The Cost of Our 'United' Jerusalem

Could the latest wave of terror attacks in the city actually be good for the economy?

Nehemia Shtrasler
Nehemia Shtrasler
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A concrete wall erected in East Jerusalem's Jabal Mukkaber neighborhood, October 18, 2015.
A concrete wall erected in East Jerusalem's Jabal Mukkaber neighborhood, October 18, 2015.Credit: Olivier Fitoussi
Nehemia Shtrasler
Nehemia Shtrasler

Israel Katz was enraged, Ze’ev Elkin protested and Naftali Bennett objected — that’s how Benjamin Netanyahu discovered that he’s no longer the greatest patriot of Jerusalem. There are bigger ones: Katz, Elkin and Bennett, the politicians who refuse, under any circumstances, to divide the city with a wall between the neighborhoods of Armon Hanatziv and Jabal Mukkaber. They are really all for Jerusalem. Not as it is, but rather for the Greater Jerusalem, united and serene. And so Netanyahu, the former patriot, was forced to give in and cancel his plans to build that wall.

Aside from the political and security aspects of building a wall, the move would also have economic significance. In that respect, it’s similar to the economic impact of the recent increase in demand for security guards, enrollment in self-defense classes, and the special bonuses being paid out to Israel Police personnel in Jerusalem. All of these things increase domestic production. More economic activity leads to more jobs, more income. So perhaps the wave of terror attacks is actually good for the economy?

A quick look at data from around the world shows that we’re in a pretty good state, in terms of domestic production. This year, the GDP per capita is $36,000, which ranks 22nd, worldwide. So although we’re behind the advanced, Western countries, we’re ahead of countries like Japan, Italy, South Korea, Spain, Portugal, Cyprus and Greece – not to mention the Asian and African countries.

But the world travelers among us probably cannot fathom this information. It simply cannot be that we have such a high ranking in terms of quality of living. It’s too good to be true.

And yes, the doubts are legitimate. If instead of looking at domestic production as a measure for standard of living, we look at national consumption rates as well as the portion of the government budget allocated to social and welfare initiatives, the picture is much grayer.

Every new security guard that shows up for work, every company that produces concrete blocks and places them outside Arab neighborhoods, and every bonus paid out to Jerusalem police increases the domestic product. But the truth is that these things have no added value, not to quality of life, nor standard of living. They actually have adverse effects. All these production resources had to be diverted from important civil activities in the fields of agriculture, industry, commerce, education and health so actual quality of life – as measured by private consumption and government spending – actually goes down.

Everyone knows that our defense budget is many times higher than the accepted amounts in Western countries, and as it gets higher and higher, we get less education, culture, healthcare and welfare.

All of these things come atop our already high prices – which are high in part due to the general uncertainty in the market. Everyone who rents out a room to tourists knows there will be a few weeks every year when the “security situation” will prevent them from finding clients. Every contractor knows that once in a while, he won’t be able to hire any Palestinian workers because the checkpoints will be closed. Every shopkeeper knows that once every year or two, there will be a wave of terrorism, or an army operation that will drive all customers away. These factors prompt the private sector to add a “risk premium” to all of their prices – and this lowers the standard of living.

And of course, none of these things take into account the fear and anxiety that grip us and toy with our mental health at times like these, which further hampers quality of life.

That is to say, our feelings are correct. We’re not number 22 worldwide in terms of quality of life and standard of living. We’re much lower than that. But there is one thing in which we seem to rank first worldwide — and that is the level of patriotism we feel for Jerusalem, the united city.

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