Co-existence during the Holiday of Holidays in Haifa

Each year around this time Haifa celebrates the Holiday of Holidays. Depending on the lunar calendar the Jews and Muslims celebrate their major holidays around Christmas.

The celebration consists of four consecutive weekends during which artists and artisans of all faiths display their work, musicians and theater groups perform and food is sold. It is a joyous time and it feels good to be together.

While few foreign tourists have discovered this event, Israelis flock in. Having read in the New York Times recently about Boston's effort to woo Black tourists (December 8, 2006), I was aware yesterday that there were very many Arab Israelis in the crowd looking in, buying and celebrating.

Later on I found myself in a coffee house along Ben-Gurion Avenue that is lined up with coffee houses and restaurants. Again, the crowd was mixed. There were tables with young professional at which Arabic was spoken and tables with Hebrew speakers. For the most part, the tables were separated. I was delighted to see a table at which there were young Arabs and Jews together.

Haifa is a city with indications of co-existence.

Infrastructure and economic growth

Many in Israel consider the government's expenditures on higher education and on research (not R&D) as insufficient. There is no disagreement that the country is not spending sufficient amounts on physical infrastructure such as land transportation, energy, etc. Some suggest that eventually this will affect the quality of life to such extent that many will leave the country and affect its future performance.

Recently I agreed to participate in a strategic planning exercise concerned with the possibility that a small open economy, such as Israel or a big urban area elsewhere can increase drastically its rate of economic growth in a very short time. While the project is concerned with all aspects of economic life, the working group that I participate in is concerned with infrastructure. In particular, I was asked to lead the energy infrastructure team.

The issues that I have started to consider include possible obstacles that the absence of appropriate infrastructure can create on the path to accelerated growth. Energy infrastructure consists of the physical elements required for:

· The exploration, development and production of primary energy,
· The transformation of primary energy into useable forms by means such as electricity generation and oil refining,
· The transmission and distribution of energy to end-users by means such as wires, pipelines and end-use stations, and
· The storage of energy in various forms.

The required infrastructure in Israel should grow in some relation to population growth and that of the national economy. The nature of the future infrastructure will be also influenced by technological changes and relative to the world energy prices.

As in many other aspects of this country, also here special attention must be devoted to the special conditions of Israel, i.e., scarcity of local energy resources and economic distance from sources and markets.

Among the issues that we are considering are the following:

1. What infrastructure will be needed? This is perhaps the most difficult issue that this report will address. Lack of “appropriate” infrastructure will be felt in the future and unevenly over time and space.
2. How can we decide what is enough and what is optimal?
3. Will insufficient infrastructure affect the quality of life to the extent that it will generate out-migration and impact the desired rate of economic growth?
4. Who should supply this infrastructure?
5. What should be the preferred method of financing the infrastructure?

High tax rates, alienation and black markets

I just returned from a PhD exam. The candidate presented some data that were startling and illuminating.

The study was concerned with the impact of new by-pass roads on smaller cities and towns, especially Arab settlements in Israel. As part of the study, Wafa presented official Israel Central Bureau of Statistics data concerning income levels by neighborhoods. She then declared that the data are unreliable. The numbers cannot reflect the actual income in the towns. The NIS 3,000 per month (some US$ 700) does not permit the housing and car ownership that she observed. It is noteworthy that the per capita GDP in Israel today places it among the richer countries of the world.

Wafa conducted an extensive survey and reported that most people interviewed were quite willing to report black market transactions of major proportions. Indeed, the real income seems to be four times the official income.

There is no doubt that black markets exist. However, their extent here is beyond what I would have expected, even in the high tax environment that we live in. The marginal tax rate on a professor's salary is above 50 per cent.

I suspect that part of the explanation of this phenomenon is related to alienation in light of the prolonged disregard by the government of the plight of marginal populations.

Is Haifa aging?

I just received the following comment from a colleague at the Technion:

Glad to read that you are optimistic about the future of Haifa. Less glad to see that you join the false common statement about the "continuous outflow of young people from Haifa".

