No need to go into mourning. The remedy is here…

A strange debate, claiming that Turkey is facing “technical stagflation”, is taking place following the release of latest GDP growth rate. Let me clarify this: This is “slumpflation”. Pure and simple… We just need to accept the issue here just as it is in order to come up with better solutions. In this report, you will read my analysis of Professor Eğilmez’s formula.

As the title indicates, we don’t need to lose hope. The GDP growth data released yesterday is the previous year’s data. We are likely to face a negative growth in the first, even in the second quarter of the year. However, the fact that GDP growth rate in the 4th quarter of 2018 is -3% may lead to a high positive growth rates in the 4th quarter of 2019, which we call it “base effect”.

But, as I’ve mentioned in yesterday’s report, the issue here is not growth rates. Turkey has experienced some high rates of growth over the last couple of quarters; however, it’s going nowhere fast on World GDP Ranking. So, it just goes to show that this isn’t about economic growth; this is about development and progress.

Frequently mentioned by Professor Mahfi Eğilmez, defined by me as a “must” during my travels in Anatolia, but constantly ignored by Turkish leaders for some reasons, the “structural reforms” will help us achieve development slowly but surely. All we need is someone with strong willpower to undertake this task.

Don’t get me wrong because I also pay attention to what other experts have to say, many of whom I don’t agree with, since they are voicing some quite valuable opinions. Apart from the fact they are suggesting hopeful things such as “Everything will be fine” or “We’ll get through this”, we, however, differ from each other about the approach we take towards the “reforms. I say “justice, education, freedoms”, they; on the other hand, choose to rather focus on education and economy. They must think everything is just flawless in the area of justice and freedoms. I consistently declare that we should climb the ladder of development all together. But, they underline the importance of an equal allocation of resources. I honestly don’t know how this “equal allocation of mediocrity” will help us thrive, considering that we are living in a country where even the most educated one should have doubts about his/her capabilities, where even the leading business people fail to create brands.

“Structural Reforms (revisited)…”

As this debate will continue for quite a while, I’ll start explaining why we need structural reforms. The formula of Professor Mahfi Eğilmez that he posted on social media yesterday helped us see that there’s still hope. Declaring that the structural reforms that Turkey should undertake in politics should first be implemented in the Constitution, Professor Eğilmez underlines that the recent amendments to the Constitution do not serve the purpose.

“The Constitution must define exactly what is meant by separation of powers, establishing a strong structure so as to avoid the powers of one branch (legislature, executive branch, and judiciary branch) are not in conflict with the powers associated with the other branches. Following the constitutional amendments, a series of reforms must be implemented in the electoral system and party systems. Electoral threshold in Turkey must be abolished entirely. Parallel changes must be made to Political Parties Act; deputy candidate must only be elected into the parliament two times for a specific period of time; a series or arrangements must be made to abolish parliamentary immunity.” This is a summary of a list of reforms that must be undertaken for the Constitution and fundamental laws.

Social Reforms, on the other hand, focus mainly on education. Stating that “We should readopt the educational system of three-four decades ago and adapt it to today’s circumstances”, Professor Eğilmez makes a precise definition of justice reform:

“Establishing a justice system free of political influence”.

Once we implement these reforms one by one, the rest will get so much easier as the necessary grounds for the implementation of the below listed economic reforms would be established:

  • GDP growth should be freed of import dependency; current account deficit should be reduced
  • Ensure that budget revenues are cleansed from conjunctural effects
  • Social security and health reform
  • Take the necessary energy-saving measures to lower energy bill
  • Sectoral reforms
  • Institutional reforms

For further details, I suggest you visit Professor Eğilmez’s blog or social media account where a lot more details about central bank independence, tax reform, banking reform and real sector are available for readers.

Obviously, none of these is simple tasks. So far, no government has taken any action to change the electoral threshold, Political Parties Act, laws and regulations governing associations, chambers, commodity exchanges, and educational dependency on government. To be honest, I don’t think that Government will take any action to change that either. Nevertheless, it is no impossible thing since Professor Eğilmez’s formula is so perfectly precise that the rest is up to a government with strong willpower and willingness to undertake this mission.

But first, we should take the necessary steps to improve justice, education and freedoms based on the philosophy of reforms initiated by Atatürk himself. We will never be able to attain high development unless we get rid of the “This doesn’t even exist in Western countries! Why should put it into force?” Instead we should be carrying though the good things that even the Western countries are missing.