Plastering over the cracks

You cannot fight inflation by impoverishing the public. Impoverishing the public is not a method of fighting inflation, but a method of fighting the public. I must state with regret that the so-called anti-inflationary policy being implemented aligns not with the former, but with the latter. In this case, the policy not only loses its legitimacy but also has no chance of success.

Let us first establish this: inflation, in its appearance, is a price increase; in its operation and underlying effect and purpose, it is a transfer of wealth and power between social segments. Therefore, we must recognize inflation not as a market mechanism formed automatically, but as a power mechanism created through political maneuvers. If we do not look at the issue from this perspective, we can neither understand its formation nor shape our political preferences. So, let us state the matter clearly: inflation is not a natural price increase, but a mechanism for resource and power transfer created by deliberate political decisions.

Well, we have gone through and are still going through a wave of inflation that is running exceptionally high in our country. Let us try to reveal the economic and political aspects of the process by examining the inflationary environment we are experiencing, along with its causes and consequences. Our starting year is 2000. As is known, we arrived at the 2000s by going through crises. In 2000, the IMF presented us with a program, and the first term of the political organization that came to power in 2002 seems to have been quite successful. But whatever happened, the second decade of this political organization has been spent in deep crisis and rising unemployment and inflation. Before getting into the explanations, let us clear up a small misunderstanding. Sir; according to classical knowledge, to define a crisis, there must be negative growth for two or even three consecutive periods. This definition method is entirely wrong. In our country, there was no negative growth; on the contrary, there was positive growth. So, why does this contradiction occur? Because growth rates are given as a total, independent of income distribution. When an economy grows at an extraordinary speed, if income distribution is not taken into account, the result appears positive. Yet, in such a society, a part of the public, or even a large part, may have become increasingly impoverished. In short, while the situation appears positive with economic growth figures, which are blind indicators, it can be understood that society is being dragged into a deep crisis through sociological indicators, which can be illuminating. This is the situation in our country, even if the degree of severity is debatable.

If this is the situation, in whose name and why are we experiencing such inflation now? As with every socio-economic event, the inflation we are experiencing has more than one cause. However, it is necessary to distinguish between inflation caused by relative market conditions that rises insidiously over time and inflation of political origin that rises suddenly and has high resistance. Our topic today is the second type, the sudden-rising political type of inflation. If this is the case, that is, if inflation is a resource transfer mechanism in the guise of market processes, what could be the source and cause of the political-type inflation we have experienced recently? Just as no period can be examined in isolation, the last period of the AKP must also be examined not alone, but together with the first period. Let us remember, please; the first period was a time when IMF-supported foreign resources flowed into the country. In addition to the confidence the IMF program gave to foreign investors, the build-operate-transfer and public-private partnership models that came to the agenda within the framework of the program and neoliberal practices led to an abundance of money and artificial images of prosperity in the economy. However, this abundance was not lived through the rise of the country's own assets, but through debt. In short, while living in an economy rising on debt, look at the ignorance of the intellectuals; they paved the way for the country to be brought to these days by being deceived by momentary and deceptive images and rhetoric. While the political power that incurred this debt was the one acting ignorantly, the ones who would pay the debt would not be the wealthy segment, but of course the public, in accordance with the definition of inflation as a resource transfer mechanism. Well, was it necessary for debt repayment to impoverish the public to this extent in such a indebted state? No, of course not! However, if investments had been made that could repay the debt incurred, the situation would not have been so dire. When we say investment, since a lot of infrastructure has been built, why are we experiencing such inflation? Because infrastructure investments are not of a capacity-increasing nature in the short term, but are the type of investments that can amortize themselves in the long term. Do we not need such investments? Of course we do, but if the temporal harmony between the cost of investments and their potential income-generating capacities is not managed properly, this is what happens. If a family moves into a luxury house that exceeds their income capacity, they will take that house away from the family. To explain the situation in a way our business people can understand, such an example is useful. If a firm expands extraordinarily without doing much calculation, as is the case with some contractors, the end can be bankruptcy or financial distress.

Well, if this is the situation, why did we embark on such ventures with abnormal speed? This issue also takes us to the subject of deep global capitalism. Global capitalism is in crisis; rogue funds and idle construction materials in the West are looking for places to profit. Turkey, with its 85 million people and in the shadow of the IMF, was seen as a perfect fit for this, and a demand for resources and investment flowed into the country. It was risky for investments to turn towards factory formation. Investors, avoiding risk, took the state by their side with payment guarantees and entered into infrastructure works. We are paying these bills today. In the meantime, we can also include wasteful public spending and the like in the bag. More importantly, when we also factor in the stubborn suppression of interest rates and the resulting currency-protected deposit robbery, we can see from whom and to whom the resulting inflation transfers wealth.

The picture, in short, is this. Now our people are taking to the streets with demands for tax adjustments based on income, salary increases, and so on. All actions are legitimate and acceptable in terms of the exercise of democratic rights. However, the short-term solution to the problem is not in street rallies or demonstrations, but in political choices. Because inflation is cyclical and political in nature. In this case, the solution must also be of a political nature. Such a deep crack cannot be closed with plaster!