The Kibbutz

I just came from the festive dinner marking the last day of the 19th summer school in economic theory at the Hebrew University. I saw Kenneth Arrow, an economics Nobel price laureate, and one of the most brilliant minds of the world, being called by the waiter to serve the rice... well, he actually did not serve it, but he opened the large pot. In any case, I never thought that I could be having dinner with seven Nobel price laureates and talk about nothing...

In any case, things that one never thought that could be happening, can actually happen. As the pioneers who came to Israel in the fifties and founded the kibbutzim, it was not possible seeing the kibbutz falling apart as they are today (or at least most of them).

Well, it is not my intention to explain why kibbutzim are falling apart, but here is an interesting story. Last Friday, I went to a Kibbutz near Jerusalem to have dinner at my neighbor's family. I became very good friends with my neighbor who is a very nice girl who also studies at the Hebrew U.

The kibbutz has been almost fully privatized. I don't know exactly how is the income from the kibbutz activities distributed, but I do know that the kibbutz members keep their wages as they are (either if they work inside or outside of the kibbutz).

One of the decisions is that the kibbutz land will be divided among its members. Also, they are transferring the ownership of the houses from the kibbutz to the families. Since houses are on land (duh!), families that receive ownership on their house, are receiving also ownership on the land below it. Ok, so problem solved you may think. Let's give to everybody their house and their little garden so that they can seed tomatoes in it.

Well, guess what? There are some houses with two stories, and two families living there - one on each floor. So, what can we do there? We can give ownership per floor, but each family will receive half of the land that belongs to them.

So I have a solution. Let's cut the house in two, and wait for the immediate response of the families. The first that says "NO! GIVE THE HOUSE TO THE OTHER FAMILY, WE PREFER THE HOUSE NOT BEING DESTROYED" are the winners! They keep the house.

Ok, this won't work. Actually, also the strategy of King Solomon wasn't perfect. Maybe the fake mother is also a good human being, and prefer that the child will stay alive, and she was also faster in her response. It is not that we go on the street and we are totally indifferent to murderers who kill everybody but our sons...

In any case, the question is: which family is keeping the house? The one who lives in the upper floor or the other one? How do you take a fair decision?

Well, the decision was based on kibbutz tenure. The family who has been a member of the kibbutz for a longer period of time, is the one keeping the house. The other family will receive land to with a new house.

Total justice or total catastrophe? Maybe the second. Families (of course those who are not keeping the house) are going to the court to sue the kibbutz for the decision. Even though they are receiving a new place, most of them prefer to stay in their current house, which is located in a better spot. So look at the irony. The kibbutz: the big, strong, happy and indivisible family... this is what happening 60 years later. The own members who founded the kibbutz are suing the same kibbutz, because of private property issues...

The kibutztroika is an unavoidable process. Since kibbutz members know about quality of life outside the kibbutz, does this mean that they are revealing their preferences? Economic theory explains about the revealed preference. If you have 5 bucks, and you can buy either a cup of coffee or a cup of tee, and you decide for the coffee, then I can understand from that behavior that you prefer a cup of coffee over a cup of tea, and that actually, the coffee makes you happier than the tea.

If kibbutz members can still maintain their lives inside of the kibbutz but they have decided to have an "out of the kibbutz" life... Is this a reason to think that the free market is better than the socialism of the kibbutz? Or maybe they can't maintain the kibbutzim as they are? Is it because that the rate of return to agriculture has significantly dropped since these kind of jobs do not require high levels of human capital? Who knows... I can't answer this question, and probably neither can you, but this could be a nice discussion.

In any case, as I just told Prof. Arrow walking out of the restaurant: "Thanks! The rice was wonderful!"

Here you can see a small report on the kibbutz: