Government vs. economic theory

Mehmet Simsek, the finance minister of Turkey, said  the rate hike, from 4,5 to 10 percent, will have a limited effect on growth of the Turkish economy. And Erdogan opposed the hike with the argument that high interest rates results in high inflation, which is contrary to all economic theory and even common sense. Does any one in the government know anything about economics?

Government vs. economic theory

an old inflated Turkish lira bill



Why is Erdogan still popular?

The latest polls show that even though the support for Erdogan’s government has weakened, it is still strong enough to make him come out relatively unharmed in the local elections 30th of March  this year.

To understand why Erdogan is still popular, it is important to understand some facts about Turkey and  Erdogan’s core voters.

Since the dawn of the Turkish Republic, there has been corruption in the country’s politics. I would even go as far as saying that corruption is a part of the culture. It can be seen in the way business is done on the level of neighbourhoods, just as it is seen in national politics. Close informal relations and a sharing of success with close family and friends are normal and in some way accepted. Especially among the conservative part of the population where most of Erdogan’s votes come from.

Thus, many people expect politicians to be corrupted, and that’s why they do not immediately take away their votes from AKP.

Another factor is probably access to information. Many of Erdogan’s voters belong to the about 50 percent of the population that does not have access to Internet. They are on average poor and with low education. News would be obtained by pro-government newspapers such as Yeni Safak, and Sabah, plus teve channels, of which the big majority are also pro-government. To get an impression of how they report, just visit Sabah in English by clicking here. It’s basically propaganda! Critical newspapers such as Sözcu, is primarily sold in the big cities.

However, let’s for the arguments sake say that a conservative and religious voter would decide not to vote for AKP. What party would they then vote for?

Voting for CHP, with their close ties to the old military regime and their emphasis on secularism would be unthinkable for many of them. Voting for MHP, would also be complicated, even though they historically adopted a softer stance on religion.

The lack of alternatives for this group of voters is obvious. On top of that, Erdogan has over the years become a strong symbol for them, which also contributes to their unwillingness to give up on him.

Many therefore agree that the only reason this group would take away their votes from AK Party, would for personal economic ones. Since the Gezi protests the Turkish Lira has depreciated against the dollar with about 30%, whereof more than half has occurred since the 17th of December. It’s implications on the domestic economy is starting to be more and more visible.

The only question is:

Will the effect be felt by AKP’s core voters before the elections?

Why is Erdogan still popular?

It is all about the money!