Social Affairs: Billionaire’s blueprint for social justice

Sharga Biran, Israel’s wealthiest attorney, says neo-liberalism has gone too far and that social democracy is a thing of the past.

August 19, 2011 18:06
Tel Aviv apartment

Tel Aviv apartment 311. (photo credit: Courtesy)

Israel’s ‘tycoons’ have so far been relatively quiet on the subject of the social protests that have swept the country this past month, however one of Israel’s richest men did contact The Jerusalem Post this week asking to spell out his blueprint for social justice in Israel.

While not having cross-holdings in finance and the real economy, thus not being classified among the tycoons, Shraga Biran is believed to be worth some several hundred million dollars. A lawyer, he amassed his fortune in real estate and also has holdings in retail and energy.

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The issue of social discontent is not new to Biran. He prides himself on having warned many times in the past that the glaring gaps in wealth in Israel, and in other countries, would in the end lead to civil unrest.

In an interview with this writer at the beginning of the year, just a few months before the outbreak of the current protests, Biran said: “Does anyone think we can really go on with a situation where 68 percent of wealth belongs to the top decile?...

People won’t remain silent.

People will not accept this situation over a sustained period.”

At 79, Biran still speaks with passion and energy to match the most fervent of the protesters on Rothschild Boulevard.

“It is a great thing that this social, economical agenda has come to the forefront,” Biran said as we sat in his law offices in Tel Aviv’s Museum Tower overlooking a panorama of the city. “The problem is, though: How does one create ‘social justice.’” In order to address that problem, Biran said, one first has to define what social justice is.

“Social justice, as I see it,” he said, “is to give the maximum possible – not the minimal needed.”

Biran translates that into what he calls “social privatization.”

He explained this as the distribution of as yet undistributed assets. It is, he said, a “non-revolutionary revolution,” one that creates wealth for those who do not posses it, while leaving intact the wealth of those who do.

Specifically, Biran’s proposals focus on housing, and on the privatization of state assets such as band-length and natural resources through publicly held companies that would hand out shares to the public.

On the housing front, Biran said he would grant residents of Israel’s tenements 500% building rights that they could sell, in effect granting them sums that could be worth as much as $150,000 per household. This would, he said, enable contractors to buy up rights and build modern high rises as a means of urban regeneration by freeing up land for hundreds of thousands of housing units.

Furthermore, Biran said, he would also build affordable housing for the middle classes.

He said this can be done at a cost of NIS 500,000 for a 75- meter apartment even in desirable areas.

Israel, Biran continued, is in a unique position to address the housing issue because of the tight state control of the ownership of land by the Israel Lands Administration, a system he described as “feudal ownership.” The ILA, he said, is a unique authority in a democratic country.

He complained that the ILA is run by bureaucrats, that the government uses it as a vehicle for generating profits and not for providing housing for those who need it, and that it is not responsive to changing needs.

But while he agrees with the need to break up and reform the ILA, Biran also warned against the current housing bill being pushed by Prime Minister Binyamin Netanyahu.

Flooding the market with land will not bring prices down sufficiently to solve the problems of lower and middle-income families, but will bring them down enough to generate a crisis, he said.

“The state doesn’t know how to create things, but it knows very well how to destroy things,” said Biran. “You have to create affordable housing for those who don’t have access to ownership, but you also have to protect the value of the assets of the established middle classes,” he explained. “If you flood the market with land then you will bring down prices in an uncontrolled fashion.

That would destroy the established middle class and would be unforgivable.

“The wealth concentrated in housing in Israel,” he continued, “is one of the biggest concentrations of wealth in the country. It is also the most democratic, because, after all, [home] ownership still stands at 66%, so if you break that concentration of wealth you will be breaking the necks of the general public.”

Biran said that Israel needs a national authority for affordable housing and urban regeneration that would define social and affordable housing needs, regulate the market and create financial models.

In the model that Biran proposes for affordable housing, the cost of the land would be covered by a standing loan that would be repaid only upon sale of the apartment, while the additional sum would be covered by a longterm mortgage.

Building costs for an apartment of 75 meters would be NIS 300,000, while land costs per unit would be some NIS 200,000 – a sum that he notes is in fact quite expensive when compared with other western countries.

According to his calculations, repayments would begin at less than NIS 1,000 a month, rising as the tenant’s repayment capabilities increase. All of this, he said, can be done within the framework of existing legislation.

Where would the land for these affordable housing units come from? Biran said there are hundreds of thousands of dunams of brown fields, of disused and old buildings, that create a reservoir for as many as one million housing units.

Housing, Biran said, is essential to addressing the issue of asset poverty. He notes that 160,000 families have been unable to purchase an apartment in the last decade, adding that ownership rates have dropped dramatically. “Giving people the opportunity to buy affordable housing creates equity,” said Biran. “It allows people to take a first step.”

While Biran wants to provide affordable housing and believes that the state needs to provide as “much free education as possible with affirmative action for the lower deciles” he is not a believer in a welfare state.

“Both ideologies have gone bankrupt – capitalist and socialist,” he said. “Both deregulation and nationalization have failed. We need a completely new agenda. There can be no return to the past. The social democratic model of the ‘60s and ‘70s is not relevant to the modern economics of the 21st century.”

Despite having started out his ideological life on the left – even being expelled from kibbutz for his affiliation with the Communist Party – Biran doesn’t look back nostalgically to the days of Mapai, when the state controlled 70% of the economy.

“There was no Garden of Eden here,” he said emphatically.

“It was that ‘paradise’ that discriminated against the Mizrahim and threw them into development towns that became the third world of this country.”

Biran said that this romanticism is “just as dangerous as the neo-liberal side,” and warns that there are organizations trying to take control of this wonderful movement of the middle classes and take it in a very extreme social-democratic direction.”

So, how does Biran plan to finance these changes? “The only way to do this,” he said, “is via social privatization.

That is social justice. The whole issue of creating a new agenda – of creating new priorities – is a political issue. It’s not that we have some kind of patent that doesn’t exist anywhere else.

“Am I willing to pay higher taxes, higher company tax? Of course, without a doubt – but there is nothing creative about that, nothing new. The issue of creating an economic social foundation through the creation of assets is creative, but changing priorities by progressive taxes is a political decision that is banal, although obviously very important.”

“This is an opportunity,” he concluded, “not of once in a hundred years, but of once in a thousand years. Almost the entire public supports change and that support needs to be translated into reality. We must not look back in romanticism, nor forward to some kind of Utopian dream. We must seize this opportunity, today.”

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