The Minimum Wage and the Partiality of the State

Since there are two issues on the parliament's agenda, we must address them in today's article. While the topics of the budget and the minimum wage are technical, they are matters that closely concern our people, especially laborers and retirees. One reason I am addressing both issues together is to demonstrate which segment of society the government stands with. For the true face of capitalism as a system is revealed most clearly during times of crisis. Turkey is experiencing an economic and social collapse that is deepening beyond just a crisis. Inflation is eroding the value of money, and despite all the measures taken with IMF-supported imported personnel, the economic crisis cannot be stopped; on the contrary, it is deepening. Unfortunately, our parliamentarians, failing to realize this trend, are holding kebab feasts in parliament while discussing the budget and minimum wage issues in the relevant committees.

When we look at the issue of the minimum wage, as wages and the minimum wage rapidly erode in the face of rising prices, some remedies such as a slight raise are naturally being considered. Since the rate of wage increases remains below the rate of inflation, wages and the minimum wage do not rise in terms of purchasing power despite the raises; they erode. This situation is an indicator of the exploitative face of capitalism. However, laborers are happy for a while when the minimum wage rises, but over time, as inflation rises and erodes the wage increases, that happiness turns into a nightmare. Because for the happiness that can be experienced during wage increases to be real, it depends on stopping inflation. The reason for the happiness experienced in the initial period when the minimum wage increases is called "money illusion" in economic literature. That is, laborers experience the deception that the same degree of increase in purchasing power will be achieved in the initial periods of a rising minimum wage, but this situation never happens. Such is the sad adventure of wages against inflation.

Meanwhile, a bill for capital is also being discussed in parliament. The issue of inflation accounting for capital is being discussed, and this bill will likely be enacted. If we look into what this inflation accounting is, our answer would be: When taxing capital income, that is, the profits of businesses and companies, the intention is to take the annual earnings as the tax base after adjusting for inflation. For example, if an income of 1000 liras is subject to a 10% tax, 100 liras of tax will have been paid. If inflation is also 10%, the real value of the 1000 lira earnings will be around 900 liras, and therefore the tax will be lower. Looking at it from another perspective, when companies' profits are taxed, taxes are being levied on some asset values in addition to real profit due to inflation. At first glance, inflation accounting may seem extremely justified for taxpayers who generate capital gains.

It is precisely in this context that if it is justified to protect capital gains against the erosive effect of inflation during inflationary periods, why is the same system—that is, protecting wages by providing periodic increases according to inflation—not considered? In short, how is it justified to tax wages that are not adjusted for inflation, and through withholding at that, meaning taxing them before the wage even enters the relevant person's pocket? Moreover, the first bracket of labor income is taxed at a higher rate than in almost all European countries, and since the income brackets are extremely narrow, most incomes rise to higher tax brackets starting from the middle of the year. It is seen that the state, which treats capital like a favorite child, unfortunately deems it appropriate to treat laborers and retirees like stepchildren.

In the face of this situation, let us develop a proposal in two different scenarios. In the first scenario, inflation accounting should not be applied to capital, and wages should continue to be taxed under the current system. If inflation accounting is not applied to capital income, the state would be taxing not only the profits of the capital owner but also partially their assets. In this scenario, if we define the assets of bosses, and even excessive assets, as exploitation, would it not be reasonable to tax a portion of the exploited shares added to the boss's wealth and reflect this as an income increase to the increasingly impoverished laborers and/or retirees? In this way, the government would act more sincerely in not letting laborers be crushed by capital regarding the minimum wage, and by making adjustments for laborers and retirees between periods, it would, in a sense, apply an implicit inflation accounting to wage income. Can the government implement this scenario? It is here that we see how much the government, which we see as powerful and which thunders around, is actually at the command of capital and how weak it is.

In the second scenario, the state, which applies inflation accounting to capital income, should similarly apply inflation accounting to labor income through various models. The inflation accounting to be applied to laborers can be easily adjusted through tax bracket lengths or bracket heights. In short, if desired, labor income can easily be adjusted for inflation. Naturally, such measures limit public revenue. The measure that can be taken in terms of public revenue is, in the classic expression, to collect high taxes from those who generate high income. However, this principle cannot be applied as easily as it is stated. First, a government that needs money tries not to scare it away as much as possible. Second, the government claims that by providing tax advantages to capital, it is thereby developing production and employment. Some of these arguments may be valid, but some are meaningless and are not implemented. But at the core of the matter lies the inevitability of a political structure that has transferred state-owned enterprises (SOEs) and all public assets to the private sector surrendering to capital. It is seen that at the root of the issue lies the exploitative capitalist system and the state and government, which are the loyal guardians of capital, the fundamental element of the system.

So, our laboring friends, in times of crisis, the behavior of the apparatus called the state against capital and labor is very clear; the state is always on the side of capital, because the name of the system is "capital-ism". However, the state apparatus may try to make itself appear likable to labor through various maneuvers. For example, one should not be deceived by the appearance of the state using the minimum wage process as a display of not letting labor be crushed by capital. This treatment is actually nothing more than an activity of the pro-capital state to legitimize the system and appease laborers so they do not become sharpened against capital. It should be known that in this system, every penny given to laborers is taken back in full in future periods, and sometimes even many times over. Let us address in future articles how the welfare state or social democracy applications, which are experienced very clearly in this situation but for some reason are frequently voiced even by some intellectual circles, are a deception.