First, as we all know, young people tend to move from place to place much more often than older ones. Hence, we find considerable turnover of young persons everywhere, especially in bigger cities.

Second, in my work for the Master Plan of Haifa, I made a special analysis of the migration balance of Haifa's 20-44 age group in four years: 1998-2001. I found that in each of the four years a large number of this age group left Haifa - 5,000 to 7,000 persons a year - but very similar number of persons from the same age group entered the city in each year.

A most serious disadvantage of Haifa is the bad reputation of the city in specific fields. As detailed above, and as your student - Lilach Berger Roth - found in a different field, much of the bad reputation is based on false rumors that people tend to spread around. Let's try to avoid it.

Naomi Carmon
Professor of Sociology and Urban Planning


Here is some additional information that may shed some light on Haifa demographics.

The municipality of Haifa is home to 268,000 residents, or nearly 103 thousand households. The population is heterogeneous. Jews comprise some 82 per cent of the population, some 4 per cent are Muslims and almost 14 per cent are Christians (both Arab and non-Arab). Immigrants from the former Soviet Union, having arrived since 1989, make up nearly a quarter of Haifa's residents.

The Haifa metropolitan area is home to 530,000 residents, or 175,000 households. The metro area includes the group of towns that surround the Haifa municipality and rural communities that increasingly serve as bedroom communities for people who work in Haifa and desire to live in suburban, single family housing.

Despite the influx of immigrants in the 1990s, the population of Haifa has been declining, especially since 2001. There are conflicting forecasts for Haifa’s population growth in the coming decade. The skeptical scenario suggests that the population of Haifa will continue to decline. The more optimistic approach, based on the performance of the hi-tech industry and encouraged by the Haifa municipality, is that the negative immigration trend will cease, or even reverse itself in the near future

Population growth in Haifa

Source: Central Bureau of Statistics, Statistical Abstract of Israel, no. 56, 2005

Despite the declining population, since 2001 the total number of households in Haifa has been constant and is expected to increase slightly due to the decreasing number of persons per household and to the improving quality of life in the city.

An associated demographic characteristic of Haifa is the relatively low percentage of children. The share of older people (age groups over 45) is high compared to both Tel Aviv and the rest of Israel. Haifa's population is ageing. Younger people seek education and better jobs in central part of Israel and families with kids migrate out to bedroom communities in the vicinity of Haifa.

The balance between the religious groups in Haifa is slowly shifting, as the Jewish residents are growing older and the younger ones leaving, while the number of Christians and Muslims is growing. Unlike elsewhere, the national and religious tensions between the main ethnic and religious population groups in Haifa (mainly between Jews and Arabs, and between Muslim Arabs and Christian Arabs) appear to be of a subdued nature. This situation is evident both at the municipal government level, as political frictions that appear on the national level, do not influence the daily management of the city, and in daily life. While there are distinctly Arab neighborhoods in Haifa, there is an increasing integration of populations, especially as well-to-do Arab families move into affluent, mostly Jewish neighborhoods.

On the issue of urban branding I posted a note some two weeks ago, on November 23rd.

The impact of immigrants

In his blog today Matthew Kahn (http://greeneconomics.blogspot.com/) discusses the relationship between immigrants and urban crime. This question is certainly not unrelated to the situation in Haifa, my home town.

Within less than a decade, Israel's population increased by almost 1,000,000 immigrants. The wave from the former Soviet Union started in 1990 immediately after the fall of the Iron Wall.

However, the increase in crime, especially petty theft and drunk driving, is dwarfed by the positive impact of this immigrations wave. There can be no doubt that the increase in the country's human capital has contributed tremendously to the expansion of Israel's hi-tech industry. At the same time, Israel has become a good example of growth that is demand-driven. The new population, given transfer payments and housing subsidies, created growth that is unprecedented.

An interesting side phenomenon concerns the behavior of the housing market. In the years 1990-1992 housing prices fluctuated widely as a result of the demand shock. It is interesting that it took the market only 2 -3 years to settle to a new equilibrium with only slightly higher price levels.

