Fatih Özatay, PhD - [Archive]

Being not ready for rainy days 12/08/2009 - Viewed 1655 times

September 12 coup led to a severe destruction in universities. Among the most destructed was Ankara University Faculty of Political Sciences (Mulkiye). Yilmaz Akyuz, a professor in Mulkiye back then unfortunately found himself out of the university in his most productive age like numerous other professors. Maybe, this was good for him, because he went to Geneva as chief economist of UNCTAD. However, Turkey lost one of the most important macroeconomist - in my consideration the most important.

After reading the comments on some daily columns, listening to the majority of the remarks in television channels, witnessing the performance shown by some candidates in associate professorship exams and being taken aback at the level of knowledge in most academic articles, one understands better how the mentioned period destroyed economic thought in Turkey. Let us take a look at Yilmaz Akyuz's words published in Turkishtime magazine in August:

"Turkey needs both domestic and foreign fiscal discipline. The most important factors that limit the independence of countries like Turkey are foreign debt and ongoing payment deficit. I do not like fiscal indiscipline and public debt. I am a Keynesian in that respect. The essence of Keynesianism is fiscal discipline. A country without fiscal discipline cannot use fiscal policy tool. Just like Turkey... The economy has growth for six-seven years. In the meanwhile, you should substantially change the budget structurally so that you can enjoy budget surpluses. You do not impose income tax; corporation tax varies at ridiculously low levels. Then, you overtax fuel, communication, cigarettes and alcoholic beverages. This is an out-dated system; it is a tax paradise like the Wild West. If the situation has come to this point, there is not much option to pursue."

Akyuz touches upon other subjects in the interview as well. You of course do not have to agree with all of his views. However, I would like to highlight the above quotation from an economic who always criticizes neoliberal economic policies. Take out the part on Keynes from the quotation; if you voice these sentences in front of some economists, they will most probably label you as a neoliberal. In Turkey, even discussions on a solid and meaningful economic policy does not fall into place; so there is no need to mention the implementation phase. They immediately categorize you. However, in macroeconomics, there are certain and absolute must facts. For instance, you can accomplish nothing without ensuring budget discipline.

But, here discipline refers neither to obsessively keeping the budget at balance nor to having budget surplus all the time. In good days, you save a buck or two, i.e. you have budget surplus. However, you do not make saving with crazy measures but with a sustainable taxation and spending policy. For instance, you do not create a tax paradise or shut your eyes to the informal sector. And in rainy days, you spend what you have saved in good days or more, if it is not sufficient. So you have budget deficit. If domestic demand has come to a halt, you try to stimulate it at least to a certain degree. Here in Turkey, we even fail to agree on these certain facts. In particular making savings in good days does not suit us. We somehow fail in introducing reforms that will enable us save a buck. Apart from this, when elections are near, we cannot even protect the old distorted fiscal structure leading to more distortion. It is of importance to examine with this lens the policies implemented from mid-2006 to the most of 2008.

One reason for the passiveness against such a big crisis is hidden here.

This commentary was published in Radikal daily on 12.08.2009