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Sunday, November 07, 2010

Creating Greater Dependency

[Note: I sometimes choose to post on Israeli Economic issues, but my knowledge of the ins-and-outs of Israel are lacking, so commentary is always appreciated. Also, I know I do not recognize some other pressing issues facing Israeli society in my post such as the growing demographic issues. Nonetheless, some commentary].

I admit, I have not been keeping up with the blow-by-blow regarding kollel stipends in Israel. But any economist that bothers to factor in human behavior into their predictions and calculations will tell you that this latest proposal being pushed by Shas, in the name of "equality" (and appeasement, no doubt), is just another road to create yet another dependency class in Israel. Expanding a dependency program to another class of students will certainly create perverse incentives, especially when the requirement to qualify is not based on quality (of academics/research/Torah learning) but on quantity (of children) and lack wealth creation (note: students cannot personal income from a job of their own or spousal income to qualify).

According to an article published on 11/4/2010 at ynet.com and 11/5/2010 and 10/24/2010 at JPost.com, Shas Chairman Eli Yishai seeks to award University students raising one child or more the same assured income received by yeshiva students with three or more children.

Yishai states 1) it is all for the children and 2) naysayers speak out of hatred and to incite:

"We have no objection that [university] students will also receive the benefit. Anyone who would propose otherwise is behaving in a discriminatory way,"; "The entire goal [of the bill] is to provide support to the tens of thousands of children living below the poverty line and to close [social] gaps."; "We do not object that every student who studies should receive the benefit. Anyone who would say otherwise speaks out of hatred and to incite."

I speak not from hatred, nor out of lack of concern for "the children" but because this is bad public policy and faulty economics.

14 comments:

Commenter Abbi said...

you have to understand the background of Yishai's comments. There are have been continuous university student protests against kollel stipends for the last few weeks. Yishai is calling for uni student subsidies to save the kollel subsidies.

Commenter Abbi said...

Also, at least with uni students, you know the stipends will be temporary because most college students end up with jobs. Kollel students don't or they have black market jobs. So, I don't see the parity.

Orthonomics said...

Hence this sentence:

in the name of "equality" (and appeasement, no doubt)

Also, I would never count on any benefit program being temporary, even if many students will be temporary. That is exactly the point of this post. In an effort to appease students and save kollel stipends, the State risks creating a new dependency class.

Anonymous said...

The taxes in Israel are already high. The government and local leaders (Rabbinic and lay) need to encourage people to join the workforce and obtain more education.

Also the high birthrate among the charedim is unsustainable.

Commenter Abbi said...

But how are they creating another "dependency class" when this class eventually graduates and loses student status? Kollel students don't, which is the whole problem. There is almost no equivalency between kollel students and uni students. Yes, this was Yishai's way of trying to keep his constituents' money. Is it logical? Is it necessary? Who knows? But Israeli politicians rarely think of the long term ramifications of their proposals.

Also, you're not understanding this stipend in the larger context the Israeli national budget. All children in the state currently get a "stipend" (think around 150 shekel a month). Hence what sounds crazy to you (a married student stipend?) is not so crazy here.

Anonymous said...

Not only is the stipend for university students temporary, they presumably will be using their education to contribute to the Israeli economy in a significant way and pay taxes in a few years where that does not appear to be the current plan for the chareidi students.

Miami Al said...

Here is the part I don't understand. Wealthy working man/business owner/professional marries his daughter to a "learner" to much pomp and circumstance. His enabling of Torah is well known, much Kavod.

I have two questions on this:

1. What about other daughters? Or do wealthy men marrying daughters to learners only have one-two daughters, and those with more daughters marry them to working men?

2. What happens to his granddaughters. His daughter, through his wealth, was able to marry a Prince of the Yeshiva. Now, his daughter and son-in-law will never acquire much wealth, what happens to their daughters?

Forgive me, the only side of "this" form of Frumkeit that I see is what I read about online.

Commenter Abbi said...

Miami Al, your example is completely irrelevant to the discussion of Israeli kollel stipends. There are no wealthy Israeli charedi businessmen (or extremely very few- who aside from Lev Leviev?) who marry their daughters to learners. Most Israeli charedim come in the poor, very poor and destitute varieties.

Ariella said...

Doesn't the American welfare system work on the basis of number of children and income? It also seems to underlie the WIC program, as well as government programs that cover the college tuition and daycare costs and kick in a stipend for single mothers. For older children, a free lunch is a reality for families who qualify based on the the number of people in it and income levels. They can also qualify for a highly subsidized lunch of about $40 rather than $500 a year based on more generous income allotments. Health insurance for children is free or virtually free, depending on income levels for those who qualify for the Healthy Children program. There is a similar program for adults, though the cost is not as low. The point is that it is not only in Israel that perverse incentives exist to qualify for subsidies.

Dave said...

WIC is separate from welfare.

Welfare (TANF - Temporary Assistance to Needy Families) has had a lifetime cap since 1996. (*)


(*) States can exempt up to 20% of the cases from this, but can also have a lower lifetime cap than the 5 year Federal Limit.

Ariella said...

Dave, I didn't say WIC and welfare were the same. But for both, more qualifying children would translate into more benefits.

Orthonomics said...

Ariella-I believe that you are correct that WIC and Food Stamps continue to add benefits when families grow.

Another welfare program in the US is the Earned Income Tax Credit and Additional Child Tax Credit. I don't have my tax books in front of me, but these do not grow with each additional child. Also, there is a bell curve if you map out the EIC against income. As income grows, the EIC grows also, before being phased out.

What I find particularly alarming about the Israeli policy is that it forbids student or spousal income.

I have a lot of commentary on US welfare programs and the dependency they have created. But they certainly don't resemble this policy of qualification based on complete lack of income.

aaron from L.A. said...

To solve the Israeli kollel problem:

The Israeli governement should stop the stipends tokollel learners altogether.The chareidi communities should pick up the cost.Because there isn't that much money in the Chareidi community,only the very best talmidim,those who show real promise to be gedolei Yisrael will be able to go to Kollel.The others will be forced to get training and go to work,which in turn,will improve the economic status of the chareidi community.This will then promote their general status in Israeli society.Plain and Simple.All it takes is someone with foresight and 'cojones' in the government.

Shachar said...

The resoning behind the linkage between the two groups wasnt mentioned here yet, so i'll explain. in the late 80's a law was passed giving money to poor families specifically exempting two groups - students and kollel families.
in the mid 90's under political pressure the kollel group was unoficially removed from the law.
in 1998 a law suit was filed demanding either the original rule be enforced, or both exempt groups being added into the law.

it should also be noted that this is only one of many various types of "kitzvaot" awarded to charedi torah scholars (for political reasons most of them are not awarded to zionistic yeshiva's, or to any other religious institutes (weather conservative/reform or muslim/christian/druse)