We're again talking about what should have been done, and my point is that it's a pointless exercise, but if you really can't see any ways to build a functioning economy with literally billions of free money, then let's continue the exercise: about half of Palestinians used to have permits to work in Israel before Hamas fucked them over by attacking Israel. In the recent years the number of Israeli work permits has been increasing again, unfortunately Hamas decided to fuck them over again. So even if they had a small economy of their own, there was a way to work and bring money to then spend in Gaza.
But I find it really hard to believe you couldn't imagine a dozen things more useful for Gazans than things to wage war against Israel that ultimately only ever made their situation worse.
Another episode of "what should have been done" is that while with humanitarian aid it's not really possible, we never should have sent Gaza any development money without any conditions based on outcomes of their usage. But as with the above, what's done is done.
I'm not sure what else they're supposed to do. After a terrorist attack like this one, I don't really see any other option that would realistically be accepted by the government and the population other than attempting to wipe out Hamas completely. Israel is risking many lives of Israeli soldiers in order to reduce Palestinian civilian casualties by deciding to do a terribly difficult ground invasion instead of levelling Gaza to rubble, Grozny style. I don't blame them for trying to make the situation at least a bit easier by blocking communication of all things.