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April 16, 2015


Özkan Yeşildağ

For providing us the truth, thank you.


Great post! I have a question regarding the declining inequality in Turkey. I wonder what the causes of that are. According to ILO data, Turkey's labour share has declined from 42.3% in 2003 to 29.7 in 2011.


«a substantial deterioration in the private sector balance. What has happened, in other words, is that the private sector has been encouraged, through easier access to credit, to go on a borrowing binge. Financial indiscipline and reckless have not disappeared; they have moved from the public to the private sector.»

You are describing here the preferred economic policy practiced in many anglo-american culture economies since the 1980s.

In the UK this was notably described by Colin Church and named by him suggestively "privatized keynesianism".


«In the 1980s and 1990s, there was a stream of thought – known as the Lawson doctrine -- that said we should not worry about external deficits that are the consequence of private sector saving and investment decisions. No serious economist believes this anymore in view of the systemic consequences of private sector folly.»

There are then plenty of non-serious but extremely well compensated Economists still maintain that doctrine. It has even evolved into the Greenspan Doctrine that the best economic policy is to boost the balance sheets of property owners, so the capital gains may trickle down.

«Private sector debt crises have a way of engulfing the entire economy, and largely as a consequence, unmanageable private debts tend to find their way onto the public balance sheet.»

A lot of people like the idea that they can make a lot of money by booming debt and then the public pays the bills. Among those many people the middle aged property owning middle classes in particular love that.

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