Construction, politics, and relative impoverishment

Construction was seen as the capital base and a salvational field of activity for politics, and after continuing at full speed for a long time, it now appears to have slowed down partially, with the exception of state-guaranteed infrastructure projects.

For a while, we feared we might be dragged into a mortgage crisis like the one in the US or a construction crisis that had erupted in Spain. While the situation seems to have calmed down for now, infrastructure projects carried out through state-guaranteed build-operate-transfer tenders or public-private partnerships continue.

It may have been thought that the planned sales to wealthy Gulf individuals, or even sheikhs, would handle part of the business. One might think that the Middle East war could perhaps lead to wealthy individuals from Middle Eastern countries coming to our country, serving to revive this dream of the government. Perhaps the exact opposite trend will develop; if borders close due to the war and travel is restricted, this dream could also fall through.

Construction is an interesting field of investment. It uses intensive labor within a certain period and can create revitalization in many sectors; more importantly, because this field is a technique for creating wealth through rent-seeking in the short term—unlike industry, which requires accumulation achieved through years of effort—it whets the appetite of both the politician and the contractor. Value is also created in construction as an economic activity, but the market price formed above the created value reflects, in part, rents transferred from Anatolia and, in part, potential welfare shifts made from the income of future generations through finance.

This means that the rents created in Istanbul and similar developed regions may provide wealth to certain firms, individuals, or even the city or region, but this wealth created through rent is not a net enrichment nationwide; it is achieved at the expense of the economic collapse or regression of Anatolia.

In other words, while construction activity enriches the one doing it—that is, the contractor or the owner—the country's wealth does not increase with the same intensity. Especially since rents transferred from Anatolia are recorded as income in cities, while the income decline in the region from which the rent is transferred should be taken into account, this situation is not reflected in the accounts because national income is not calculated using a net method. In calculations made using the gross method, national income appears to be rising above its actual growth rate.

As is always said, since construction activity is not an exportable product like an industrial product, money is changing hands internally, except perhaps for the sale of a few apartments to wealthy individuals from Gulf countries. When construction activities reach a saturation point, it means things will slow down or even stop. This is an indication that the business was not entered into with long-term rational thinking and calculations.

In infrastructure investments such as highways or bridges, etc., both politics and those who criticize politics are making a serious mistake. First, let us point out the point where those who criticize infrastructure investments are wrong. Such infrastructure investments are not made with annual or three-to-five-year calculations. These types of investments are made with long-term calculations of thirty or fifty years. Therefore, it is very natural for an infrastructure investment made today to operate below capacity. In this regard, the politician's duty is to make calculations and plans that will take into account long-term economic movements and population mobility across the country, and even lead to meaningful and balanced settlement across the country, without chasing simple political calculations and rent in such investments. Infrastructure spending that will draw the majority of the population to the Marmara region, especially to Istanbul, is waste and, from a strategic perspective, a wrong policy. While it takes 3 hours to get from Germany to Istanbul, the fact that it takes about the same amount of time to get from Sabiha Gökçen Airport to the city center is not a political success, but a complete disaster. While such infrastructure draws the population to Istanbul, urban infrastructure services that were never calculated are disrupted, and the people of Anatolia do not receive their necessary share of the national income increase.

While such rapid investments provide market opportunities for idle infrastructure construction firms and consortium-hungry financial institutions in developed Western economies, they create short-term rent for the political power, but future generations are obligated to pay these debts. I sometimes think that since the first generation of the Republican administration paid the debt of the Dolmabahçe Palace, which was built with debt in the final period of the Ottoman Empire, the politicians of that era, who were the leaders of the debt-paying generation, could rightfully stay in the palace. However, it cannot be argued that the members of today's government, who sell the works of that period for a pittance, have the same right. However, politicians, in particular, create a political base with instantaneous calculations rather than intertemporal calculations and carry out their actions accordingly.

According to this situation, the values found as a result of Turkey's national income calculations should be examined with all these different interpretations. This examination is not the duty of statistical institutions, nor is this system valid in international calculations. However, this situation must be taken into account by national development planners or policymakers. Especially being so adrift in the field of construction should be reviewed very carefully. However, for well-known reasons, it seems that there is no possibility for the existing government to turn back from this path. It seems that as long as the rent channels do not dry up and the accumulation of building stock does not reach abnormal amounts, this path will be followed. When that stage is reached, it may be too late. The political interpretation of this is: after all, politics is short-term action, and today's mistake will be paid for by other politicians and future generations in the long term.