Poverty in Israel is a relative concept
צילום: רוני סופר
Who's poor in a rich country?
Lack of warfare benefits the poor in rich and poor countries alike
As 2006 dawns, Israel is a relatively wealthy country. Gross national product approaches USD 20,000, but, relatively speaking, there are many poor people.
Poverty in Israel is a relative concept: A poor person is someone living in a household who reported his income to the Central Bureau of Statistics as below the "poverty line" – NIS 1500 per month (USD 350) per person.
Relative poverty in a relatively wealthy country - how would you measure it, and what would it cover – is today the topic of social and economic research the world over. The year-end edition of Britain's The Economist magazine featured an article comparing a white, unskilled, chronically unemployed man who lived in a neglected trailer home in Kentucky with a public emergency room doctor with 28 years experience in Kinshasa, Congo.
The actual net income of both was roughly similar – between USD 500 to 600 per month. The American gets his money from welfare, while the African doctor supplements his income with a private practice. The American drives a falling-apart car and is buried deep in the country's poverty statistics.
The African doctor is considered well-established and lives in a four-bedroom apartment. The doctor feeds his children meat twice a month; the unemployed American downs hamburgers regularly and must shop for "special sizes" when buying new jeans.
Poverty, says The Economist, describes two different phenomena: Extreme destitution for a billion people around the world, who live in the "third world" and who exist on one-to-two dollars a day, and the situation of people with low incomes in rich countries.
Unexplainable gap
A typical poor family in the United States, says The Economist, owns two televisions, a VCR, air conditioning, a car of some description and cable TV. In Israel, we should add a refrigerator and mobile phone.
And so The Economist exhorts us to measure poverty in rich countries not only according to monthly income, but also to standards of spending, that is to say: according to the actual standard of living.
Lower socio-economic classes in the West require as much as twice the amount of income they generate. "No one can explain the huge discrepancy between spending and income for the poor," wrote the magazine.
In Israel, too, there is an unexplainable gap between income and spending for poor families. In the poorest sector of society, net income last year was NIS 2830 (USD 613) per month, but spending was NIS 5,110 (USD 1,100).
According to these figures, the lowest tenth of our society is drowning in poverty.
Judging by the spending index, that's not true at all. There is a huge gap, more than NIS 1,000 (about USD 213) per person per month between net spending and net income, in the first 35 – 40 percent of the income scale. It's only about the 40th percentile when the income-spending ration begins to even out. "The numbers are clearly mistaken," writes The Economist.
Working the numbers
The numbers go through more processing that the public reading the final numbers knows about. The Central Bureau of Statistics does not collect data about net income for families. Families report only their gross income, and bureau economists estimate their tax liabilities. "Mandatory tax payments," say the statistics folks, "includes income tax, national insurance payments and government health care, all calculated according to general tax rules, not as reported from the heads of each household."
And what about tax-evaders? They play no part in the official statistics.
Therefore, we have no reliable transparency about division of net income in the Israeli economic reality; we only have an answer to a theoretical question: How would incomes be divided if everyone paid tax according to the exact letter of with the law.
The third problem, mentioned by The Economist, connects the economic and social mobility of the poor – how much time is a poor person poor?
The ability of a poor person to get out of poverty quickly is much more important than a temporary fiscal crisis.
In the case of the chronic welfare case from Kentucky, the recipient feels embittered, cast out of society, rejected and a failure, because he has been stuck in heavy poverty for more than a decade.
In contrast, the African doctor feels that his economic position is getting somewhat better, and that he is climbing the economic and social ladder. The end of war in his country doubled his hospital salary to USD 250 per month.
The end of war is good for the poor, in poor countries as well as rich ones.
Sever Plocker is a regular contributor to Israel’s leading newspaper Yedioth Ahronoth
