Relief for low-income people cannot happen through debt cancelation
The AKP government, which does not take responsibility for the misery it has created with its conscious choices in the economy, especially with its monetary policy preferences, which condemns 70% of the society to minimum wage and around it, which does not care about the aggravated living conditions to the point of stating "don't worry about inflation and interest", announced a "support package for low-income people" this week.
Accordingly, the government assumes the debts of 6 million voters up to 2 thousand liras. As part of the "package", the electricity, water, natural gas and telephone debts that are in the process of execution, amounting to 30 billion liras, will be covered by the budget. That is, they will be paid by the public.
The AKP government, which has failed in its duty to provide relief to the people during the difficult period of the pandemic, which has instead decided to encourage everyone to consume more with a low interest rate policy, which has driven inflation to unbearable levels with an even lower interest rate policy in the post-pandemic period, and which has further undermined the low-income group by introducing a wealth transfer mechanism such as the currency-hedged deposit, which will cost citizens up to 250 euros in taxes by the end of the year, the same government, suddenly, eight months before the elections, decided to put support for the low-income group on its agenda.
It is certainly not the first time in Turkey's political history that public funds have been used as electoral gifts. What is new, however, is that for not less than 21 years now, the AKP government has used social aid policies not to overcome impoverishment, but for its own interests, in order to create progressively dependent masses.
It is obvious that the AKP has no answers to questions such as why, in the 21 years it has been in power that have seen only the expansion of low-income groups, instead of taking policy measures that would reduce the high cost of living, it introduced policies that lead to intolerably high inflation rates, only to pretend otherwise, why already struggling population groups have been pushed to even higher levels of indebtedness by giving away incentives that encourage consumption. It is clear from the president's own words that he is not interested in answering these questions. In an environment of high inflation, the partial restoration of purchasing power through retroactive wage adjustments and turn the poor even poorer and middle-income groups even lower are clearly results of a deliberate policy. With less than a year to go before the election, measures such as adjusting wages to reflect past inflation in the interim and having the public assume the debt of the "lower income group" are part of their worldview.
In reality, measures like this "amnesty on enforceable debts," without trying to change the underlying economic causes, will not prevent the poor from falling back into the same spiral tomorrow. Knowing this, it is a typical practice of the AKP era to use economic policies to trap the low-income masses in this cycle and make them dependent on their "grace."
As the details of the "low-income support package" demonstrated once again, the AKP has neither the vision nor the capacity to implement policies that will turn the economy around and break the cycle of poverty. Hopes of addressing this immense problem are contingent on the opposition's emergence from the polls which we will go to in less than 12 months.
To be able to realize that the AKP's approach to low-income support goes no further than giving out handouts and serves no purpose other than to perpetuate poverty, we need to explore what the average welfare state means by low-income support.
What are "social transfers" actually supposed to do?
"Social transfers" refers to social support provided by public and nongovernmental organizations to people living in poverty or at risk of poverty. This "social assistance" may take the form of cash or a combination of forms, including cash assistance. The important point here is that "true" social transfers are "predictable." More specifically, that they are paid or distributed regularly. It is a preventive initiative designed to ensure that beneficiaries are effectively prepared and protected against unforeseen economic crises or natural disasters.
Not as a response to an economic crisis or as a pre-electoral vote-getter by instilling 6 million voters with a sense of gratitude. The mechanism called the State, which each of us supports the least with our taxes, is supposed to be much more serious.
The concept of "social transfers" encompasses a wide range of instruments, from short-term reactive humanitarian aid in emergency situations to long-term, planned and predictable support for people trapped in poverty or at risk of falling into poverty.
Social transfers, especially in lower-middle income countries such as Turkey, should focus on sustainable, predictable and long-term means to address chronic poverty and its underlying causes.
Throughout the AKP years, reactive and short-term aid has been reduced to non-existent during the last years under the pandemics, while its predecessors failed to address the underlying causes of poverty. In other words, they were not designed to reduce poverty in the way that predictable social transfers seek to achieve.
We have seen many policies, such as this "low income support package", which was introduced with an overnight decision and was devised to win votes by writing off a total of TL 30 million in debts of 6 million people facing execution of their debts, because it was an election year. The AKP has never really addressed chronic poverty, as it does not target reliability and sustainability.
Since the variables that drive chronic poverty, such as slow economic growth, low agricultural productivity, high unemployment and pandemics, are themselves chronic, the caseload of the chronically poor is relatively predictable. This predictability allows the problem to be addressed in a structured, multi-year, managed way through predictable social transfers, rather than having to rely on the drafting of annual aid applications that are always underfunded, delivered late, and inadequate - even harmful - to the chronic nature of the problem they are intended to address.
Predictable social transfers provide beneficiaries with guaranteed and regular aid. This reliability allows them to make considered decisions about how to use the transfer. Instead of being victims of circumstances, recipients can plan and invest ahead and have some control over their future. In this way, not only public expenditures have an accountability but also predictable social transfers have value beyond filling empty stomachs or relieving high electricity, water and telephone debts brought on by misguided policies at the first place. They offer a range of benefits that reactive, short-term humanitarian aid cannot.
Conceptual models of social protection
There are also a number of conceptual models of social protection. The "Social Risk Management" framework of the World Bank; the "Decent Work" agenda of the International Labor Organization; and the "Transformative" approach of the Center for Social Protection are some of the first to be identified.
They all have essentially three objectives:
1. Provide income for those who cannot provide for themselves: Whether it is the most basic "safety net" transfers or social welfare or social assistance grants, such as disability benefits, measures to alleviate chronic deprivation.
2. Prevent poverty shocks that devastate households: through various insurance mechanisms, such as crop insurance, health insurance, unemployment benefits, old age pensions, etc., preventing deprivation or poverty before it occurs.
3. Help people out of poverty: Empowering the poor to get ahead, these social transfers aim to improve incomes and capabilities, as well as protecting livelihoods. Examples that immediately come to mind are nutrition and education support through school meals, conditional cash transfers, conditional health care, and training aimed at improving their skills and knowledge.
When assessed in light of this information, the "low-income support package" announced by the AKP government last week is nothing more than an electoral bribe as it appears to be at first glance. In fact, as 21 years of experience have shown, the AKP has no business with well-designed social transfers.
Instead, they seek to win votes by rendering 6 million low-income voters grateful. It is not in the AKP's interest to help those 6 million poor people out of poverty.
*She is an economist with 28 years of professional experience and a columnist on economy/politics on web-based media. She was the Director of Research and Strategy at Egeli & Co. Asset Management, previously was the Turkey Economist of UniCredit Menkul Değerler A.Ş. as the Director of the Research Department; the Chief Economist and the Manager of the Research Department at Ekspres Invest; the Economist at Raymond James Securities; and Ege Invest; an Analyst of the Research Department at Global Securities, and Karon Securities. She received her undergraduate degree in Business Administration from Middle East Technical University in 1995, before receiving her M.A. degree in Economics from Hacettepe University. She is the mother of a lovely daughter and runs the family farm producing raisins and grains in the city of Manisa/Saruhanli, located in western Turkey.