Palestinian and Israeli artificial islands

One of the main issues at the heart of the Israeli-Palestinian conflict is the division of land west of the Jordan River among the two entities. For some time now Professor (emeritus) Michael Burt from my faculty claims that there is a way to reduce the conflict between the two nations that stems from, among other things, shortage of land.

The Israel coastal plain is home to 70 per cent of the country's population, some 4.5 million people. There are some 3,500 sq. k. in the coastal plain. In a business as usual scenario, by the year 2040 this population is expected to increase to above 9 millions.

In the Ghaza strip of the Palestinian Authority there are some 1.1 million people. The strip is 350 sq. k. The population is expected to increase relatively quickly and by the year 2040 it will be 4.4 millions. This is an unbearable density.

Burt proposes that we utilize the relatively shallow coastal waters of the southern Mediterranean, along the Ghaza and Israeli coast, to build a series of artificial islands that will relieve the expected future population pressures. Burt proposes a "Blue Avenue" in a form of chain of islands with "Blue Parks" that will be equivalent to green parks.

Lest you think that this is just a dream, Burt assembled a team of engineers and proceeded to analyze various aspects of the endeavor. Burt invented sponge like water breakers and designed various types of artificial islands.

At one point Burt asked me to perform some simple economic calculations. The economics of the islands is doable. For example, the cost of building an island is 8 times the value of land in the Haifa Bay area. Luck would have it that Haifa Bay is the home of Israel's petrochemical industry. It occupies a piece of land that creates a polluted corridor 8 times its size. By removing the petrochemicals, the power station, the airport and some smaller activities to the proposed islands, it is possible to create a new city next to Haifa and double Haifa's population. The resulting total value of land ex post the construction of the city will pay for the land needed for the current activities on the islands and land for future expansion of 100 per cent.

Tourism is a good predictor

There is good news for Haifa, my hometown.

At present and for the last few decades, there is continuous outflow of young people from Haifa. This is somewhat surprising. The city is endowed with natural beauty and two leading institutions of higher learning – Technion and Haifa University. Many young people come to Haifa to study. But I know of almost no middle-aged family in Haifa who has not experienced the discomfort of the kids leaving the city as soon as they reached the age of leaving home. Fortunately, the age at which kids leave home is increasing.

The result of this out-migration by young people has created a stigma. In some sense, Haifa is a "has-been city". Despite its burgeoning hi-tech industry young professionals prefer to commute to the city from as far as 100 km. Many hi-tech companies provide shuttles to Haifa from as far as Tel Aviv as well as from the local train and inter-urban bus stations.

To emphasize the dire situation of Haifa, I should mention that the traditional industries on which the city was built have been declining for a long time now. The Haifa port and the refinery have competitors to the south. And so have many other smoke stack industries. Fortunately, the leaders in Haifa are not advocating that we invest effort in bringing to Haifa growing industries in which we have no competitive advantage.

What can be done to change this trend? How can we keep skilled people from leaving the city?

The ongoing debate between Richard Florida and Ed Glaeser concerning the means to keep people, and skilled people in particular, from leaving a city makes me optimistic about the future of Haifa. The Florida vision is that the by creating dense, bohemian downtowns, tolerance and arts it is possible to attract the creative class. The Glaeser vision is that good schools, relatively short commuting times by car and street safety are the key. Well, we have good schools and commute times in Haifa, including from the outer burbs, are relatively small. Also, Haifa is has the reputation of co-existence of Arabs and Jews. Finally, the mayor is an arts freak.

But what make me most optimistic is that tourists are coming to Haifa. Despite the fact that the city has only 700 modern hotel rooms, the tourists have discovered the 8th wonder in the world of tourism… The Bahai hanging gardens are unsurpassed by any place in the world. Also, before long the Carmelite Order will complete the renovation of their sacred gardens at Stella Maris, the spiritual home of the Order. Haifa will become the world's capital of gardens and parks.

As Ed Glaeser claims, tourism is a greater predictor of how well a city is doing. Intensive tourism reflects a positive view of a place. A city with tourists suggests that the city has positive characteristics.