Ethics @ Work: Jerusalem: The world's fastest growing ghost town

Nobody wants Jerusalem apartments anymore, they're too expensive.

Business ethics 88 (photo credit: )
Business ethics 88
(photo credit: )
The famous Hall of Fame catcher Yogi Berra is equally famous for his creative expressions that expose the paradoxes of common thinking and idioms. Here's a justly famous Yogi-ism: Referring to a popular restaurant, he quipped, "Nobody goes there anymore. It's too crowded." This kind of thinking seems to be behind a recent initiative to solve the "problem" of foreign investment in Jerusalem real estate. According to recent news reports, Professor Shlomo Hasson of the Hebrew University considers this a worrisome phenomenon. It is claimed that as a result of the demand for tourist apartments, entire neighborhoods are empty for most of the year. A number of reporters referred to these neighborhoods as "ghost towns." The proposed remedy: encouraging more young people to move to the city center. This is truly Yogi Berra reasoning. There can indeed be a "ghost town" phenomenon whereby property values are not realized because no one wants to live in an empty neighborhood. If a few bellwethers can be drawn there, perhaps by subsidies, others will follow. But these articles don't explain exactly who is suffering from the supposed "ghost towns" of Mamilla and Rehavia. They're certainly not empty because the neighborhoods are unattractive. (They never seem empty to me at all - especially when I'm looking for a parking space. The claim here is in effect: "Nobody wants Jerusalem apartments anymore, they're too expensive." Let us take a more careful look at the problem and the proposed solutions. The claim is that low-income families cannot afford apartments in urban centers; the proposed solution is a form of rent control or rent subsidy. Now the lack of low-income families can be viewed as a problem for the families or the problem for the city. If it is a problem for the families, the problem is obviously their low income, not their locale. Low income families can't afford apartments in certain neighborhoods; they also can't afford meals in certain restaurants, vacations in certain locales and so on. Sometimes they can't even afford decent housing anywhere. The solution to this problem is to give these families more income. Instead of giving them a rent subsidy limited to a narrow area, give them a blank check they can spend on anything they want. If they decide to spend the money on a tiny apartment in Rehavia, that's fine. In all likelihood, they would prefer to take the same money and spend it on a house or large apartment in a Jerusalem suburb. It may be that professors at the Hebrew University would prefer to have them in Jerusalem, but that legitimate sentiment should not be cloaked in the guise of concern for the families themselves. If it is a problem for the city, the problem is not specifically the presence of low-income families. There is certainly no disgrace in being poor, but I can't think of any contribution poverty per se makes to the life of a city. Perhaps the object is to attract students, professionals etc. who do have a unique character. If so, then incentives should be directed specifically towards these populations. As a matter of fact, Jerusalem does have a number of programs designed to attract precisely these groups of people. Anyway, is it important that these individuals live specifically in Rehavia? Is it really so terrible if they live in Ramot instead? Hasson is also quoted as saying that the emptying out of neighborhoods has a detrimental effect on city services. The example? "Schools, and in particular kindergartens, are the services shown to have been most affected because there's less of a demand for them as the number of young families in the capital is decreasing." Reduced demand for services is not exactly a source of harm. Decaying services means there is a reduction in the services that people need - not in the services that people don't need. In fact, absentee owners are a dream for city services - they pay city taxes but make minimal use of services. In any case, Jerusalem has no shortage of kindergartens or young people. According to the Central Bureau of Statistics, it is second among Israel's cities only to Bnei Brak in the fraction of children and young adults in the population. It is also not true that Jerusalem has become a city for the rich only. In fact, it is the poorest of Israel's large cities. It is also not shrinking and becoming a ghost town; it is in fact one of Israel's fastest growing cities. Certainly a city has an interest in housing a variety of populations. The best tool for this purpose is zoning. For example, when building permits are issued, it is legitimate to decide that a certain fraction of apartments will be of modest size. Efforts also have been made (with minimal success) to influence the balance between secular, religious and haredi elements by tweaking the kinds of schools and community institutions. But after neighborhoods are built I can't think of a valid reason for using selective payouts to dictate what kind of people should move there. The housing problem in Israel is a serious one. In my opinion, the main source of the problem is the slow pace of freeing up land for new building. But reshuffling the same people among the same apartments is not going to solve any problems. How exactly would the situation be better if Israelis lived in Rehavia and French tourists in Gilo? It's wonderful that Jerusalem is acknowledged as a world city and attracts interest from property buyers from abroad. In order to meet the demand for real estate throughout the country, there is a need for more building and solid, rational urban planning including thoughtful zoning. But using subsidies to arbitrarily decide which residents should live in which neighborhood is certain to be an expensive, cynical and futile project. [email protected] The author is research director at the Business Ethics Center of Jerusalem (, an independent institute in the Jerusalem College of Technology.