Israels Identity Conflict, Peace and Neo-liberalism

Assessment of Haredim Request for Increase in Child Allowances
The policies and decisions of a government have a direct bearing on any communitys economic status and influence within a society.  In a lot of cases, the said community can influence the policy-making process to its advantage by virtue of its population size, geographic representation, political awareness, historical background, and participation in the political process.  Thus, in turn, allows it to further consolidate its political status and the resultant economic benefits within the societal milieu.  However, at the same time, it is a balancing act at best since those charged with making these decisions and policies also have to keep in mind the sensitivities of other communities, as well as the economic and political cost of any decisions to them.

Introduction
We must remember that any decision regarding child allowances has a direct bearing on the economic status of all of Israels population.  On the one hand, it increases or curtails the amount of child benefits available to certain communities, such as SephardiAsheknazi Jews, thus having a significant bearing on their economic well-being.  However, on the other hand, any such decision represents an increase or decrease in the indirect economic cost to be borne out by Israels other communities, especially those with smaller number of children.  Alongside economics, any such decision also has a significant bearing on Israels long-term demographic make-up, as well as its political orientation.

In Its the budget, stupid, published by the daily Haaretz in January, 2008, Nehemia Shtrasler( has succinctly argued that because of the very nature of their religious ideology and the weltanschauung that it espouses and promotes, those belonging to the ultra-orthodox Haredim community will continue having large families, irrespective of the amount of state support at their disposal.  He does, however, argue that the state can promote the rapid population expansion of the said community by increasing the amount of child support benefits  something that plays an important role in most Haredim households.  Of course, whether this would be a positive development or otherwise cannot be judged from the Haredim perspective alone.

In terms of demographics, the ultra-orthodox Jews represent only 7-8 of the Israeli population  making them a small minority, even when compared against the Israeli Arabs, who make up 18 of the population within the territorial confines of Israel proper.  However, as pointed out by Margalit and Halbertal(, they represent a cohesive community with a strong and densely populated territorial representation.  Furthermore, they represent a distinct way of life  often, sharply at contrast with the rest of Israels civic society  and herein lies the rub.

Basing their arguments on Kymlickas Liberalism, community and culture, Margalit and Halbertal( argue that even though the Haredim espouse an illiberal value system, sharply at contrast with the liberal aspirations of the modern Jewish state of Israel, the state still has an obligation towards this segment of this society to protect their way of life and to enable them to live in accordance with their cultural and religious beliefs.  They believe that in doing so, the liberal state has to abandon its neutrality in matters of societal nature in favor of the minority community while remaining neutral towards the dominant community groups.  This, in turn, means actively assisting, protecting and promoting the Haredi population through legislative and fiscal measures that may qualify as interventionist in nature.

They base their arguments on the principle of a communitys right to culture stating that because of their size  further complemented by their concentration in certain geographical locations  the Haredi population has a right to be allowed to maintain its way of life within these locations with their activities only limited by the principle of harm.  Furthermore, they do not only support the judicial and educational autonomy at the groups disposal, but also state that the government should actively support their way of life, for example, large families and active participation in non-economic activities, through fiscal assistance.

However, as stated above, this does not come without its contradictions.  First and far most, the liberal state will stop being so the very moment it decides to abandon its neutrality in favor of one specific group of individuals while maintaining it with reference to others.  Secondly, this will further deepen the economic contradictions already existing within the Israeli society.  In Sect, Subsidy and Sacrifice  An Economists View of Ultra-Orthodox Jews, Eli Berman( has used statistical data to highlight the economic consequences of any fiscal interventionist policies that the state of Israel has followed in the past  or may possible follow in the future  to assist the ultra-orthodox community, as favored by Margalit and Halbertal.

Berman has specifically concentrated on the consequences of increased and sustained child support policies that have been followed by successive governments since 1975, and that have had a significant effect on the fertility rates being experienced in the Haredi community.  Furthermore, he highlights that these dramatic increases in fertility rates have been accompanied by an equally dramatic reduction in the communitys participation in economic activities and their share in the general labor supply.  Berman has used Iannaccones club good approach( to explain this economic contradiction where a community continues to prosper despite dedicating the majority of its resources, specifically human resources, to nonproductive religious activities, as exemplified by Yeshiva attendance of ultra-orthodox men until the age of 40 on average.

He has pointed out that because of the interventionist policies of the state, Haredi households are actually being largely subsidized by the government to not only maintain their lifestyle, but also to increase their communitys demographic and political strength within the overall societal framework.  Taking the example of families with fathers attending Yeshiva, he points out that out of the total monthly income available to such families, 39 comes from transfers by state institutions and another 32 in the form of child support allowances with only 18 being contributed by the family  mostly, the wife  in form of actual earned income.

He then goes on to juxtapose these figures against data obtained between 1980s and mid-1990s to illustrate that while the ultra-orthodox labor force participation dropped by one-third between these 15-odd years, their fertility rates rose from 6.5 children per woman in 1980s to 7.6 children per woman in mid-1990s.  He further cancels out the possibility of any general trend in the overall population expansion by pointing out that while in 1980, the gap between the fertility rates being experienced by the Arab and ultra-orthodox Jewish communities was only 0.5 child per woman, it had grown significantly to 3 children per woman by 1995-96.

He goes on to explain this phenomenon by pointing out that the 2.5-children per woman increase in fertility rate amongst the Haredi population, running in reverse to Beckers fertility transition argument, was engineered by efficient prohibition(, the ultra-orthodox value system, reduction in economic participation and increase in state subsidies, which in turn further reduced the value of any economic activities for the community.  The last point is even borne out by Shtrasler stating that replacing the principle of tax credits with child allowances by the Ben-Shahar committee in 1975 meant that parents were to be paid a certain amount in the form of child allowance, irrespective of their employment status, and hence no longer had to work to avail the benefit of having a large family.  He points out that because of their voting strength, this gap in policy was further exploited by the ultra-orthodox community who kept pushing for bigger allowances from fifth child onwards.  This meant that by 012001, the government had increased the allowance to NIS 855month from fifth child onwards, while discouraging those with a smaller family with a child allowance of only NIS 171month.

 Furthermore, Berman has effectively documented the demographic, and hence political, consequence of this policy by illustrating how the ultra-orthodox population share is projected to rise from 5.2 in 1995 to 12.4 in 2025, meaning that 22.5 of the Israeli children at that time will belong to ultra-orthodox Jewish families, signifying a dramatic shift in labor force ratios on one end of the spectrum and political power on the other end.

Conclusion
In my view, the policy shift implemented by the Sharon government in 2003 was a step in the right direction, wherein they proceeded to revise the figures of child allowances, equalizing them and making them smaller, but there is a greater need to streamline the system in line with economic realities.  Haaretz( had reported that because of the 2003 policy shift, fertility rates dropped among both the Bedouin population, as well as ultra-orthodox Jewish community, signaling a relationship between child allowances and fertility rates.  While the figures of child allowance can be revised upward from time to time, a concentrated effort needs to be made to avoid the principle of incremental increases, as well as any dramatic increases in these figures.  I, however, do not see any need to propose or implement rate increases at this point in time, given the policy success experienced since 2003.

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