Erdonomics?

PHOTO from Hurriyet Daily News

A recent report by TurkStat, the Turkish government's statistical arm, reveals a growing division between rich and poor despite the high growth percentages and foreign direct investment numbers the government has been posting. While the rich have indeed been getting richer, the poor have gotten poorer. From Hurriyet Daily News:

The people in Turkey’s highest income group are 8.5 times richer than those in the poorest, up from 8.1 times in the previous survey, according to the “2009 Income Distribution and Living Conditions” report recently released by the Turkish Statistical Institute, or TurkStat.

The overall poverty rate in the country likewise increased from 16.7 percent in 2008 to 17.1 percent in 2009, the report said. This means a total of 12.97 million people living in poverty, up from 11.58 million a year earlier. According to TurkStat, the monthly income set as the official poverty line for a four-person household in Turkey was increased from 767 Turkish Liras in 2008 to 825 liras in 2009.

. . . .

According to TurkStat’s figures, the richest 20 percent of people in Turkey earned 47.6 percent of the country’s total income in 2009, while the poorest 20 percent had a share of only 5.6 percent.

“Of course, as the statistics demonstrate, the gap of more than eightfold is a sign of inequality. But compared to Western Europe, this ratio is better and I don’t see a worse deterioration,” Professor Seyfettin Gürsel, the director of Bahçeşehir University’s Economic and Societal Research Center, or BETAM, told the Daily News. He said increasing income taxes in an equitable way would enable the social transfer of wealth needed to help solve the problem of income inequality.

TurkStat’s survey showed that poverty rates increased in both urban and rural areas, to 15.4 percent and 16.1 percent, respectively. The 7.09 million urban poor in 2008 went up to 7.51 million, while the total in rural areas went up from 3.2 million to 3.49 million.

. . . .

Wages constitute the largest income source for the Turkish population, 42.9 percent, compared to entrepreneurial income, at 20.4 percent, the survey said. The breakdown of statistics by region and province showed that Istanbul residents continued to have the highest levels of disposable income in 2009, with an average of 12,795 liras annually in 2009, followed by the Western Anatolia region with 11,501 liras. Southeast Anatolia had the smallest amount of disposable income, an average of 4,655 liras. The number of poor people in Southeast Anatolia increased from 895,000 in 2008 to 999,000 in 2009, or 13.7 percent of the regional population.

For the report, click here.

The numbers come at the helm of an election year in which the CHP is challenging the government on its failure to grow the economy for everyone. Moving back to a social democratic agenda, CHP leader Kemal Kilicdaroglu has promised to work to bridge the wealth divide and provide better social services. The AKP, on the other hand, has put the emphasis on traditional welfare systems and pursued a neoliberal economic policy that has kept Turkey from pursuing another IMF loan while at the same time largely failing to adequately address income inequality, poverty, and the country's significant informal sector.

Part of the problem here is that Turkey lacks a proper tax infrastructure that would progressively address income inequalities and help solve for the growing inequality brought by high interest rates and an elite-oriented growth policy. From my post last February:

According to data from the Organization for Economic Cooperation and Development (OECD), the revenue Turkey collects from personal income taxes and profits stands at less than six percent of the total GDP, and has been declining steadily since 2000. (See "Public Finances" at the bottom of Turkey's OECD statistical profile.) This is the lowest among all OECD countries. As the Anatolia News Agency pointed out in its report Monday, a decline in personal income tax collections likely shifts the burden to workers and more vulnerable members of society. Though the Agency cites no sources, I would very much like to see more analysis of the problem.

Also worth taking note of are the remarkable revenues taken in on cigarette sales, which no doubt hit the families of smokers quite hard. (And, in Turkey, smoking is not only an "upper-class" addiction.)

According to the United Nation Development Program's Gini index calculations, Turkey stands between Peru and Ecuador in terms of economic inequality. All European Union member countries rank far ahead of Turkey according to Gini's equality measures, in addition to Croatia and Macedonia, the two other countries that have accession partnerships with the EU.

Kudos to the AKP for bringing the Turkish economy out of a sad time, but it is time to balance neoliberalism with economic and social rights and democracy that delivers. Perhaps the CHP can shake things up a bit. A counter-cyclical fiscal policy would also help -- some lessons from Chile? Finally acting like a social democratic party while paying significantly less heed to the nationalist/laicist rhetoric . . . actually focusing on democracy that delivers . . . what a concept!