The State of Israel owns, directly or indirectly, over 90% of the land within Israel's 1967 borders. This gives the government enormous power to control housing, construction and even where people choose to live. The subjects of land ownership and control, and their reform, are so important to creating free markets in Israel that IASPS has commissioned Dr. Paul Rivlin, author of several previous Policy Studies on immigration and industrial subsidies, to undertake a comprehensive research program on housing and land use in Israel. IASPS will publish this research in a separate series of RESEARCH PAPERS IN LAND ECONOMICS, symbolized by the green logo. This first paper examines the laws, ideology and institutions of planning. Subsequent papers will deal with the construction industry, taxation and housing costs, mortgage and other subsidies, and proposals for privatization. Recommendations for reform will be presented in the concluding essay of the series. Here are the highlights of the first paper:

* In 1953 the Preservation of Agricultural Land Commission was created. Its activities are part of the reason for Israel's excessively high land and housing costs. The Commission prevents rural communities from being converted into suburbs. The upshot is that money-losing agricultural settlements continue to be subsidized with taxpayers' money while land on urban fringes cannot be put to higher-valued, more efficient use.

* A prime objective of Israeli planning has been dispersing the population. This was accomplished by subsidies, other incentives and even outright assignment of immigrants to peripheral areas. It was this policy, applied to 400,000 Soviet Jews who arrived during 1989-1992, that resulted in building homes where no one would live at a cost of billions.

* To cope with a short-run wave of high immigration, the government offered incentives to builders to speed up construction. (Foreign construction firms were required to put up large deposits to secure contracts, while Israeli firms, some thinly capitalized, received preferential treatment from the Ministry of Housing.) However, the provision of infrastructure - electricity, water, sewers - lagged, so that many new homes remained empty for nine months. Temporary dwellings, trailers and cabins imported or purchased to house immigrants, were more expensive and will last one-fifth as long as permanent homes of the same size.

These are only some of the problems that stem from state ownership of land and housing, and poor planning.