Archive

  • March 2024 (1)
  • December 2022 (1)
  • March 2022 (1)
  • January 2022 (1)
  • November 2021 (1)
  • October 2021 (1)
  • September 2021 (2)
  • August 2021 (4)
  • July 2021 (3)
  • June 2021 (4)
  • May 2021 (5)
  • April 2021 (2)

    Obama continues with the stimulus packages

    Güven Sak, PhD23 March 2010 - Okunma Sayısı: 1060

     

    Did our focus shift from the crisis toward the budget recovery? Did the crisis management measures have lost place on the agenda and the time to eliminate the damage of the crisis on the budget came? No, it did not; not yet. The administration of the United States of America (USA) continues to manage the crisis period. US Senate passed the Jobs Bill on March 17, 2010. The bill now waits to be signed by President Obama. Therefore, the administration accepted a new $18 billion economic stimulus package to manage the crisis process. US administration learns new lessons from the crisis and keeps on trying. They do crisis management there; they still do. But, we wait. Since we do nothing but wait, we do not feel that somebody is in charge. Have you thought why we are looking around with anxiety?

    Economic policy design reminds a statement by Samuel Beckett: "Ever tried. Ever failed. No matter. Try again. Fail again. Fail better." At the heart of economic policy lies not being afraid of failing. What matters is to have the capacity to learn from mistakes. This is exactly what we should have done in the case of the 2008 crisis. However, we have proved several times during that process that we do not have the capacity to try and then learn quick lessons and then try. However others continue trying. President Obama tries again in the midst of all the discussions that he mismanaged the crisis. The best way to strengthen the impression that "someone is in charge" is to maintain the will to try. This is the first lesson to learn.

    So, what does the arrangement Obama passed on March 17, 2010 introduce? The bill targets the unemployed and small and medium size enterprises (SMEs). The bill introduces tax exemption for employers on workers they hire who have been unemployed for more than six months. It also defines additional tax reductions and provides social security premium support for employers promising to employ unemployed people for more than one year. The bill entirely targets to limit the damage caused by the crisis. In the coming period, steps geared directly to the finance problems of SMEs and to prevent employment losses across state governments will be taken. President Obama, while passing the Health Reform draft on the one hand, addresses the problems of the unemployed on the other. The purpose here is to resolve the dual structure of America's economy. However, just as in Turkey, signs of recovery from those other then the well-off enterprises are quite weak in the USA. So, Obama takes a step to support the SMEs. This is the second lesson to learn.

    A similar situation can also be observed for Turkey. Unemployment rate has reached historic levels and seems to get rigid around this level. TURKSTAT data reveals that the number of those who are unemployed for more than six months increased by 400 thousand to 1.9 million in 2009. Moreover, 4.2 million people who are unemployed or discouraged correspond to the 20% of the working age population (21 millions). But, why then the unemployed people in Turkey do not come to fore on the agenda? Why can active employment policies not be introduced here? We think there are a couple of reasons for this specific for Turkey. First, this is a problem we have never encountered before. Until today, we believed that during crisis we should tighten our belts. This is what we were taught. Though no one does this currently, Turkey's administrators have made no other diagnosis. Under these circumstances, inaction should be the strategy. This is the first challenge for Turkey. Second challenge is structural: Turkey only talks about impact analysis, does not actually carry it out. And since making a mistake is not even a matter of question, no one learns lessons from mistakes. As not learning from mistakes translates into not mending mistakes, Turkey cannot implement active employment policies. And the third structural challenge: Here in Turkey, it takes courage to transfer public funds to the private sector. No one takes that path without any "special prize."  You might have to give account of your act besides the court saying "that decision was in the interest of the system as a whole." You cannot respond to questions on public interest as "you think the public sector is composed solely of the state." What is more, the judge who poses the question or the prosecutor who files the suit does not know economics. They have the authority to file a suit and judge. They will ask "to whom did you give the money" regardless of whatever you say. In this sense, we should pay attention to calls for legal reform.

    Turkey's despair in front of the crisis is mainly structural. The issue is closely related with the ability and the organizational structure of the public administration and the modus operandi of the legal system. As a result, we have nothing to do but question whether or not anyone is in charge in the midst of the turbulence.

    One fundamental conclusion to be derived from the bill Obama introduced is that the system still cannot operate on its own. The era of stimulus packages is not over yet.

     

    This commentary was published in Referans daily on 23.03.2010

    Tags:
    Yazdır