Turkey trapped in the middle

The title should sound familiar. It may seem to you that Turkey today finds itself trapped in the middle in many respects. I, for one, hear it often these days: We are trapped in the middle of the Iranian crisis, not to even mention the one between Baghdad and Arbil. How about the crisis in Syria? Measures have been taken, Patriots are coming to the rescue. However, I would like to point out a distinction. In none of the above cases is Turkey uncomfortably sandwiched in a situation of its own making. We simply happen to have crisis-prone borders. I see only one case in which Turkey is caught in the middle due to its own choices - that is the economy, as you might imagine. Turkey’s economy is trapped in the middle.

There is currently an intense discussion going on in Turkey about the middle-income trap. I find all the arguments about the possibility or probability of falling into the trap utterly useless. Turkey is already in the middle-income trap, if you ask me. When I was born in the early 1960s, Turkey was a middle-income country according to the World Bank’s classifications. Today, we are still a middle-income country by that same standard. Fifty years is a rather long time for an assertive country to just stay in the same place. Despite all the furor of the past years, in the middle it was and in the middle it still is. We are trapped.

Korea was a fellow middle-income country in the 1960s, when I was born. Now it is a high-income country, with the world dancing to its Gangnam tune, while we are left alone in the middle. Should we care? Does it matter if we don’t have world-beating industries? This question is especially urgent in the hyper-competitive and hyper-connected global age. In the past, it was quite possible for an average person to earn an above-average salary and have an above-average life style. Not any more. The space for mediocrity is shrinking rapidly and quality matters more than entitlement. We should feel uneasy about being in the middle.

So why are we trapped while others made it out? Let me cite three reasons for you: First, our judicial system. If your people are to excel, you need hard work to pay off and everyone to feel secure. The World Justice Project shows that Korean courts are four times more efficient than Turkish ones. Second, our education system is still in shambles. Korean kids are outperforming Turkish kids in the OECD’s PISA tests. Third is the deficiency of Turkey’s tax code. It perverts the economic decision-making process. In Turkey, investing in a piece of urban land in an obscure place and changing the zoning laws is more profitable than investing in industry or sending your children to a good school. Our system focuses on hard-earned personal income streams but fails to focus on highly speculative land rents, for example.

Here is a list of our twenty-first century problems for you: Turkey’s economy is trapped in the middle because of the persistent mediocrity of our education, tax and judicial systems.