FÖŞ seminar: 3 deadly diseases of the economy and their treatments

Date: April 18, 8:30 p.m.

Free online

Link for registration: https://lp.integralyatirim.com.tr/ZiweaAuP9h

What will we talk about in this seminar?

These days, pus and virus are pouring out of almost every sector of the Turkish economy. After 100 years, we have become the sick man of Europe for the second time. However, if we do not diagnose economic problems correctly, we cannot correctly assess what is happening to us. A simple classification can help:

  • Cyclical (temporary, can be dealt with in a short time with the right economic policies)
  • Structural or chronic (rooted in economic DNA, requiring social consensus and patient reform to resolve)

Diseases.

An example of the first type would be hyperinflation. The reason is that Erdogan manages the monetary policy and the methods accepted by the world cannot be used in treatment. An example for the latter is the current account deficit. The current account deficit can be improved for a while with the right economic policies, but it will show up again after a while. The solution is to implement structural reforms accepted by the whole of society.

In this seminar, which I will be giving under the auspices of Integral Investing, I will explain 3 dangerous diseases and their solutions, which cloud the future of the economy and create different types of crises if left untreated.

Monetary deficit

Turkey consistently spends more foreign currency than it earns. In other words, he earns his living by borrowing money from the outside world. The two main causes of this disease are lack of savings and inefficient production. If a drastic treatment is not implemented, the exchange rate shocks that we have frequently experienced in recent years will eventually lead to a balance of payments crisis. In other words, the country opens the flag of bankruptcy. The solution is to encourage financial savings and improve the quality of the people and machines used in production. Then how ? I will explain at the seminar.

chronic unemployment

Chronic unemployment has become a disease that drains all energy from society. The reasons for this are the mismatch between production requirements and workforce skills. In other words, the lack of education and the inability of the public to produce a coherent labor policy spread the disease. In particular, low-skilled people and lack of youth employment pose a risk of social unrest beyond economic hardship.

If permanent unemployment persists, political stability will deteriorate, the social security system risks collapsing and the brain drain will accelerate. Remedial education begins with animal husbandry. I will explain the rest in the seminar.

undeveloped turkey

The third and biggest problem is the lack of development. Discussion of Turkish economy is based on very narrow data such as continued growth of national income, construction of road bridges, inflation, current account deficit. However, the goal of state and government should be (sustainable) development. What is development?

I like this definition:

Development; It is the progress of human life in the material and spiritual realm by changing the economic, social and political structures of the country and increasing the welfare of society. In this regard, development includes only economic growth determined by general numbers, but goes beyond it. Economic development (growth) is very important for the material well-being of society, but it is not enough to express development alone. The concept of development is a concept that finds its counterpart in the discipline of economics as well as outside the discipline of economics. The most important factor separating development from economic growth is that it covers the whole of society. Economic growth is the increase in a country’s productive capacity and the quality of that capacity.

When this increase is reflected in social elements that are not structurally economic, we can begin to speak of social development (Social Development Report, 2010). Social development includes not only economic growth, but also social development and change. To give an example, social development, improvement of national income distribution and reduction of poverty, intensification of infrastructure and social investments not only in certain regions of the country, but especially in underdeveloped regions , thus removing the fact of “economic and social backwardness” in each region of the country, and modern technological developments in the problem of education. It aims to move to a level that includes information, increase the country’s material wealth, enrich people’s livelihood and expand culture, develop awareness of environmental protection in parallel with the development, to raise awareness of women, children and human rights, to ensure women’s participation in the economy and women to have a say in social and economic developments. (Social Development Report, 2010).

When development is viewed from this perspective, one can easily see that with development, society has transcended itself and transformed into a new society. In short, social development constitutes the social dimension of the current understanding of development, which is defined as the change of the economic, social and political structures of the country in order to increase the quality of life of the individual. (source: Karadenizsiad, link)

After the democratic crises of the 2013-2016 period, Turkey is in decline in all international development indicators. If this situation continues, either we will be socially impoverished and return to Argentina, or we will be condemned to a rich but primitive life like the Gulf monarchies.

The main reason for the end of Turkey’s development movement is the sacrifice of institutions and rules that we call democracy to one-man rule. Turkey has the potential to develop rapidly. In the period 2002-2013, it made rapid progress that amazes the whole world.

So how do we get back to the good old days? Let me give you a tip or two:

  • Judicial independence,
  • Autonomous audit institutions (CBRT, BRSA, EMRA, Public Procurement Authority, etc.) serve the constitution, not the government,
  • rules-based management of the economy,
  • Political competition to produce consensus, not to camp.

You can find examples of previous presentations and seminars on Atilla Yeşilada’s individual website.

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