Muhammed Maruf: "There is an economic crisis, but why does not consumption decrease?"

Muhammed Maruf: "There is an economic crisis, but why does not consumption decrease?"
Date: 29.7.2022 12:30

Milli Gazete columnist Muhammed Maruf writes on Turkey's economy. Here is the full article.

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While those close to the government defend that there is no economic crisis in the country, they often refer to the argument about the continuation of the society's high consumption habits. Almost every day, a troll account on social media asks, "If there is a crisis, why does this consumption continue at the same rate?" sharing is coming. Images of cafes, holiday places and places operating in the service sector are shared in these posts, and it is argued that there is not actually a crisis affecting large masses in the country.
 
Leaving aside the fact that even in countries such as Venezuela, where the economic crisis is most intense, a certain segment of the society can maintain the consumption habits in the same way, that is, the fact that an economic crisis in a country does not prevent consumption from continuing at a certain level, in my opinion, there are three basic principles regarding the continuation of consumption in our country at the same level. why can be expressed.
 
The first reason is related to the changing consumption habits of the society. The economic policies implemented after 2002 had both economic and negative social consequences. Expanding the use of credit, providing the supports that should be given in return for production directly without production, accustoming the society to consumption by borrowing, etc. As a result of these factors, our society has been transformed into a consumer society, which has the habit of consuming without producing.
 
As a result of the habit of consuming without producing, today's total household debt has reached a level of over 1 trillion liras. Considering that this figure is about 35 million people in debt, we can talk about a society that borrows approximately 30,000 TL per person for consumption purposes. At the point reached today, people have been working for a year to pay the debt of the vacation they took in the summer of the previous year. This is the painful result of becoming a consumer society.
 
Since it is not possible for people to change their consumption habits that they suddenly become addicted to, the majority of the society continues to consume at least close to the standard they are used to by borrowing more even in the crisis environment. Of course, just as the bill of the habit of consuming without producing in the past comes before us today, the cost of consuming by borrowing at a higher cost in this crisis environment will come before us as a heavier bill in the future.
 
The second main reason for the high level of consumption can be expressed as the psychological environment created by the expectation that high inflation and economic problems will continue. The fact that the prices of the most basic necessities have increased by 20-50% on a monthly basis in the last 7 months causes people to have the perception that they will have to buy any product that they do not buy today at a higher cost tomorrow. Moreover, small savings house, car, etc. The fact that we are living in days when it is meaningless to meet the needs pushes people to be reluctant to save.
 
For example, even if a person who earns a high salary of 20,000 TL allocates half of his salary, he needs to save 200 months and pay in installments to own a house in big cities, and 40-50 months of savings and installments to buy a mediocre vehicle are required. The fact that small savings are so meaningless makes saving meaningless. Both the meaningless savings and the constant increase in prices push people to consume at the current price and to live their lives today, which is cheaper than tomorrow.
 
This may also be related to the low hope that the economic crisis will be resolved. In a society where the understanding of bad days are over and there are worse days ahead, people seem to be inclined to live as long as they can and take what they can before the crisis gets worse.
 
The third and last reason can be expressed especially in relation to the continuation of the luxury consumption habit. The most fundamental problem in the current exploitation system is the increasing inequality of income distribution day by day. One of the reasons and one of the consequences of the economic crisis is the continuous increase in income inequality. Therefore, while large segments of the population are getting poorer, there is a segment whose wealth is increasing.
 
The said segment continues to live their lives, no matter how big the crisis in the society, and maintains the habit of luxury consumption. However, the existence of those who pay 20.000 TL for a meal in a restaurant does not reveal the existence of a crisis, but the existence of a minority disconnected from the realities of the society in general. In short, the fact that the consumption in the country continues close to the old speed is not an indication that there is no economic crisis in the country, it is actually an indication that the economic situation is quite dire and that the society is not ready in terms of basic life reflexes to overcome the crisis.

YEREL HABERLER

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