Engineering Turkey’s middle class and Maslowian politics

Could it really be that in our little bourgeoisie circle of secularism, we might have overlooked Turkey’s saddening reality; that despite all the statistics Prime Minister (PM) Erdogan calls out in all his speeches about Turkey’s development under his rule and despite World Bank’s superficial classification of Turkey as an upper middle income country, could it really be that Turkey is in fact still poor? Could it really be that while we wine and dine and protest in defense of our ideals, there are people out there who have other unmet priorities such as food and shelter? Could it really be that while we continue to be polarized as a nation, pointing fingers at each other, the real enemy is not any one person but a simple idea that is exploited by one person?

In the past decade, there has been talk of an ‘emerging’ middle class in developing nations including Turkey. I suspect much of the talk was based on observations, not data. Based on Turkey’s household income data, it is difficult to argue there is a large middle class in Turkey. Only 10% of the households make above TRY75,000…that’s about USD35,000 a year net of taxes…a little less than USD3,600 a month. What can you do with USD3,600 a month? Not much if you are a household. Chances are you have three dependents; a wife and at least two kids. Rent, food, kids’ school, utility bills, phone bills and possibly a vacation to a beach resort every year with the family and the annoying in-laws. There is your average middle class life. Caveat; that was the richest 10% in Turkey.

The next wealthiest 10% makes about USD18,000 per household…that’s about USD1500 a month. You can still get by but not easily anymore. Still, when you look down, you have a lot to be grateful for.

Meet Turkey’s reality; more than 70% of the households live with less than USD1000 a month. More than 30% live with less than USD500 a month. That’s less than USD16 per day for an entire household. It gets worse; there is a trend that the poorer you are, the more kids you have (a paradox that haunts the entire world save the US)…so the less money you have per individual.  Nearly 20% of the population lives at or below Turkish Statistics Institute’s definition of poverty line.

Figure 1: Income by household groups in USD

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Source: Turkstat, author’s calculations, 2014.

Note: I used cost of living index to calculate 2012 purchasing power of 2002 incomes, which I believe is more accurate than inflation or GDP deflator for the purposes of this article.

The middle class illusion: one then wonders if all these economists that talk about a new middle class are wrong. Not really. There is the illusion of a middle class thanks to a modest rise in incomes but more importantly a significant increase in debt.

Beneficiaries of Turkey’s ‘impressive’ growth performance: it’s beyond doubt that incomes rose in the past decade but not equally. While household data suggests there was an inclusive rise in incomes (the poor got richer and the rich less richer), individual data suggests the reverse; the bottom 20% did not see any real rise in their incomes while the top 10% saw huge gains. From a purely economic point of view, this is normal; marginal productivity theory suggests that those who contribute most to growth should reap the benefit of their efforts through higher wages. It was the ‘educated’ crowd – the top 10% – that drove Turkey’s growth in the past decade and hence ended up with a bigger share in the pie. Majority of the population saw only modest gains in incomes; around 40% over a period of 10 years. That’s about 4% each year. Nothing to celebrate given where Turkey stands today, not enough to create a middle class.

Figure 2: Per capita disposable income

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Source: Turkstat, author’s calculations, 2014.

Note: In 2006, Turkstat stopped releasing per capita disposable income data. I have had to divide household income by average household size. The latter is my estimate based on city level data that might not correspond to income levels but given the sample size it should be fairly accurate.

 Figure 3: change in disposable income

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Source: Turkstat, author’s calculations, 2014.

Low income at home, middle class on the street: the middle class ‘feel’ in Turkey has been engineered through debt.  Massive increase in household borrowing particularly by the low income households made many Turks feel like they are middle class even though they had the wages of a low income group. Despite making minimum wage, tens of thousands of households were able to acquire nicer phones, better furniture, electronics etc…all thanks to bank loans and maxed out credit cards. Turkish banking sector acted like a financial Robin Hood; banks took in deposits from the rich (50% of deposits in Turkey are owned by 0.1% of depositors) and lent it to the poor – clearly not for altruistic purposes.  Here, I will let the figures speak for themselves.

