IASPS - News Behind the News

November 16, 2001

Government Knows Best

Construction and Housing Minister Natan Sharansky wants legislation that would freeze plans for building non-residential properties for one year.  Sharansky’s motive is that, given the surplus in office and commercial space, it is preferable to give priority to residential building plans in the regional planning committees.

The president of the Association of Contractors and Builders in Israel, Shmuel Ulpiner, said there was a total of 1.5 million square feet of office space available for rent.  Rental prices have, he said, fallen.

If Sharansky’s proposed bill becomes law, Ulpiner hopes that local authorities will defend it against lawsuits brought by private companies to build residential projects.

Poor Sharansky.  He spent too much time in Russian prisons.  It would have been better had he first lived in the United States for several years before immigrating to Israel.  He might have learned about markets.  What needs fixing is not limiting permits to build office space, but something much more fundamental—private property.

The government of Israel owns over 90% of the country’s land.  This is absurd in any economy, but especially in one that calls itself a free-market, liberal economy.

Second, the government has no business allocating building permits based on what it thinks will be future demand for residential vs. commercial space.  A non-profit entity, the government, in this case an especially inefficient government that lives on foreign aid and charity, has no ability to make judgements about the efficient allocation of resources.

Shame, shame, Minister Sharansky.