What would it be like if income distribution was corrected?

We always say that there is injustice in income distribution. In classical terms, we say that even if our income is in its current distribution, it is necessary to increase income by inflation plus the welfare share in income adjustments.

OK, let's assume that the new government takes radical decisions to correct the income distribution and that everyone now has the income required by the welfare level.

Let's proceed a little more concretely. What is our total income? 

Turkey's annual gross domestic product (GDP) was 806 billion 800 million dollars in 2021. It may have increased this year, but even if we accept the same, it means that we earn approximately $9,500 per person for Turkey with 85 million people. This income means the average income of one person for a year. If we take today's dollar exchange rate into account on a monthly basis, it is approximately 14,750 TL. 

This income is per person, of course, which means that the average monthly income for a family of four is 59,000 liras.

As I said, this is the average value. While some people earn less than this income, others earn much more.

Today, when we say that there is injustice in income distribution, we are talking about the fact that a very few favoured stratum earns too much income and the majority of the people earn an income far below this average value.

As I said, in this article, we think that income distribution has been corrected in some way. Let's say a family, two children, four people and a monthly income of 50.000 liras. It is a little below the average, but I think even this income is a tremendous income for many at the moment.

How would you live with such an income?

I made a calculation at the beginning of the summer. Again, based on a family of four, I calculated the monthly income requirement for a standard living level. I plan to do the same calculation again one day in the future with new prices, but for ease of calculation, let's think that prices have increased by 60% since the beginning of the summer and let's calculate accordingly. 

Perhaps prices have increased by less than that, TÜİK claimed that the annual inflation rate for November was 84.39%. Since six months have passed, we should normally take half of this into account. But since my aim is to calculate the minimum amount of money that we can keep from this average income, I accept the increase in prices at 60% for half a year at the maximum.

According to the calculation of that day, we found the monthly income requirement for four people to be 23,800 liras. A certain amount of savings was also taken into account in this need. If we do not take into account the amount we considered for savings, the amount required for expenses alone was 22,600 liras.

Today, with the same calculation of that day, we can calculate that the need is 36,160 liras, assuming price increases of 60 per cent. Round calculation can be 36.000 liras.

That is to say, if we earn 50,000 liras per month today in accordance with our scenario and if we live exactly according to the calculation we made that day, we will have an extra 14,000 liras every month. 

In accordance with our scenario, this is not only the case for us, imagine that everyone you see around you has an extra amount of money in the same way. 

Now let's reason a little about what we can do with this increased amount.

First of all, we would probably start to behave a little more relaxed in the areas where we restrict ourselves due to our standard of living. After all, we think that this extra amount is not for one time, but that we have the same amount of extra money every month.

So in this case, we can say that we will have 10,000 liras in our hands, not 14,000 liras. So let's imagine that we allocate four of the 14 to a slightly more comfortable life.

We would probably immediately apply to a bank with this extra 10,000 liras for the house that we could not afford to buy at that time. 

After all, we now have extra money to pay the instalments for a loan we can get.

Well, if we have extra money every month, why shouldn't we have a car, right?

What else?

I don't know, everyone probably has a dream, if only I had a little more money, if only I could do this or that.

Here's your opportunity, you get much more money than you are earning now, and okay, maybe it's not like winning the lottery, but it's still enough money to be an opportunity for some of your needs. It is more than enough for some needs.

Well, what do you think happens next?

The first thing that comes to mind is inflation. There are a lot of opportunists. There will be those who want to somehow gather the excess money in everyone's hands, and this will whet their appetite. Gradually the price of everything will increase. So it's the same old story again.

Let's say the state took some measures to prevent this from happening and did not allow such opportunists.

So I ignore the inflation result.

In this case, where would the balance be?

Everyone has a house and a car. They have a job, their earnings are normal. In other words, if we say that the level of welfare has increased, I think we will start to spend the excess money we have comfortably. 

Consumption was sure to increase. 

We have become a consumer society! 

I guess this is a situation that will whet the appetite of some. 

Someone will again look for opportunities to destabilise the balance. 

This comfortable spending psychology of people may lead to a desire to consume some consumer goods even though they are not normally needed. 

Imagine, you change your shoes every other day. Or you go to a kebab shop every other day. 

Shoemakers' sales are booming. Kebab shops are overflowing.

Can the state have a say in this situation? OK, the state may have prevented them from increasing prices, but it cannot tell people why they go to kebab shops so much. 

Does the state have the chance to say why do you buy so many shoes?

Naturally, kebab shops and shoemakers will earn more than normal. 

There will be profit from the version!

Of course, when I say shoemakers or kebab shops here, I said it as an example. 

As a result, there will be a boom in sales in the whole market. 

We can even expect price reductions. After all, since the money earned from the release would be more than enough, a price cut would also be an expected reaction for the market.

But what about those who are not in favour of spending? Those who like to save?

You take the excess money you earn to the bank and deposit it, you deposit it, he deposits it, she deposits it. What will the bank do with so much money?

Probably the first reaction will be to lower the interest rates they pay on deposits. 

Loan interest rates will also fall, of course. After all, there is a lot of money in the bank, and banks have to find some ways to distribute this money as loans.

Investors who find cheap loans? 

This is also an opportunity for them. Ready credit, use your mind and make a good investment. Good investment means good profit!

Here you go, employment has increased. There are new job opportunities.

It seems to me that this is going well. 

The welfare level of the people is increasing. Earnings are increasing and unemployment is decreasing. 

OK, we are becoming a consumer society, but I guess there will be a balance.

That's good. Then everyone will be satisfied.

Isn't anyone dissatisfied? 

Maybe.

I guess it's not so easy to make easy money in a market like this. 

It is a sad situation for the money men who think of making money from money. 

Because the state will have taken some measures to prevent the accumulation of money in some people. 

We say income distribution will be balanced!

Is this too fantastic a scenario?

Do you think it is not possible to organise the economy in this way?

I think that if there is careful thought, good planning and the necessary measures are taken by law, why not? As long as a cadre in favour of the welfare of the people comes to power.

OK, maybe these things would not happen completely, but at least the people would live in a little more prosperity.

I think balancing income is a good thing no matter how you look at it.

I don't know about you, but my vote would be in favour of those who would improve the income balance.

I wish everyone a prosperous life.

With love and respect from Moscow