Wednesday, 18 January 2012

Go one, have another one. Who's counting?

How much would you spend on a new dress? Or for you girls out there, on a new car?
Now how much would you spend if you were only going to wear/drive it three times? What if you were only going to use it once?
Yes, of course if you were not going to derive much use out of it, you’re less likely to spend vast sums of money on it, correct?
So keeping that idea of frugal efficiency in the front of your mind, let’s look at drainage design. Yes, I know. I can hear you all saying, “But that’s the fourth article I’ve read this week on drainage...” But bear with me, I’m sure you’ll learn something new here:)

Let’s say you’re the mayor of an Israeli town, let’s call it Mazkeret-Yankele-on-the-Galilee, and the town is in need of a complete overhaul of its drainage system, which is simply lots of large, generally tubular pipes, underground, that carry away rainwater. And Israel, for most of the year is generally dry (and hot and sunny, which is wonderful). So what size should the pipes be? Yes, you think this should be a straight-forward question for the City Engineer, only I forgot to mention that in our scenario the City Engineer for Mazkeret-Yankele-on-the-Galilee happens to be your brother-in-law who, though a fully qualified engineer with a framed certificate in Latin, lorem ipsum, from one of the finest technical colleges of Swaziland hanging on his wall, just by chance missed that lecture on pipe sizes. So he’s passed the buck to you.

Clearly the bigger the pipe, the costlier it is. One short pipe alone could cost thousands of shekels, so if you decide on a 50cm diameter pipe, instead of a 40cm diameter pipe, then the cost of the entire project could jump by millions.

A problem, true? Which is why you’re not an engineer in real life. Or probably why you’re not mayor either.
How does the engineer go about it? Well he takes a look at precipitation tables. Or, in other words, rainfall figures. How much does it actually rain in Mazkeret-Yankele? you ask. (This is a brilliant question, well done, maybe you should run for mayor). And thanks to the sterling work of the Israel Meteorological Service and friends, we have such tables. Now what?
Well the engineer can design a network based on a size of pipe that will be capable of dealing with the rainfall that occurs in a typical year, and in some not-so-typical years too. But according to the tables, maybe once in every 25 years there will be a storm of such magnitude that the drains will not be able to cope. There’ll be flooding, mayhem and havoc. There’ll be flotsam and jetsam, and then’sam. There’ll be calls for resignations, and lawsuits, and homes wrecked. Which could all be avoided if the engineer chose a larger pipe. Only that would be more expensive.
This now becomes not an engineering issue but a political and municipal one. The size of pipe, and hence the total amount spent on a drainage system, boils down to a question of: How often is the town willing to put up with flooding - once every 25 years? or, if Mazkeret Yankele was awash with cash, once every 50 years?

Now I may be exaggerating but sometimes it appears as if the drainage systems of some Israeli cities work on the once-in-a-year principle. In other words, the council chose a size of pipe that is able to deal with all rainfall up to, but not including those heavy storms that occur... um... well every year, actually. Our drainage systems work superbly for most of the year (i.e. summer), but fail to cope when it rains. Last week, it rained in Tel Aviv and I literally had to wade across King George Street, which had become King George River.

The same principle can apply to roads too, but here Israeli town planners apparently lean to the other extreme. A town has to decide how wide each road should be: It should be wide enough to deal with the traffic that uses it, but there are busy times of day (rush hour) or year (Independence Day) when traffic is heavy, and other times (nighttime) when it’s dead quiet. So how many lanes should there be? One can see plenty of examples of three- and four-lane roads crossing the country, which for most of the day are empty. Here’s one in Tel Aviv (photo taken at 9am on a normal workday, January 2012):
Would it not be more sensible to design narrower roads with fewer lanes, freeing up more space for housing, parks, public areas? And improve the public transport system that would reduce the expected traffic flow during those peak hours of the day?

It’s not such a crazy idea. Have a look at the House of Commons in England. This is the chamber where 650 members of parliament meet, discuss, argue and pass legislation, but how many seats are there? About 408 (It’s difficult to be precise as there are no individual chairs, but rather long upholstered benches). When the chamber was originally built in 1860, and again when it was rebuilt after being bombed in the Second World War, the decision was made that it should be that size. Why? Because most of the time, the chamber is bare. Not many turn up for the debates. And when there is something special on, having elected representatives sitting in the aisles, or on each others’ laps, simply adds to the atmosphere:)

I predict (and my prediction is being given here free, for you, no purchase necessary) that at some time in the future, we will see road-narrowing in Israel.

