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This is not just an economic crisis
Are you aware that the current global disaster is not just an economic crisis in the sense we have been used to during the last three decades? Decision-makers, including Honorable Prime Minister of Turkey, may not be aware of this yet; but USA President Barrack Obama is. Let us see how we know he is aware and what we miss.
President Obama was in Columbus, Ohio on March 6. He attended Columbus Police academy graduation ceremony in the context of the "Recovery Package". He explained the public that a 2-billion dollar fund was allocated for the use of the Ministry of Justice under the scope of the Recovery Package, this way more police officers would walk on the streets and more attorney generals would be employed. The President was trying to buoy Americans up and asking them to trust in themselves and their country. Nowadays, President Obama is travelling all around the US and gathering with the middle class under the framework of the program for restructuring the US city by city. He is listening to the problems of the public and explaining the policy measures implemented. While we are goofing around with a "we do not need a measure package" attitude, President Obama was giving start to repair works of bridge in Minnesota and signing in front of the press the Recovery Package that will finance the works. What is the most important task in managing a crisis? It is managing the crisis psychology. This is exactly what Obama is doing. Those unaware of this shall learn it.
But, why is Obama attaching such a high importance to this task? Because of the first point we have stated: This is not just an economic crisis. This is a disaster that affects and harms the society as a whole. In the past, crises affected a certain segment of the society. During the last three decades, crisis emerged and ended rapidly. The prices have gone up or down steeply and supply-demand equilibrium was enabled via rapid price adjustments. Now, this is not the case. Today, the equilibrium is reached through quantity adjustments. The economy is trying to reach the new equilibrium with huge reductions in employment and production. The indicators considered as favorable in the past do not represent any favorable condition anymore. In the past, everyone, thinking that the bad days will end, would wait for the end of price adjustments. In the meanwhile, workers would not lose their jobs, though were faced with lower nominal wages. Employers would wait for the end of the storm. Now, this is what we learned from the crisis: This storm will not end in a breeze. It is a quite limited probability to recover from this storm without any damage unless the government builds shelters.
And what is more, the disaster does not affect all segments of the society at the same level. Negative effects of the disaster are not distributed symmetrically to all segments. Relatively poorer segments of the society with poorer educational background feel the negative impact of the crisis more deeply. What does this mean? This economic crisis further victimizes the victims. Exactly because of this, what we go through is not an economic crisis but a social disaster.
Is not this also valid for Turkey? If you remember, the 2001 crisis hit the bank officials and journalists harder. They were the first to lose their jobs. New unemployed had relatively better educational background and economic status than the rest of the society. Victims of the crisis did not match one to one with the victims of the society. Nevertheless, the picture is different today: 2008 crisis predominantly victimizes the blue-collars; i.e. the working class. In 2001, the factories were not shut down as rapid as today, not only in a certain location, but simultaneously and throughout the world. Effects of the crisis are arising from the suburbs and spreading to the city centers. It is not a few families deprived of income flows. The crisis affects all neighborhoods and cities throughout Turkey as a whole. And this is bad.
The Recovery Package framework implemented in the US shall be closely followed in this context. Attention should be paid why the working group is composed of the middle-class. The "payment check program did not succeed in the US either" argument widely voiced in Turkey proves that the issue in general is addressed roughly and that it is never internalized. Spending check program is not unsuccessful. What Turkey has to do is to learn lessons from the US concerning the dense coordination required to tackle the current disaster. The US experience is definitely guiding with this respect.
When he arrives here in Turkey, President Obama shall first teach Honorable Prime Minister of Turkey the "Introduction to Crisis Psychology" course. We will feel the need for this further in the near future.
Did you know that, if the economy contracts by 5 percent, around 850 thousand people would become unemployed?
This commentary was published in Referans daily on 12.03.2009