The Effect of Public Financial Assistance on the Management of Moshav Economic Affairs

This paper analyzes the impact of public financial support on economic behavior in moshavim (cooperative villages). Until the recent (1986-1990) crisis of the rural settlement sector, the public institutions responsible for settlement were unwilling to allow a moshav to reach a state of economic breakdown that might lead to its abandonment. If debts reached a critical level, there was a high probability that emergency assistance would be provided. Examination of events in moshavim established in the Jordan Valley after 1967 shows that the expectation of aid from public agencies weakened the pressure felt by members and management to conduct the cooperative's affairs in an efficient, orderly, and disciplined manner. Similarly, since the settlers' financial obligations were likely to be covered by an influx of public funds, one member was not likely to see in another's debt a direct financial burden. Demands directed to heavy debtors were thus likely to be interpreted as unreasonable meanness towards those who faced the same difficulties and hardships shared by all. The expectation of assistance undermined the moshav's ability to impose financial discipline on individual members.