Israelis, Giving to the Settlers

Ayelet Shaked is a passionate devotee of free market economics, except for when it comes to the territories

Justice Minister Ayelet Shaked.
Emil Salman

Justice Minister Ayelet Shaked is part of a cult. The guru is Milton Friedman and the church is market economics. Its message never changes, and to hell with the changing reality: the government must never intervene.

Speaking at a conference last week, Shaked said that for as long as it is up to her, the law limiting executive pay will never be broadened. She feels that salaries in the banking sector will be straightened out the moment there’s more competition between the banks, just as executive pay straightened out the cellular communication companies. “This process is going to happen without the need for 120 hands to vote in the Knesset,” she said, adding, “All it will take is one hand: the invisible hand of the free market.”

Did Shaked forget that the “invisible hand” had been connected to then-Communications Minister Moshe Kahlon, who spearheaded reform of the cellular companies? It seems that if it were up to her, Shaked would have waited for the cellular companies (as “market forces”) to encounter competition and then voluntarily lower their executives’ salaries.

Shaked also quoted economist Joseph Salerno’s spot-the-difference lecture “Bomb Damage or Rent Control,” saying that aerial photographs of neighborhoods where rent control had been imposed looked like neighborhoods that had been bombed from the air.

The comparison is infuriating, especially coming from a minister whose nation has bombed entire neighborhoods in Gaza from the air – and is also wrong. In some of the most popular cities in the world, there is some sort of supervision over the rental market. But Shaked is insistent: the government must not intervene.

By the way, Shaked isn’t alone. She has a fan in Haaretz Op-Ed writer Nehemia Shtrasler. Last week (writing in Haaretz Hebrew), Shtrasler applauded her, writing: “The moment supervision is imposed and rent can’t be raised, landlords will stop investing in the property.”

Shtrasler, who probably hasn’t lived in a rental property for the past 30 years, is welcome to join me on a tour of urban housing. Together, we can tour the crumbling buildings and meet the tenants who are begging the landlord to send a professional handyman, or at least share in the cost of repairs, in vain. And then, as he shakes with shock, I will tell him that all the homes we saw were rented out without government supervision. He will say that it can’t be: in the absence of regulation, landlords improve their properties. I will show him a 12-meter-square (130-square-feet) apartment with the toilet in the kitchenette and Shtrasler will flee, cursing communism and bolshevism – because apartments like that cannot possibly be the result of market economics.

There is one area where Shaked has become more flexible, though: the settlements. Here, the government must intervene, and heavily. She reduces the people of Israel to fighting each other over crumbs; any benefit to one is at the expense of the other. But in the territories, the state bears sole responsibility and is the exclusive financier. It paves roads and builds; it educates and employs.

Just as the “free market” takes from the poor and gives to the rich, Shaked and the government take from Israelis and give to the settlers. The settlements are a bottomless pit and would die without artificial respiration – in the form of billions of shekels a year – emptying of most of their residents, who were mainly seeking quality of life at low cost, not the messiah.

For the bottomless pit of the settlements, Shaked is abandoning her economic principles and, while she’s about it, smashing the justice system, the institutions of civil society and the tiny pockets of solidarity that still remain. And while he is applauding Ayelet Shaked, will Shtrasler stop to think about that?