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Passiveness prevails in the mid January
Production levels are steeply falling down. The growth estimations for 2009 are modified downwards. There even exists a risk that the economy will contract. So, what would you do under such circumstances? An alternative can be inaction. I may list a lot of reasons why such a passive attitude will be assumed; but today I will enumerate just seven.
First reason is there is nothing to 'exaggerate', since 'such things happen' and 'such things will naturally end'. Being patient is the formula. This attitude is in fact synonymous with not acknowledging the seriousness of the situation.
Second, you are aware of the seriousness, but you are a fatalist. Everything takes it course. In this case, there is no need to act. This might be the second reason of passiveness. Third, though you are not a fatalistic, you do not know now to react to such a situation. Therefore, the best thing to do is, to do nothing.
Fourth, you calculate the potential growth performance of the economy as zero. All economists know that no economy can grow continuously over its potential. The growth can diverge from potential from time to time, but this leads to problems. In this case, you say "I am sorry to say, but this is the potential of the economy" and leave the issue there. In short you do nothing.
Fifth reason can be ideological: Intervening in the market might oppose to your ideological stance. The ones that are to take the final decisions on economic policy or that are to direct the decision makers might believe that the economy will fulfill the equilibrium alone without requiring state intervention. They might believe that an early intervention might lead to undesired outcomes and thus argue that it is dangerous to take early action. Are there interesting economists with such an attitude? Of course there are. And the economics course books always mention such an 'economic policy (economics without a policy)' option.
Six, you finally reach the "Oh, this might be serious" point. However, the third reason is still valid and you do not know exactly what to do. You believe that 'now' it will be more logical if 'others' come and design economic policy on your behalf. Nonetheless, you need time to announce the public that you will ask help from the agencies you used to discredit. So, it will be wise to waste some time to be able to say 'See? The whole world is proceeding on the same path'.
Güven Sak has taken the patent for the seventh reason. He mentioned the issue a few days ago, and wrote on the issue in his column on last Saturday. The title is "Are we the control group of an experiment?" In experiments testing new medicines, a control group is used. While the rest of the patients are medicated with the new medicine, the control group is not medicated. Therefore, the disease follows the normal course for the patients in the control group. By this way, the efficiency of the medicine is evaluated according to the difference between the ones taking the medicine and the control group.
I guess, in case of dangerous diseases, it can be concluded that while bad outcomes is inevitable for the control group, medicated patients have a chance to survive. Therefore, Güven Sak, defines the fact that Turkey has not taken any action while 41 countries are taking measures against the crisis as a favor for the rest of the world. Turkey does a favor (this is not Güven Sak says; it is my interpretation) by 'accepting to be in the control group'.
Until this point, we dealt with the alternatives for and possible reasons of 'inaction'. I do not know which of these reasons are valid for Turkey. But, of course, there is another alternative: 'taking action'. But, it is already the middle of January. I would like to remind you that it is not possible to make 'that decision' today and ensure 'this outcome' overnight. We need time to observe the outcomes of economic policies implemented.
This commentary was published in Radikal daily on 11.01.2009