Behavioral economics and US tension

Published 13.10.2017 22:02

The origins of the capitalist system stem from the mercantilist philosophy. An economy controlled by the government, a political-military governance model based on the expectations of the capital-owning class. Mercantilist philosophy is also the milestone of the colonialism movement with these key traits.

Even though it seems like World War II ended the classical colonial movement with the Cold War, the process to build a new world order started under absolute hegemony of the U.S., and with the leadership of the U.S., the Northern-Northern Alliance continued to create value and get richer with a new model of colonialism using the cheap resources and labor force of developing countries. However, with the end of the Cold War, the claim and weight of the leading developing countries in world economy started to rapidly rise and 10 leading developing nations, including Turkey, led the way to all developing countries by accelerating their local-national technology and research and development (R&D) processes.

Today, policies based on neo-liberal understanding and global strategies overlooking humane development face a major deadlock. Remembering that economics is a branch of science that puts humans at its center, the political-economic relations of the Northern-Northern Alliance that neither internalize humane development or values nor is based on sincere foundations are blocked. It is not even a possibility to pursue imposing, ordering economic-politic relations or say "we decided this, you will follow" to economies such as China, India, Brazil, Russia, Turkey, South Korea, Mexico, Indonesia or Nigeria.

Human behaviors at the center of the economy, the economic-politic consequences of societies' individual and mass decision processes and of their social preferences is the main headline of the last 10 years and of the next 25 years. The Nobel Prize in Economics was for exactly this reason awarded to Richard Thaler on this work devoted to Behavioral Economics.

If the goal of the U.S. via the "visa tension" is to create serious pressure on President Erdoğan and the government, it can be a strategic mistake to believe that steps taken in Washington's corridors and rooms with a basic mathematical logic would actually have a result. Turkey has been paying a clear price for its allies since the Korean War, for 67 years. Codes of this geography rely on sincere and honest relations. The U.S. is going through a historic test of sincerity toward the Turkish public. Even 10 years may not be enough for the recovery of any action against socio-economic and socio-political realities.

Search for independence and the income inequality problem

While heated discussions continue on the independence referendum that has taken place in Iraq's Kurdistan Autonomous Region in northern Iraq, the independence referendum of Spain's Catalonia Region and Scotland's decision to revote to separate from Britain have embroiled the European continent. Including attempts to make northern Italy independent, certain geographical regions in European countries have aggravated disputes since they want to share neither their added-value with the rest of the country nor their own wealth.

An Organization for Economic Cooperation and Development (OECD) report published this summer emphasized a warning that the distortion in income distribution imposed a threat to separate societies. Aside from the fact that the income inequality in question said to be at a level never seen before is threatening social unity, it is very frightening that the income of the richest 10 percent is nine times more than the income of the poorest 10 percent among those living in OECD countries. Twenty-five years ago, the income of the richest was seven times the income of the poorest 10 percent.

Prior to the traditional autumn meeting in Washington, the International Monetary Fund (IMF) shared the October 2017 issue of its bi-annual Fiscal Monitor with the title "Tackling Inequality."Following the OECD, the IMF also pointed out that inequality in the distribution of income -- that had a decreasing trend until the 2008 financial crisis and re-entered an increasing trend in the last few years - is threatening social harmony.

In the report, which stated that the need for fiscal policies supporting inclusive growth is ever increasing, it was also expressed that the possible worsening of income inequality in the world's biggest economies like the U.S., China, and India was worrisome. A suggestion that stood out in the report was re-establishing balance without harming growth by imposing new taxes on the highest income group.

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