Wednesday, 4 January 2012

We shall fight them on the beaches and in the counting houses

Could you lend me 100 shekels? Let’s make that 1000 shekels. No sorry, I mean, 14,000 shekels, and I promise never to pay it back.
Sounds like a good deal? No, I didn’t think so either, but you’ve already done it, and you just didn’t know it.

Let’s assume you are an ordinary (of course, I don’t mean ordinary, in many ways you are spectacular and incredible, which is why you’re reading my blog, and why we’ve been friends for all these years), I mean, let’s assume you are a regular Israeli taxpayer. Well then you have given (and will give) thousands of shekels to pay for others who have either misplaced their money, or thought it would be far funnier if they got you (yes you, no not him next to you, YOU) to cough up.
I am of course referring to public sector non-contributory pensions, but if I’d written that in the first line, you’d have gone off and watched Downton Abbey. True? True:)

Now many people get put off by the word “pension”, and I agree, it hardly sets the heart racing. And if we add on “non-contributory”, well, even I nearly dropped off to sleep just typing it.

In Hebrew the term used is pensia taktsivit (תקציבית (פנסיה which is a wonderful euphemism. It literally means budgetary pension, which of course makes no sense to anyone at all. If they called it by the English term “non-contributory” then you’d begin to understand the problem, and at the same time it would rankle all those public sector workers who are generally having a laugh at our expense.
Let’s pick for our example a 43 year old, Dror Mishtalem, who works as a logistics officer in the Israel Defense Forces. He’s clocked up over 20 years of service in the army, and he’s soon to retire. Yes, you heard that correctly: Soon. Apparently permanent staffers in Israel’s standing army oddly become old and decrepit at an incredibly young age.
So let’s say Dror hits the ancient age of 46, and the IDF packs him off home with a pension. A pension that is determined by the size of his salary at the time of his retirement, and could easily be 10,000 shekels a month, which is greater than the average take-home pay of the typical Israeli (average salary is about NIS 8,100). And it also goes up every year, in line with inflation, noch. Plus, Dror could easily live till the age of 83, so that’s a good 37 years of retirement ahead.
In short, we’re talking about a pension worth more than 4 million shekels.
Where does this money come from?
Did Dror put some money aside each month? No.
Did his employers, the IDF, put some cash away for this inevitability? Wrong again.
Did the government, in its usual avuncular spirit, and with honed wisdom of thinking ahead, set up a fund to cover this vast sum? Pull the other one.
Then who?
Yes, you.

I think you should sit down. That’s it, have a cup of tea, or better still a stiff drink.
You, an honest taxpayer, on an average salary, are paying thousands of shekels to keep former engineers, accountants, typists, clerks, drivers, pen-pushers, officers, and maybe a few soldiers, in comfortable retirement.
Of course I say retirement, but that’s also a misnomer, because actually these people often do not retire.
Imagine you are 46, still fit, agile, capable, and by no means middle aged, and you’ve just been “retired”. You’re not going to sit at home and knit matinee jackets for the grandchildren. (Don’t ask - I’m not sure what matinee jackets are either, but Agatha Christie stories always mention them). Indeed, many former IDF staffers find new jobs almost immediately upon leaving their old ones. I used to work for an engineering company where the CEO, his deputy and the head of each department were all former army employees. And to tell the truth, they were all capable, professional individuals, that got things done. So why does the IDF dispense with them so early? Why are we paying for these people to retire so absurdly early that, despite the cushy pension, they often find themselves other jobs, with no doubt good salaries too.

Of course that NIS 4 million I mentioned is just for one person. There are thousands more like him, and most of this pension benefit is “unfunded” i.e. there is no kitty with all the money in it, but rather each month, every month, you--the taxpayer--pay in money which goes straight out again to retired army personnel. It’s called pay-as-you-go. I like that. It describes the situation well. Imagine if all working-age people in Israel suddenly got up one day and stopped working or left the country. Then the thousands of army pensioners would find they have no pensions.

So how much do all these pensions cost? Well there’s a slight disagreement here. Guesses range from NIS 100 billion to over NIS 400 billion, depending on who you ask. The army, by the way, won’t allow anyone near to assess how much it’s costing. So I conservatively took the lowest estimate. And that means a NIS 14,000 contribution each from you and you and you, hence that snazzy opening above.
Don’t be bedazzled by the Defense Minister’s waffling on about security risks, Iranian nuclear threats, and Hamas plotting. The army needs that money because it’s the largest unfunded pension scheme in the country.
And we’re paying for it.