So Erel Margalit wants to be Jerusalem mayor...

The capital's problem isn't a lack of vibracy, but its socialist mind-set.

June 21, 2006 21:13
4 minute read.


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Erel Margalit, one of Israel's hi-tech leaders, was recently touted, in a profile by Haaretz's Ari Shavit, as a possible Jerusalem mayoral candidate. Those who are alarmed by the narrow focus of our professional politicians should welcome the addition to politics of people of caliber in other professions, besides lawyers. This despite the fact that recent experience with another hi-tech tycoon, Nir Barkat, is not very encouraging. Margalit will probably run as "a tough businessman" with a socialist heart. So it is interesting to examine how he thinks his business philosophy can rescue Jerusalem. Margalit offers vision and energy. No one doubts his energy; his vision, however, raises some serious problems. He believes that Israelis have "great energy" but it is concentrated "in a narrow geographic region and a small social stratum." Therefore, we must "foment a revolution of the periphery" by making business plans for government and business cooperation in development. Since many such plans (a most recent one by McKenzie Consulting) gather dust, and others were tried and failed, let's see how Margalit intends to implement his. Margalit wants to follow Houston's mayor, who "brought music to the city. This made Houston hip, and once it was hip the hi-tech came too." Margalit elaborates: "In Jerusalem there is no need for anything artificial like that. Everything is already here," music included. One only needs to give "artists and creative people a sense of direction… making the National Library a magnet for every young person in the country… [and bringing] the [Hebrew] university into the center [of town], to shake up the students… Within two or three years," Margalit promises, "you'll have a very different city." BUT IF, as Margalit claims, music alone can turn a tide, should not Cuba - a home to music, and in addition to cheap but educated labor and to "shaken" activist students - be a hi-tech leader? As for Houston, maybe music helped, by more likely its success was predicated on it being a pro-business town, with low taxes and minimum government intervention (no zoning laws!) - conditions which Jerusalem sorely lacks and whose absence Margalit does not even seem to recognize. And good intentions aside, does Margalit really know how to make the National Library "a magnet" to the barely literate Israeli student, how to "shake up" the exhausted Israeli student, or in what way to "give a sense of direction" to artists? Surely, Margalit who protests that he is a socialist but not a Bolshevik, does not intend to form an "Arts Commissariat" to "give direction." And will moving the university to the center really do it? And how do you move this behemoth, and to where? At what cost? Jerusalem's problem is not the lack of a creative environment, but that it is strangled by its failed socialist welfare system, whose bloated and corrupt bureaucracy redirects and wastes capital by imposing exorbitant taxes and strictures. Like the economy at large, Jerusalem suffers from the domination of government-sanctioned monopolies that inhibit competition and cut efficiency, and from a heavy burden of a public sector augmented by charitable contributions that created a few fine public institutions but also many white elephants. The periphery, whose problems Margalit bemoans, does not really suffer from a negligible geographical distance but from its being in the periphery of protektzia, in an economy where most credit has been directed by the bank duopoly to a small group of cronies, starving all others, especially smaller businesses. Perhaps because Margalit lived in New York trying to establish an international business, he failed to notice all these crucial problems; perhaps this is also why he has discovered social misery in Israel only recently, as he confides, and why he seems oblivious to the fact that many young people leave Jerusalem because housing prices are inflated by the government's land monopoly and by the government-sanctioned building trades and materials monopolies. His US experience could teach Margalit that it is the statist-cum-socialist system of Israel that has turned a country of the most energetic and intelligent people into an economic cripple. Instead it apparently strengthened his childhood disposition toward socialism so that he recently endorsed Amir Peretz, naming him "a social start-up." "A SOCIAL start-up"? A man who led the most regressive organization in Israel which has been serving the interests of the public monopoly unions at great expense to all other workers; who supported politicization in the workplace so that Israeli productivity is only half that of America - while most workers still earn shameful wages? A man who made workers dependent on his nomenclatura though it squandered their pensions? As befits a future mayor of Jerusalem Margalit has also a spiritual message. He is devoted to the Jewish people, but he characterizes it as "some kind of early Indian tribe…. The greatest victim of the 20th century…" He finds this "riveting" and "most meaningful… in terms of depth and creativity and the density of life…" He interprets Judaism not religiously but "as the movement of the spirit of the Jewish people in history…" Whatever. Let us hope that before Margalit runs for mayor he will apply his keen intelligence and energy to a deeper study of Jerusalem, its problems and its meaning and destiny. The writer is an economist. His Web site is

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