Economic Incentive

06.18.13

Discriminating Against Arabs Costs Israel Billions

There are all kinds of reasons for Israel to rectify the discriminatory treatment it affords its Palestinian citizens (a community generally referred to in Hebrew as “Arab Israelis”). The most basic requirements of democracy, for instance, or the demands of basic justice. On Friday, however, the editorial board ofHaaretz admonished the state for fostering the existence of what it called “two separate states, one Arab and one Jewish,” and pointed out a somewhat less obvious fact: Discriminatory practices don’t do your economy any favors, either:

One out of every five citizens in the State of Israel today is an Arab. Nonetheless, for most of the Jews living in Israel, the Arabs are transparent. They do not meet them in the street since most Arabs live in separate towns... They also don’t meet them at work since Arabs have a hard time making their way in the Israeli labor market, and certainly have a very hard time filling desirable jobs. They also don’t meet them in government offices since the government itself does not meet the goals it set for itself for employing Arabs: only 7.8 percent of government workers are Arabs...

The gap between the two countries in terms of standard of living, income level, quality of education and employment rate is enormous. This is the gap between the Jewish state of Israel, which is a developed Western nation, and the Arab state of Israel, which is no more than a Third World country.

Two researchers have determined that Israel is losing billions of dollars as a result of its institutionalized discrimination, which starts as early as preschool and moves with the children as they age and advance into and through a sub-standard school system and on to blatant inequity in the professional world. Just this week the Israeli Knesset is considering a new law to punish citizens who don’t serve in the IDF (read: Palestinian-Israelis and the ultra-Orthodox) by withholding services and de facto preventing non-veterans from being hired for positions in the civil service.

Tel Aviv University’s Eran Yashiv and the Bank of Israel’s Nitza Kasir estimate that an investment of about $2.2 billion in the Palestinian-Israeli sector over the next five years would net the state $11.1 billion by 2030, and $33.3 billion by 2050. “The return on investment will be unrivaled,” Haaretz reports, “and reach an annual return of 7.3 percent.”

It’s really pretty simple: If you fail to allow certain classes of people to develop fully (women across the world, for instance, or the Palestinian citizens of Israel), they will ultimately be a drag on everyone else. I may only be a social scientist, but even I know that much.

And as a social scientist, I can tell you that it’s not great for your democracy, either.