I believe that political polarization has been blocking our way and reducing our luck. The US has the same problem.

Politicians love political polarization. They can’t help it. They love it by definition. Political polarization enhances a politician’s ability to mobilize voters and thus increases his chance of winning elections. Electoral victory does not bode well for the people. It never has and it never will. I believe that political polarization has been blocking our way and reducing our luck. The US has the same problem. Political polarization makes it more difficult for Turkey to overcome the middle-income trap, and for the US to boost the economy in the short-term. Let me tell you what I think.

Let me begin with the US. A study reveals that the 50%-50% divergence of the American people between the Democratic and the Republican parties hinders confidence in the demand-boosting measures in effect. Republicans have the majority in the Congress, President Obama is a Democrat. Obama takes a step to revive the economy. The day after, the Congress does all it can to reverse it. Daily economic policy decisions lead to an intense political debate. Political polarization exacerbates economic policy uncertainty. Why? There is an election ahead. The Congress has a Republican majority. Everyone wants to know if the policy decision will be followed or not. People don’t want to take action amid uncertainties. As no one acts, the economy cannot revive. Political polarization therefore hinders the growth of the economy. A study titled "Economic Recovery and Policy Uncertainty in the US" at Voxeu tells us so.

In the case of Turkey, political polarization obviates structural decisions that the government and the Parliament have to take. Structural reform implies a process at the end of which there will be both winners and losers. Not a single politician in Turkey has the courage to throw the status quo in a society divided 50%-50%. Since everyone without exception acts with an evident lack of confidence, fearing that they will lose what they have and will not be able to win the expected, Turkey has been in a deadlock concerning economic reforms since 2007. Politicians do not dare break the polarization they themselves have created. And no one asks, “So, you were saying that the Copenhagen criteria would become the Ankara criteria.”  Turkey is not able to settle with its history and geography. It has been subsisting off its own resources.

Please, just take a look around: since 2007, political polarization in Turkey has been rising constantly. No structural reforms have been introduced since then. Meanwhile, prime minister Erdoğan won more than 50% of the votes in the third election in which he took part. However, since then, Turkey has been tumbling down in the competitiveness indicators of the World Economic Forum by ten steps a year.  In the absence of tax reform, Turkey’s rank decreased from 97^th place in 2006 to 124^th place in 2012 among 145 countries. In the absence of justice reform, Turkey dropped from 56^th to 83^rd place. In terms of education, Turkey fell from 58^th to 74^th place. I believe that the deterioration in performance in the given areas is linked to the inertia caused by political polarization. Probably the biggest drawback of polarization is the civilian Parliament failing to make a civilian constitution. Then what will happen? Then, it would be a shame for Turkey, if you ask me. The short-term policy uncertainty in the US has been obstructing economic revival. In the case of Turkey, the medium-term economic policy uncertainty that has escalated as a result of political polarization has been pushing the country down into the middle-income trap. I thought about these things while I was watching the Republic Day ceremonies.

This commentary was published in Radikal daily on 30.10.2012