Figure 4: household debt and interest payments

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Source: CBT, 2014.

Figure 5: wages vs household loans (2005 = 100)

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Source: Turkstat, CBT, 2014.

Figure 6: household loans by income group

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Source: Banking Association, 2014.

Figure 7: credit to GPD and loan to deposit ratio

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Source: Turkstat, BRSA, 2014.

Maslowian politics:

Abraham Maslow – a 20th century psychologist – theorized that our ultimate goal of self-actualization can only be achieved through needs. Our needs start with our physiological needs; food, water, shelter, reproduction etc. Once one attains these needs, he seeks safety; safety of resources, of employment, of health etc..then love and friendship and all else as portrayed in the pyramid.

Figure 8: Maslow’s pyramid

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Source: Wikipedia, 2014.

For an economist, the most striking aspect of the Maslow’s pyramid is the monetary nature of our primary needs. Maslow unconsciously assumed the social hierarchy of capitalism in coming up with his theory (for more on this please refer to an earlier post – ‘Love in a time of capitalism’ http://wp.me/p44ZHA-1a). In capitalist societies, our physiological needs as well as our security needs can be fulfilled exclusively with money except for breathing (though even clean air has become a commodity lately). Once we secure a basic level of income, the upper levels of the pyramid of need satisfaction gets detached from economics and attached to the individual’s psychology.

For the bottom two levels of the pyramid, money matters more than ideology. Those that have high risk of not being able to meet their primary needs are likely to be indifferent to ideology. While this sounds most elitist, data seems to confirm it. Of the 27 countries that have GDP per capita below USD1,000, only one is rated free by the Freedom House. Conversely, of the 39 countries that have GDP per captain above USD15,000, only one is not rated free. There is a clear trend that higher the GDP per capita, more likely it is for any country to be free. When the majority of the population live at the poverty line, they are either indifferent to politics or vote for those who only do well on the economy. For them, money is what matters…not freedom and democracy and all those other bourgeoisie inventions.

Figure 9: % countries rated Free, Partly-free or Not free vs GDP per capita

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Source: IMF, Freedom House, 2014.

Note: I excluded natural resource rich countries from the analysis for obvious reasons.

But after the second level of needs, money takes the back seat and ideology comes to the fore. Maslow suggests that once the security of resources is achieved, people start looking things less mundane such as love and friendship. As John and Paul will tell you, ‘money can’t buy you love’. These people are most likely to be more educated and have already secured a job (will not be involuntarily unemployed for extended periods) but have higher needs. They are also likely to be staunch believers in democracy thanks to their western style education.

Turkish politics according to Maslow: using subjective judgment, I tried to classify where people stand in the pyramid based on their incomes in Figure 9. I would claim that people that live close to poverty either do not vote or do not vote for AKP. They are largely indifferent to politics or have seen their incomes shrink while witnessing others get rich. An AKP voter is most likely to be in the bottom second level. This is almost 50% of the population in Turkey that has seen a modest rise in their income but more importantly borrowed significantly hence boosting their living standards. Finally, those in the upper levels are less likely to be AKP voters. Since these people have secured vital needs, they are likely to be more interested in ideology than economics.

Figure 10: Disposable income per capita vs population

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Source: Turkstat, author’s calculations, 2014.

Income inequality is a lethal political weapon. Is it not interesting that we never hear PM Erdogan speak about income inequality? For a populist politician, it is the perfect tool. Still, even though his government devised scores of economic policies, none focused on income inequality which stands at embarrassingly high levels. Even his likes (President Putin in Russia and PM Orban in Hungary) have made numerous statements about it (despite it being low in the latter).

Income inequality is AKP’s bread and butter. It masks everything. It makes Turkey look like a high middle income economy. Even though a large percentage of the population is poor, thanks to those billionaires, Turkey’s GDP per capita fits World Bank’s superficial definition of an upper middle income country (what an efficient way to use world’s most brilliant economists). More importantly, income inequality is what keeps that 40-50% bound to AKP. Having seen their incomes grow and seen what the top 10% can buy, AKP is their only shot at becoming like them. AKP is the way up the pyramid (to read more on this please refer to an earlier post – ‘Why do we drink?’ http://wp.me/p44ZHA-c). For these people, AKP’s infrastructure developments are more important than freedom of speech. The latter has no utility for them, the former does.

