Economic and political landscapes

During last week's meeting, the Central Bank Governor did not merely raise the year-end inflation expectation from 21% to 24%, but also made important statements regarding the causes of inflation.

Reflecting the same view as Mehmet Şimşek and government officials, the Central Bank Governor continuously emphasized monetary tightening in order to curb demand. Then one must ask the Central Bank Governor: "Well, Mr. Governor, if the problem stems from the demand side, demand has been suppressed so much in almost every area by now that people have been dragged into hunger and poverty to the point of destroying the social capital of the next generation, yet inflation is not stopping in any reassuring way; what is the reason for this?"

I believe that a fallacy of thought lies at the core of the issue.

Inflation is, of course, also affected by demand, but the fundamental cause of Turkey's chronic inflation is its backward industrial structure based on foreign-sourced raw materials.

Namely, because the protectionist and import-substituting development program put into practice with the 1961 Constitution was implemented with absolute closedness, the necessary technological breakthrough could not be made, and by the time we reached 1980, the Özal administration was forced to turn to a "hot money operation." Even this simple historical fact is enough for us to understand today's fundamental problem.

For example, when we look at the Statism period, when we wonder how such a high and chronic inflation spiral was not experienced even though dozens of factories were opened and the strongest development move in history was made, we reach the finding that the 1929 capitalist crisis drove down world raw material prices and input costs were low.

However, it is not possible to encounter such favorable input costs in every period.

Actually, the issue is being able to keep the foreign input connection of the industrial structure at the most optimal level. It is because "assembly imperialism" was experienced during the industrialization move we embarked on in the planning period of the 1960s that our industrial structure, which extends to the present day, relies heavily on foreign inputs.

A country whose industrial structure is so heavily based on foreign inputs struggles with two major problems.

First, the cost of industrial production becomes tied to the foreign exchange rate, and second, a large part of the virtual return of technology-intensive products in its exports is wiped out by import costs. Thus, the country cannot lift its head from struggling with both cost inflation and chronic current account deficit problems. When this is the case, it is helplessly driven toward the path of demand suppression.

The 2000 IMF-Derviş program put this process before us almost as a chronic prescription, imposed it, and made us accept it. Namely, the 2000 program forced us to adopt the monetary targets known as the Medium Term Program (MTP) in order to open Turkey's door to global idle finance capital.

The spirit of the MTP neglected the infrastructure of the economy and primarily revolved around the public sector borrowing requirement, that is, the budget deficit, hence the inflation-interest rate relationship, and in this context, the current account balance, or rather the current account deficit. Here, the development problem of the economy was set aside, and the focus was placed on ensuring that the hot money coming from abroad would not be harmed.

Not only does such a monetary project have no direct relationship with the country's development, but beyond that, on the contrary, it envisions the transfer of the country's resources to foreign economies through financial operations without directing them toward real structuring. This is the shirt that Mehmet Şimşek and the Central Bank operations have tailored for Turkey.

Let us prevent inflation by restricting demand, but will an economic move be made in return for this cost? According to the MTP, it does not seem likely to expect such a development process. Then shouldn't it be asked: Why and for what purpose are we leaving the majority of the public alone with great hardships, and by endangering the future of a large segment of society with inadequate nutrition and inadequate healthcare services, darkening our future with a socially unavoidable social cost problem?

Holding politicians directly responsible for the issue being dragged into such a rather dark course will not lead us to a resolution. Because politicians focus on their four-year prosperity and their retirement. A four-year period is sufficient neither for development nor for the creation and implementation of social reform projects. Long-term programs are designed by universities and reflected by planning departments by recommending them to politics.

Such structuring covers a planning and implementation period much longer than a single political term. The AKP government had such a chance, but the current government tried to extend its time in power by, on the one hand, directing the economy toward the construction sector, which brings short-term profits and creates a capital infrastructure for politics, and on the other hand, by meaninglessly engaging in reactionary adjustments in the culture and behavioral patterns of society as if to provide itself with political space. Yes, the political cadre's time in power was extended, and with some projects deemed quite successful by government members and supporters.

That is fine, but the time in power of those segments that divide society and show some ugly partisan tendencies toward a mere circle has been extended; so where are we today? While Syria is being turned upside down, while the Syrian issue is being discussed in a meeting consisting of Western countries, how will we digest the fact that Turkey, as its neighbor, is not given a seat? In short, the current political cadre has extended its time in power, but at what cost and for whose benefit!