Tent City Revival

"Even Adam Smith is turning over in his grave," reads a handwritten sign pinned to one of the small, square tents. Next to the sign, sewn to the tent, is a piece of cloth with the address printed on it: "51 Tent Boulevard."

On maps of Tel Aviv, the street is listed as Rothschild Boulevard, but over the past two weeks, the new name has become more appropriate. On the wide, tree-shaded center island, hundreds of nearly identical tents have been pitched in neat rows: a city of protest against the robber-baron economic policies of Israel's current and recent governments, particularly a drastic housing shortage that is hurting not only the poor but the daughters and sons of the country's middle class.

At the north end of the boulevard, facing Israel's Habima national theater, a cloth awning hangs over the tables that serve as the protest headquarters, with an Israeli flag standing on either side -- as if the ranks of gray tents were about to march northward, toward the wealthy end of the city and the flush suburbs beyond. Under the awning, a thin 29-year-old man with a three-day beard tells me that he gave up plans to get married for lack of cash. "They stole our dreams," he says. "A person is built of dreams." A large hand-painted sign nearby renames the intersection "Habima-Tahrir Square."

Israel's summer economic revolt is the sequel to the Arab Spring, both overdue and unexpected. The protest against housing prices began when 25-year-old Tel Aviv video editor Daphni Leef, forced to move out of her apartment when the building was sold, found she couldn't afford to rent anywhere else in the city. Leef set up a Facebook page announcing her plan to move into a tent on Rothschild Boulevard. When she did so on July 14, hundreds of other people joined her. Smaller tent communities have gone up in other cities. Tens of thousands of people joined an angry march in Tel Aviv last Saturday night. In Jerusalem and elsewhere, protesters have blocked major streets.

On Tuesday, Prime Minister Benjamin Netanyahu and his pet finance minister, Yuval Steinitz, held a panicked press conference to announce a plan to build affordable housing for sale and rental. Protest leaders rejected it as short on details and funding and too narrowly focused on young couples and students. The next day, Ofer Eini, the leader of the national labor federation, went on the air to throw union support behind the protests and to demand a meeting with Netanyahu by tomorrow night. A new Facebook campaign is promoting a national general strike for Monday. So far, Netanyahu's response to the crisis has had one benefit: convincing more people that that the prime minister gives ground under pressure and that it's worth joining the revolt.

The protests are a surprise for two reasons. First, Israeli politics have concentrated for years on the future of the occupied territories, leaving other issues in the shadows. Second, the standard macroeconomic figures portray a strong economy barely touched by the crisis in Europe and the United States. The Israeli gross domestic product is on track to grow by nearly 6 percent this year; unemployment is at a record low of 5.7 percent.

Those numbers show, however, that measuring an economy by averages and aggregates can be sleight of hand, diverting attention from the problems of real people. Shlomo Swirski -- academic director of the Adva Center, a progressive research institute -- explains that Israel's growth is concentrated in high-tech and finance. Typical salaries in those sectors, he says, are three times higher than the national median. On the consumer side, the market caters to a small minority of increasingly wealthy people.

That's particularly true in real estate. Thirty years ago, the difference between an apartment in a poor neighborhood and a wealthy one was that the former consisted of three small rooms, the latter of three large rooms. Today, says Emily Silverman of the Israel Institute of Technology's urban planning department, the average size of a new housing unit is about 2,000 square feet. In Israeli terms, that's mansion size, and if you can't afford the mansion, very little else is available.

This isn't accidental. It's the result of policy, strongly shaped by American intervention. In 1985, Swirski recalls, the Reagan administration sent prominent economists Stanley Fischer and Herbert Stein to advise Prime Minister Shimon Peres on ending hyperinflation. They helped impose the "Washington consensus" of downsizing government and of orienting policy toward growth rather than overall social development, Swirski argues. Peres did not let the social-democratic tradition of Israel or his own Labor Party stand in the way. Neither he nor any other national leader ever looked back.

Even among the free-marketeers, though, Netanyahu has stood out for his single-mindedness. In 2003, as finance minister, he instituted an eight-year plan for reducing income taxes. The lion's share of savings, Swirski says, went to top earners. Last year, he put in motion another eight-year series of reductions that entirely serves the wealthy.

Blind trust in the free market is particularly striking in housing policy. The Justice Ministry has blocked attempts by municipal governments to require developers to include affordable housing in new construction. Until the recent protests, Netanyahu's only answer to the housing shortage has been a "reform" that would slash government planning oversight and put more government-owned land on the market. Both measures would result in more construction for the wealthy few. (There's one striking exception to the small-government policy: The state continues its costly subsidies for building in West Bank settlements.)

It doesn't have to be this way. Because of Israel's social-democratic roots, most of the country's real estate is owned by the government. In making land available for development, it could require contractors to meet social goals. Instead, "the state acts like a real-estate speculator," seeking only the highest price for land, says attorney Gil Gan-Mor of the Association for Civil Rights in Israel. The profits, it appears, serve mainly to make up for lost tax revenue, and the wealthiest Israelis benefit twice.

Meanwhile, the economic pain has spread beyond the lower class. College-educated children of the middle class can't afford homes where jobs are. The life style they learned to expect is out of reach. Israel is much wealthier than Egypt and historically much more democratic -- but the economic bind that has ignited protests looks similar.

After years of comatose economic politics, anger is in larger supply than awareness of alternatives. Without a clear ideology and program, a movement that sprang from a Facebook page risks settling too quickly for less than a real change in direction. The good news this week included a refusal to go home after Netanyahu's vague promises. On Tent Boulevard in Tel Aviv, it appears that despite its best efforts, the government has not succeeded in robbing people of dreams.

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