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Yes, Turks feel the impact
“Is the guy on the street feeling it?” someone asked me this week. The “it” here refers to the economy of course. His intention, I gather, was to understand why the governing bloc failed in Istanbul, as well as Turkey’s other major cities. Is it the economy or ideology? I tend to think that economy was important, and it’s going to be more so from now on.
First, look at the numbers. The misery index, calculated using a country’s unemployment and inflation figures, was created by economist Arthur Okun as a scorecard for US Presidents. It’s a very simple index that shows you how the man in the middle is doing in a modern economy. People need jobs, and they need to know that the money they earn in that job has value. If they don’t have jobs and they can’t rely on their money, they can’t provide for their families, much less plan for the future. That’s a good definition of misery. According to this indicator, between 2017 and 2018, there was a 5 percent decline in the misery of the average Turk. From April 2018 to April 2019 however, Turks are 60 percent more miserable.
The unemployment rate has reached 14.7 percent this week, with youth unemployment hovering around 26 percent. One out of four young Turk is now looking for work, and can’t find any. Inflation also appears to be safely settling down at a 20 percent plateau. The latest figure announced was 19.53 percent, to be exact. We’re here from 10 percent, mind you, meaning a 100 percent increase in the rate of inflation.
From April to April, the lira has depreciated around 47 percent against the US dollar. This is terrible for Turkish companies indebted in dollars. It’s also terrible for the banks, as their balance sheets are getting a hit. None of these things are abstractions. The man or woman on the street feel worse when that they might be the next person fired, and prices rise while their paychecks stay the same. They feel so much worse that they might vote for a party they never voted for before.
Turkey definitely needs a plan to end the misery, yet the plan is still not around. We are only hearing about good intentions. Turkey’s economy is too fragile for it to engage in political adventures. With pressure building on S-400s, F-35s, Idlib operations, a possible US invasion of Iran and the election redo in Istanbul, Ankara needs to slow things down. This is not rocket science.
There’s that old joke about a guy driving comfortably on the highway, listening to some radio, and all of a sudden he hears an announcement “Attention. Attention. A car on the highway is going the wrong direction. There might be a car coming towards you at high speed. Drive carefully.” The guy looks around him and thinks “it’s not just one car going the wrong way, they’ve all got it wrong! They’re all coming at me!” Ankara today, is similarly clueless about the problems it is facing.
It’s up to Ankara to prove us all wrong. It needs to show that it has a basic understanding of the problems facing the country, and needs to find solutions to them. Pronto.