Real Estate Rant Must Stop Being a Turkish Dream

"Let Poverty Go Blind"...Turkish Folk Saying

With the definition of "Turkish Dream" I referred to the definition of "American Dream".

The American Dream is a way of thinking and a tradition that advocates the idea that success, prosperity and fame can be achieved through hard work. According to the American Dream, "life should be better, richer and fuller for everyone, and everyone should be offered opportunities based on effort, talent and/or achievement", regardless of social class or circumstances of birth. However, as the idea of getting rich quick has developed, this idea has begun to weaken and even to be perceived as "corner-cutting".

I liken the concept emphasized as "Real Estate Rent" to the corrupted concept of the American Dream. I accept this as one of the leading "root causes" of our country's failure to develop and especially of the recent earthquake nightmare, the cost of living, political corruption, social moral collapse and social despair. As a citizen who has lived for more than half a century, this determination is fixed by my experience.

We can say that the Turkish nation has learned production and trade outside of agriculture in almost seventy-five years. Before that, our people farmed, did military service, engaged in small craftsmanship, and knew almost nothing about industry, trade and entrepreneurship. Especially the trade and finance sector was almost completely dominated by a minority.

From the 1950s onwards, when industrialization began and gained momentum, the population began to concentrate in cities as cities grew with the "migration from villages to cities". In this situation, especially real estate (land and housing) started to enter our social genetics as the most valuable investment instrument.

Whereas before, grandfathers advised their grandchildren that the more they valued land and agricultural products and the more they worked, the more they would be able to eat, as real estate started to be perceived as the most prominent investment instrument, they started to advise that the sooner they owned a plot of land or a house, the more prosperous they would live in the future.

Turkish people had not yet grasped entrepreneurship, had not yet understood the power of production. Educated people preferred to work as civil servants at the gates of the state rather than establishing businesses and producing. The spirit of entrepreneurship and synergy could not flourish and prevail in the manufacturing sector, and the most intense investment desire, energy and savings of our people were channeled into the construction sector.

The desire and effort of the Turkish people to own a house was normal and should not be underestimated, because our people did not know and could not see a more valuable investment instrument than real estate. This is still the case today. It may even be considered good for an average citizen with a fixed income to save $200 a month. However, this citizen will only be able to acquire a $100,000 house with this unit in an average of 42 years. In other words, as a result of his entire working life, he will be able to acquire an average apartment or perhaps not. This is "POVERTY" in the real sense.

What could happen if somehow; "Entrepreneurship Spirit" is formed and developed in our people? I will try to explain with an example.

For example; if 100 people establish a joint company in a city in the middle of Anatolia with an average of $ 100.000 per person, which is the equivalent of a 3 + 1 medium decision apartment; they would have a total capital of $ 10.000.000 and this would be a company of approximately 200 million TL. Functions such as the place of establishment of such a company that will operate in the manufacturing industry, the product(s) to be produced, the market research of these products, the provision of customers, the selection and supply of machinery, the finding and selection of employees to work with, the establishment of the company, even the management of the company, etc. can easily be outsourced to professional service providers. 

A company established with this level of capital would also be financially supported by substantial government subsidies.

Assuming that such a company makes an average profit of 20% per year, each individual who invests will be able to buy an equivalent apartment within 5 years, and will be able to buy the same apartment again every 5 years. In the meantime, as the value of the company will increase, when the shareholders want to transfer their shares, their share value will be higher than the initial $100,000. Roughly speaking, this form of investment can bring the investor at least two houses or over $200,000 in financial savings within 5 years.

On the other hand, if we assume that our investor's apartment described above will have an average monthly rental income of 10 thousand TL in the location described, this rental value will be approximately 32 thousand $ in 5 years and he will have a financial savings of over +132 thousand $. If we foresee the inflation increase in dollar terms and add it to this value, we can assume that our citizen will have a savings of just over $ 150 thousand. Roughly speaking, it would be +$50,000 more profitable for these investors to invest in the manufacturing sector instead of investing in a house in the specified period.

If they ensure that their companies operate very efficiently, this difference can be even higher. In addition to their material profits, their moral satisfaction will be more meaningful and higher. 

If we could apply this example to hundreds of thousands, hundreds of thousands and perhaps millions of our citizens, Turkey would unquestionably become first South Korea and then Germany. This is not a mathematically difficult model at all. Thanks to these and similar models, our citizens will not be struggling to buy a house, they will be struggling to establish companies and make production.

But can these hundred citizens spend the money they have accumulated throughout their working lives on starting a business instead of investing it in housing, and take the risk of being without housing for life? Under today's conditions, no, they cannot.

So what can be done in this example for citizens to take the risk? The answer is simple; the state should provide support. So how can the state support? 