A nation of oppressed underdogs: Turkey is stuck. Political tensions that we are witnessing today are but a result of Turkey’s non-workable growth model. Reforms pushed growth higher from 2002 to 2007, external borrowing pushed growth higher from 2008-2012 but come 2013 Turkey was out of fuel. With more than a decade in power, PM Erdogan ran out of enemies to blame. Today, the middle class drunkenness is slowly turning into a dreadful hangover as banks begin to cut off on lending and interest payments are eating away an ever-increasing share of meager incomes. Turkey needs to wake up. She needs to wake up now. We need to understand why AKP is still so successful; we need to stop marginalizing AKP’s voter base and treating them like traitors for their understandable trade-off between hard infrastructure and freedom. We need to understand that through income and opportunity inequality, AKP is feeding an illusion of middle class to people, hence buying out their votes.

To do all this, the liberals need to first stop acting the like oppressed underdogs, a political strategy invented by PM Erdogan and that plagues a whole nation. It seems, in Turkey, everyone is an underdog; the liberals, the Gulenists, the Erdoganists. We all want to get rid of our respective oppressors but do not want to move a finger for it. We think our duty to the nation is fulfilled if we protest virtually. Yes, we sometimes go out to the streets and protest but how many of us tried to hear an AKP voter out? How many of us organized public discussion sessions between opposing political views? As Erdogan tries to polarize a whole nation for his personal ambitions, we must stand together against it, not fall victim to it. Only then can we claim victory.

61 thoughts on “Engineering Turkey’s middle class and Maslowian politics

  1. Congratulations ! By far, the best analysis on AKP’s election succeses backed-up by a brilliant economic analysis

      1. Those of us Turkish-Americans raised in the U.S. and whose primary language is English really appreciate writings like this! Thank you for such an informative article.

    1. i have argued this economic disparity and reasons why AKP gets credit for economy, and now this analysis gives the data behind it. the analysis and the last two paragraphs are what needs to be applauded.

    1. Hi my two cents on ratings; turkey was not adequately rewarded during its good years and not adequately punished during bad ones. Agencies behind curve as usual.

  2. Well.
    Unfortunately the intellectual, mental and moral momentum has been shifting from conventional left/republican/Kemalist/elite to oppositions.
    Just look at provocative tweets/retweets, and you will see only idiot-level old fashioned jargons. No brilliant ideas/critics even to very basic facts.
    This momentum shift accelerate the shift in wealth also, which yields another decade which will give the same trend in these graphs.

  3. Gerekli ve çok güzel bir makale

    ama birazcık daha detaya ihtiyaç var, income levelı artıp akpye kendi menfaatleri (ılımlı (kapital) islam) için oy verende var, self actualizationla ülkeden kaçan bir kaymak tabaka artık ülkenin kültürüne yerleşmiş (bknz: Paran varsa kaç bu ülkeden, şansın varsa kaç buradan )

    Tabi dinle bütünleşince ılımlı islam piramiti arapların tarzıyla tamamen paralel bir yapı sergiliyor. Onlarda da halk var ve aileler (arap emirliklerinde) yada kocaman bir ülke ailesi (suudilerde) var. Ailelere güven stabilite getiriyor.

    Kısaca arapların yaptığının “sandık” versyonundan farkı yok.

