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    When will the early elections be held?

    Fatih Özatay, PhD01 November 2009 - Okunma Sayısı: 1132

     

    News that early elections can be called started to come to the forefront. What can be the date of early elections? Of course this question has various dimensions, but I will only address the economic dimension. But it is hard to answer.

    There is no doubt that the first indicator to examine is the unemployment rate, in particular non-agricultural unemployment rate. A person who lost his/her job and returned to village is recorded as agricultural worker will have to potential to make a difference in the elections compared to the case where he/she did not lose his/her job. We know that unemployment problem, general or agricultural, deepened significantly over the last year. Although it seems that the problem eased slightly in the last months, latest data reveal that general unemployment rate increased by 2.9 points and agricultural unemployment increased by 3.8 points compared to the year before. Of course the changes in unemployment rate are of greater importance for those who will decide the date of elections.

    Let us refer to official sources. Medium Term Program announced recently estimates that unemployment rate in 2009 will be 14.8 percent. In other words, this official document says that general unemployment rate will be 3.8 points higher than a year before. Moreover, it states that in 2010 the unemployment rate will be no better; at 14.6 percent. A moderate recovery is expected in 2011 with an unemployment rate of 14.2 percent.

    In short, unemployment figures are not much determinant for backdating the elections. But they also do not provide a strong rationale for holding the elections at the originally set date. First, foreseen easing in unemployment is not worthwhile. Second, we cannot know which shocks will be encountered until then. If negative shocks appear; for instance if world economies recover quite slowly, even the foreseen moderate easing cannot be achieved.

    So, we did not derive a sufficient result based on possible developments in unemployment. Let us now examine the 'excuse' dimension of the early elections. "OK, unemployment went up while production slowed down. But this is a global problem, we cannot do anything. We have no fault in the current state of affairs. What is more, we are among the countries less affected by the crisis." This was what I meant with 'excuses'. Let us disregard to what extent the judgments in such an excuse is correct, and particularly the 'we were among the less affected' claim. It is already close to being subject to a statistics war. We will have the chance to hear and read on it.

    What is more important is: It is obvious that such excuses have a shelf life. If unemployment rate will still be high in 2011, the mentioned excuses will expire. People start to ask righteously: "So, what did you do?" Considering the need for a proper excuse, holding elections as early as possible seems more advantageous. But I guess an election propaganda based solely on an excuse would not be possible; though if it was, it would be a distinguished contribution of Turkey to the history of democracy.

    The third important variable is budget means. As a tradition, political administration increases expenditures before the elections. However, currently budget does not allow much of an increase in expenditures. If we tidy up the budget starting immediately until the end of first half of 2010 (a bit of price adjustment and a raise in taxes on indisputable items) we can expand the space to maneuver. In 2010 4 percent economic growth can be achieved as a result of the reason I will mentioned below. Tax revenues can also be raised slightly. This, around the end of 2010, we can increase expenditures to a certain degree.

    This takes us to the virtual dimension of the issue: Production in 2009 was so low that even the slightest improvement in the factors affecting production will enable us to produce more than 2009 and will be enough to push up the growth rate. For instance, if the rest of the world recovers slightly, we can achieve a certain increase in exports. Level of production will not be much pleasing compared to the 2008 level; but who cares. This growth, though it is virtual, will pave the way for the "Things are getting back on track, this trend will prevail" propaganda. In that case, when we get close to the election date, we have to 'select the best of the bad bunch' considering the economic performance. And so the last two factors I addressed becomes determinant: In terms of the economic conditions, 2010 does not seem to be appropriate for elections.

     

    This commentary was published in Radikal daily on 01.11.2009

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