The state, as the rightful owner of a certain percentage of the company's shares, guarantees the money that the citizen puts at risk in return, that is, if the company goes bankrupt, I will give you back the money you invested, but in return, this much of the earnings and/or share is mine. In other words, the state will insure the investment. In this case, would our citizens prefer to invest in production instead of buying a house? The vast majority of them would prefer to do so. In this case, the savings of our people will be transferred to production instead of real estate, and both the nation and the state will win.

What are the drawbacks of "real estate rent" as a result of the acceptance of real estate as the most valuable investment instrument? 

Rant literally means return. In another sense, rent is "the gain obtained without labor". There are many reasons for real estate rent. The value of real estate, population growth and migration from villages to cities as a result of industrialization are the leading ones. As a result of the high acceptance of real estate rent in the public consciousness;

 Real estate rent has become the most important factor that constitutes-or rather dictates-the urban plan. The influence of real estate rent in urban plans has led to unplanned urbanization, commercial, financial and legal corruption.

 Except for the sectors that serve construction, it does not contribute to the development of the manufacturing sector and the increase in exports. As the appetite for rent increases, the determination and willingness to labor decreases. In other words, while the appetite for production, which is a labor-intensive activity, decreases, the appetite for earnings obtained without labor increases.

 Informality and tax evasion are high. The state, and therefore the nation, does not gain, but those who constitute a very small part of the nation become extremely rich.

 Due to the fact that zoning permission belongs to the state, members of the construction sector are heavily involved in politics and try to have a say in the governance of the country, but this is not the result of their good intentions.

 The state bureaucracy related to urban planning, ground surveys and construction activities becomes corrupt. Inspection exists for "lip service" and is done "as if".

 The ambition to earn without labor, and the channeling of the majority of financial savings into this field, reduces production and those who produce. The manufacturing sector is eroded. This leads to the cost of living, unemployment, crisis of confidence and social despair.

 Flimsy buildings built on unsuitable ground become graves for our people in natural disasters such as earthquakes and floods.

Real Estate Rent Must Be Eliminated from Being a Turkish Dream...

Yes; on this issue, "We will be hopeful, but we will also know that hope cannot be a method"...

In that case; How will real estate rent be removed from being a Turkish Dream? Who can find the method to realize this and who can implement this method?

The task falls to the state again. The state mind has to take and implement radical and rational decisions on this issue. Some of these decisions should even be included in our constitution. 

What are the decisions and actions to be taken?

 Real estate land, i.e. all land on which buildings are or will be built, will be owned by the state. This is a very difficult and mega-costly decision to implement. It may even lead to social outrage, but it will be the most correct, rational, tactical and strategically important decision. If it is somehow not possible, at least no housing construction will be allowed in any of the existing areas open for housing construction from that moment on and this decision will be enacted into law.

 After this date, the areas and land for housing construction will be entirely at the discretion of the state (not the municipalities) and all such land will be owned by the state.

 All housing to be built will either be built by the state's SOEs (Public Economic Enterprises) or will be subcontracted under the coordination, management and supervision of TOKİ.

 All existing contractor authorization certificates will be revoked, and contractor certificates will be re-issued to only a small number of deserving people according to scientific norms. Similar authorization will be given to civil engineers, auditors and bureaucrats.

 The state will build housing permanently, providing the supply to meet the demand. The houses will be rented to citizens at very affordable prices. The tenant will forget the concept of "landlord". All the houses where our citizens reside will become a kind of "lodging".

 Houses that cannot be expropriated and that property owners want to rent will only be rented to the state. Subsequently, the state will rent them to its citizens as "lodgings".

 All agricultural land will also be nationalized, and people will only be allowed to cultivate it and rent it out on the condition that taxes will be levied on the produce. Obviously, a system similar to the "Tımar" system of the Seljuks and Ottomans will be established. The state will decide on the crops to be produced, but will also buy the entire crop from the citizens. The crop will not be wasted, and if necessary, it will be instantly transformed into canned food and similar products in the factories to be established in the neighborhood. Even the remaining plant will be turned into biofuel in biochemical plants, and the pulp will be powdered and used as fertilizer.

 The state will design and create state-guaranteed bonds or life and pension insurance and similar investment instruments that allow individuals to live comfortably in the future (as promised by today's real estate rent), that are indexed to production and manufacturing, and that are state-guaranteed. In other words, people who have to work for 40 years in order to buy a medium-sized house in a medium-sized place will not have to worry about where, how, how safe and how economical they can live, thanks to these investment instruments and housing provided by the state.

Conclusion

To summarize, the state will do the most rational work possible to meet the economic and safe housing needs of its citizens; in fact, this will not be as difficult for the state as it is thought to be, the paving the way for manufacturing, which is being held back by real estate rent, will be opened, the appetite and reflex of citizens to invest in manufacturing will be created, and this phenomenon will be encoded in our social genetics. As production increases, the level of welfare will rise; as the level of welfare rises, self-respecting, self-confident, successful and happy individuals and families will increase; science and scientism will be taken for granted and used as a guide; the nation and the state will grow and develop. 

The state must pull its people out of the spiral of rent without labor.