Is Israel really more expensive than the rest of the world?

The recent protests on everything from cottage cheese to strollers all seem to overlook the economic fallout of a reduction in indirect taxes: either direct taxation would be raised or spending slashed – either way, the first victims will be the least well-off.

By NADIA BEIDER
stroller march jerusalem_311 (photo credit: Marc Israel Sellem)
stroller march jerusalem_311
(photo credit: Marc Israel Sellem)
The unique Israeli difficulty in "closing the month" –as inelegant a translation as that is for the Hebrew term pertaining to one's salary at the end of the month— is twinned with another local trait: boundless ambition. In this country, a rather scant salary seems not to stand in the way of the wish—or indeed, the expectation—that one should have a home, car, holiday, television with cable and many other items once considered luxuries.
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Amazingly, with a little ingenuity, the average Israeli family is able to make their salaries stretch to meet many of these needs. Of course we would all like it if we could spend less, but if we really want a return to government control of the markets, we can look forward to life as it was a few decades ago; greater equality but greater poverty. The idea of children sleeping in the living room, or soda pop as the ultimate in luxury, or a total dependence on public transport, have long ceased to be features of the mainstream. The introduction of capitalism may have increased the gap between the rich and poor – it always does— but who would wish for a return to those days?
In Africa and much of the developing world, poverty is measured in absolute terms: live on a dollar a day or less, you are clearly poor, but those spending more than two dollars a day are considered to make up an emerging middle class. In the western world, measures of absolute poverty have fallen out of fashion. The universally accepted yardstick for poverty in the developed world includes all those earning less than half the average wage.  By this measure there will always be poor people—quite a lot of them in fact—yet they may and often do live pretty comfortable lives.
You wouldn’t know it from the protests of the last few weeks, but the Israeli economy has survived the current recession unscathed, unemployment is falling and Israel’s ranking in the Human Development Index has jumped to 15th in the world. Israel achieves this ranking based on life expectancy, education and, believe it or not, standard of living. Yet, it seems Israel’s citizens are up in arms: food is too costly, housing unaffordable; even children’s strollers seem to be out of reach for the average Israeli. 
A constant refrain is that outside Israel life is cheaper. Well, let’s examine that statement.  Leaving aside the unemployment, home repossessions and near collapse of banks that have accompanied the current global recession, all economies are structured differently.  To be sure in America taxes are low, food, petrol and housing are cheap, but healthcare is truly expensive and the prospect of putting one’s children through college is such a burden that parents start saving at birth.
In Scandinavia the state provides excellent cradle to grave coverage free of charge, but is only able to do this because taxes are high and everyday items are priced at levels that would be reserved for luxury goods elsewhere. In Germany the domestic economy is doing fine, but it is lumbered with doling out cash to poorer members of the Eurozone.  In England they pay doctors a decent salary; so much so that to cut the health budget essential operations are to be rationed.
Of course there are items that are expensive in Israel, not least because in a country this size it is impossible to achieve the economies of scale possible elsewhere, but also because indirect taxation is often high. But imagine the consequences of reducing these taxes. With declining government revenues, either direct taxation would have to be raised or spending slashed and the first victims of that would be the least well-off. The middle class would remain relatively unaffected, at least at first. Is that what these protests are really about?
It is hard to believe that even the most callous among the protestors would want that. So for now the solution must be to cut our coat to suit our cloth even if that means living in a smaller apartment or in a less desirable area. We may all have to trade down in cars and holidays, but surely we can cope. Looking at pictures of the recent stroller march, the relative affluence of the protesters was striking - not least because the brands selected were ostentatiously on display but also because most people are aware that mothers from more disadvantaged sectors of society invariably manage to do without the flashiest stroller. They may even opt to carry their babies instead.
The writer is a political historian and former research assistant for the Jerusalem Center for Public Affairs.