Friday, March 20, 2015

New Capitalism in Turkey by Ayse Bugra and Osman Savaskan


In the 1970’s, a Turkish film director made Seytan, a campy, micro-budget movie about a little girl possessed by the devil. Do you think it was based on the Exorcist? Well you’re wrong, it was an outright ripoff of The Exorcist! Ismael Metin Erksan, creator of Suzuz Yaz (Dry Summer) made this cardboard piece of junk, using a copy of the script, smuggled from the USA. Turkey’s government had this insane program to bar American movies from the country, then make their own plagiarized version in Turkey, so that 100% of the revenue would stay domestic. There was a Turkish Exorcist, a Turkish Superman, and I’m told there was a Turkish Jaws. How they filmed the shark scene, I don’t know, and the Superman ripoff features four different stuntmen holding on to a (slowly) speeding car. The bad guys run so slowly that Superman has time to grab them and throw them through the cardboard wall of their hangout.

This is essentially what Turkey’s economy was until the 80’s; low-quality domestic products, protected by tariffs. Years earlier, Ataturk started a policy of government intervention in the economy, mainly to increase industry and agriculture. The problem was, it made the economy dependent on the government. I guess Turkey was a lot like Britain and Argentina, with lots of state-owned enterprises, rather than a free market. At the same time, it wasn’t easy to get loans to start businesses, nor were there a lot of people willing to buy bonds or buy shares. It wasn’t until the 1980’s that a lot of modern economies would take off running.
In the second chapter, the authors credit the removal of protectionism with bringing the economic transformation. I shouldn’t say they blame the old tariffs for the problem, because a lot of small countries like Britain and Italy had tariffs. It was their only way to keep their farms in business and prevent the country from becoming dependent on cheap produce from the USA. However, there’s a point when a country needs to make the farmers compete, so I guess 50 years should’ve been long enough. The chapter also brings Islam into the argument, particularly the religious political parties. How they changed the economy isn’t clear, but I suspect that by having a multiparty state, the “old guard” loses power and becomes more receptive to new thinking.

One thing that isn’t discussed much in this book is the diaspora funding. How much of Turkey’s money comes from Turks living abroad, I have to wonder? There are sizeable Turkish communities in Germany and Australia; do they send money home? Prior to the 1980’s, did money sent home by Turks living abroad contribute to the economy? Bugra and Osman make it clear that foreign investment, heavy tourism, and bond sales would come around much later, so once again we see that funding was scarce in pre-1980’s Turkey. Also, there was a high level of socialism to the economy, similar to the John Maynard Keynes model. The country wasn’t exactly mineral-rich, so there wasn’t much to export, and they didn’t get into light manufacturing the way Japan did. Would that have strengthened their economy earlier?

I guess the main point of the book is that a government can’t prop up the economy forever, and at some point you need to get rid of the tariffs and make the business “leave the nest.” Britain did it in the 80’s, and so did Israel, South Korea, and many other small nations. From reading this book, I think Turkey made a great decision not to go on the Euro. It would’ve left the economy worse than that of Greece. Now that the Eurozone is a shambles, maybe Turkey’s currency will rise in value? I wonder.

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