Inequality rising in Turkey and across the world

Güven Sak

Living in Ankara these days increasingly feels like being in the world of the fictional Hunger Games series, the dystopian novel by Suzanne Collins. In the world of “Panem,” the Capitol houses the rich and the talented, and the 13 districts are home to the poor and laboring masses. Every year, there are “games,” gathering a pool of talented young people at the Capitol and pitting them in a fight to the death. The winner gets to live in Panem.

Why hunger games dystopia now? Just follow the facts. According to the Food and Agriculture Organization of United Nations (FAO), food prices are on an 11-year high as of 2021. In 2020, in the first phase of the pandemic, the FAO announced food prices to be at a six-year high. This is due to hoarding and the COVID-19-related food nationalism. “China ramps up farm imports to cover domestic food shortages,” read Bloomberg the other day. Access to food, just like access to vaccines, is becoming increasingly scarce.

https://www.bloomberg.com/news/articles/2021-03-18/china-ramps-up-farm-imports-to-cover-domestic-food-shortages

Take Turkey, for instance. A key feature of Turkey’s economic growth between 2003 to 2018 was its inclusiveness. Poverty declined from 37 percent to 8.5, a 77-percent decline, mind you. Since 2018, the trend has changed. First came the economic shock of 2018 and then the COVID-19 shock, pushing more than 3 million Turks below the poverty line. That’s an increase of around 40 percent in the number of people below the poverty line in just two years. Think of what that means for society. (See pp.42–43 below)👇

According to TEM, the bottom 40 percent of the pyramid accounted for 60 percent of job cuts in the country. That’s the growing rift between the haves and the have nots in the country. The policy mix that we have since 2018, without a doubt, has been working for a few and not many. How?

The Biden administration has provided direct relief to its citizens amounting to around 27 percent of GDP, while the relief packages Turkey has provided amount to less than 1.5 percent of GDP. Support was all in the form of loans in Turkey. That’ bad for the bottom 40 percent. With global food prices rising around 40 percent since the beginning of the pandemic, the pain is rising to unbearable levels.

People are already feeling the impact. Just check Metropoll’s May survey, 82.8 percent of Turks believe that consumer inflation is higher than the officially announced 17 percent. Around 60 percent think that it is above 30 percent. Producers’ prices? Already at around 38 percent officially. If we do not change our economic approach, a more dystopian world awaits us.

A green-digital trade region is taking shape on both sides of the Atlantic. A more talented and well-trained workforce is needed to steer the new, non-carbon-based technological revolution. Recently, the International Energy Agency released its roadmap for net-zero emissions by 2050, noting that 65 percent of employment in the energy sector will be highly skilled by 2050. That too is bad news for the less skilled and the countries where the less skilled are in majority. Note that 60 percent of Turks have an educational achievement of middle school or less whereas the same figure is around 20 percent in Germany. Which one is easier to adjust?

There may be opportunities for developing countries. Green development, a jobs and growth agenda for developing countries with green-digital transformation is a possibility but only if developing countries have the means to adjust.

This requires fewer indebted firms, fewer troubled banking systems and lower CDS risk premiums. These countries need to focus in order to make a real effort to gain from the transition. Developing countries with organizational capacity could pull it off.

As the Nobel economics laureate, Joseph Stiglitz, said some years ago, development, unfortunately, is about organizational capacity. It is what separates the developing from developed countries. The world needs global leadership not only in vaccination but also in managing the green transformation. Saving the planet should not come at the cost of bringing fictional dystopias into reality.

This commentary was published in Hürriyet Daily News on 07.06.2021

Originally published at https://www.tepav.org.tr.

Notes from Turkey and its vicinity: It’s the economy, stupid