Development, Growth and Income Distribution

Dear friends, since the real content of many economic concepts is not known enough in the society, they can be made the subject of political discourse consciously or unconsciously. The purpose of political discourse is mostly to legitimize the policies of political power. In other words, political discourse may not contribute/benefit to the purpose of the policies implemented, to inform the public, or to the public interest. For this reason, the political discourse used by the political powers in the world either reflects only a certain part of the reality or distorts the reality to create the desired perception. The justification for projecting a part of reality is understandable, but justifying distortion is not possible in moral and conscious societies. In this article, I will try to make an economic and political evaluation through these concepts.

Political Discourse, Public Opinion and Intellectuals

The target of political discourse is public opinion. The political power, which wants to provide legitimacy to its policies, wants to convince the society that the implemented policies have been successful. Otherwise, administrative legitimacy is also questioned. For example, in the period following a period when economic growth is negative, that is, the economy shrinks, growth will be high, probably due to the base effect. This does not mean that everything is getting better and that the economy is really growing. However, political powers may distort this reality, create the perception that everything is fine with the policies they implement, and try to ensure the legitimacy of the policies they implement. Not everyone in a society has knowledge of economics, nor does it have to be. However, politicians have to be moral and responsible and behave. Not only they, but also intellectuals who shed light on society should be moral and responsible. It should not be misconstrued that everyone educated here is an intellectual and therefore moral. There are also educated and knowledgeable people whom the political power uses to persuade the public for political discourse. However, if these people prefer not to be honest with their education and society by distorting the truth they know for the sake of some interests, these people cannot be called intellectuals.

Gramsci argued that defeating the minor sides of the opposing side is of no importance in ideology, and that the strongest blows in this struggle should be directed at the leading people (1).

In other words, instead of dealing with small polemics, he states that people with intellectual responsibility should struggle with more important and bigger problems. In addition, the responsibility and importance of scientific works are emphasized in reflecting the intellectual dimension of this period. For example, the responsibilities and attitudes taken by academics at important turning points in history should be reflected in the scientific works that are/should be put forward. For this reason, academics should be a title/effort/occupation where providing oneself with more comfortable living conditions is not the primary goal, at least. Using empty titles as a source of status indicates that the person has not reached personal maturity (let alone scientific maturity).

Development, Growth and Income Distribution

These two concepts, which are often confused with each other, are very different from each other. The main difference between them is that development can be defined qualitatively and growth can be defined quantitatively. In this respect, the concept of development is closely related to the human development index. The human development index is a data obtained by making use of three basic variables: healthy life, access to information and living conditions. It consists of subjects such as healthy life, access to health services, infant mortality rates, and average life expectancy. For example, Turkey has surpassed only Mexico and Colombia in maternal and infant mortality rates (according to 2019 data), with nine per thousand among OECD countries (2).

In average life expectancy, it is ahead of Mexico, Hungary, Slovak Republic, Poland and Colombia with 78.6 according to 2019 data. Living conditions are usually measured by GDP (Gross Domestic Product) per capita. This figure shows the economic growth. Therefore, economic growth figures are not an indicator of development, but only a dimension of development. Although GDP per capita is an important indicator, it may not be a very meaningful data on its own. Let's make an assessment of this figure, which is found by dividing the total GDP by the population.

Let's take the 29th of June 2018 as a starting point. The starting value of the dollar exchange rate is 4.57 TL. The minimum wage for 2018 is 1603 TL net. This makes about 350 dollars. Four years later, on June 29, 2022, the dollar rate is 16.65 TL, the minimum wage is 4253 TL, which is approximately 255 dollars. Depending on the fluctuations in the exchange rates, there may be differences between 10-20 dollars. Considering that the increase in average wages is less than the increase in the minimum wage (3), we can say that wages converge to the minimum wage.

In this case, it is possible to say that the loss in wages in dollar terms from 2018 until today is more than the loss in GDP per capita in the same period. The figure, which was 10696 dollars at the end of 2017, was realized as 9539 dollars at the end of 2021 (4).

In this process, the rate of minimum wage earners has also increased (5). In other words, the National Income per capita decreased by 1157 dollars in 4 years. However, on the other hand, the decline in the salaries of (retired, working) wage earners in dollar terms has been many times greater than this. This situation reveals that the income distribution in the country has deteriorated. Here, I do not go into technical details such as "Gini Coefficient" for easier understanding. However, it is clearly seen that the purchasing power has decreased. While the people who make a living with their labor in the society become poor, a part of them can have an unfair advantage. Now let's look at the political dimension of this event.

Income Distribution by Public Policy Dimension

Public policy analysis shows that the economic situation in society is never a coincidence. Because public policy does not come about by chance. It is a known and desired process. The deterioration in the living standards of wage earners is based on a very basic reason. Of course, the wrong use of public resources, waste, mistakes made in determining priorities, unqualified public officials, the destruction of the culture of institutions are also factors. However, the policies applied to keep the rate in a certain place as a result of the wrong policies are trying to compensate the wrong with the wrong. That is to try to extinguish the fire with gasoline. It's no surprise what happens when you cut interest rates. However, trying to justify this policy with political discourse is not enough to prevent what will happen in the end. Or what will happen in the end may not be what the political power sees as a public problem. Providing foreign exchange guarantee for the savings of people who have savings from public resources, that is, from the taxes of the people, is an application that will disrupt the income distribution. Indeed, it has been so. There is a very good saying in military strategy. The mistake made in the strategic field cannot be corrected in the tactical field. Similarly, the mistake made in public policy cannot be corrected by political discourse. However, political discourse may hinder the public's perception of reality for a while.

References:

(1) Antonio Gramsci, "Aydınlar", Hapishane Defterleri, Belge yayınları, 5. Basım, 2007, İstanbul, s. 154-155.

(2) https://stats.oecd.org/ , E.T. 29.06.2022

(3) https://www.karar.com/yazarlar/ibrahim-kahveci/orta-sinif-bile-aclik-sinirinda-1592916

(4) https://www.dunya.com/kose-yazisi/buyuyorsak-gelirimiz-niye-azaliyor-gelirimiz-azaliyorsa-bu-nasil-buyume/650387