  4. Good analysis on economy of Turkey, but, as the author would agree, Turkish politics and voters’ behaviors are far more complicated than to describe with just one model (in this case, Maslow’s hierarchy of needs), so I can’t say it is a good analysis on Turkish politics too.. I am well aware that the analysis for which income group votes for which party is based on subjective judgement, or more like an educated guess. But, for instance, it does not explain why the people have voted for AKP in 2002 elections. At that time, they didn’t have any responsibility on income inequality, since they were a new party in opposition. And, looking at the figures, we can’t say that AKP make it worse than it already was. Even the opposite is true. You can check how GINI index has changed from 2001 to 2010, it is slightly decreased* from 42.71 to 40.03. You know a lower GINI index represents a better income distribution. Which means, together with all the data that proves increase in income for almost all the layers of income groups, the income distribution is now better than 2002. In the long run, the policies of AKP is actually destroying its own voter-base. But, contrary, AKP does have a big support among Turkey still. Which means we have to look other dynamics that affects the voters’, like Kurdish people’s problems, headscarf problem (that is pretty much solved now), and perception of other parties. Having said that, other parties does not have much credibility when the issue is human rights and press freedom. So why should they bother to change their vote, if the only change is going to be who is going to be “more equal among equals.”

    * GINI: https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&ctype=l&met_y=si_pov_gini#!ctype=l&strail=false&bcs=d&nselm=h&met_y=si_pov_gini&scale_y=lin&ind_y=false&rdim=region&idim=country:TUR&ifdim=region&tstart=1017014400000&tend=1269475200000&hl=en_US&dl=en_US&ind=false

  5. flawed analysis throughout… I don’t know where to begin.. Data is wrong, author contradicts himself on many occasions.. just to give one example: author says “Massive increase in household borrowing particularly by the low income households made many Turks feel like they are middle class” but just below that figure 6 shows complete opposite…

    1. Bulut merhaba. 6. Gorsele tekrar bakmani rica edecegim. Onun disinda internet burasi herkes istedigini soylemek de ozgur ama dusuncelerini daha detayli paylasirsan sevirim. Tsk.

  6. Even it’s flawed by some aspects, it’s still represents a different and unique viewpoint on politics of Turkey. Thanks for sharing and your effort, congrats.

  7. Selam, Asgari ücretin bu iktidar süresince bu kadar artması gelir adeletsizliğine karşı yapılmış birşey değil mi sizce? ( AKPli değilim)

  8. 6. grafikte Y ekseni neyi temsil ediyor çok açık değil . En azından ben ilk görüşte anlayamadım :)

    Bir de sorum olacak :) household debt and interest payments verisini verisini TCMB’nın hangi kaynağından çektiniz merak ettim.

    1. Merhaba kaan, yorumlar icin cok tesekkurler. Tek basina asgari ucretin arttirilmasi onemli fakat yetersiz bir adim. Eger asgari maas alanlarin sayisi da artiyorsa (turkiye’de calisanlarin %40’indan fazlasi asgari maas aliyor) gelir adaletsizligine cok buyuk etkisi olmaz. Fig 6: toplam hanehalki borcunun gelir seviyelerine gore dagilimi. Yuzde olarak. Nominal rakam degil. Yani 2002 de toplam borcun %80’i en varlikli kesime aitmis. 2012 de tam tersi. Kaynak finansal istikrar raporu diye hatirliyorum ama excele tekrar bakmam lazim.

  9. Great article on recent economic and political scenery in Turkey. Only question is how do we communicate this to AKP voters?

  10. So true that is the what we have been saying for over years as a University of Istanbul school of Economics Capital Market and Banking graduated students.

  11. Could you please mention a little bit about politic economics of Turkey and growth doesn’t mean development but means control, breucracy, cencor and control also bribe and corruption. How the statictics shows miracles while people suffer. How statistic foundation generate politic statictics which is far away from market and country realities? How walface doesn’t cover whole country because of politic economics and economy is managed from Ankara with fossiled X generation with ideologies.

  12. The fundamental princible of AKP government is to take seisin of others, competitors and folk or to snatch a market or seize all. We call it ”ÜTMEK” in Turkish. Ütmek is a slang word that is used among children who play glass pellet on the streets. Whoever wins collect all balls or pellets.

  13. I liked your analysis. However, I had the difficulty of interpreting the population figures of the very last diagram. Could you please give me ballpark estimates of respective constituents of physical, safety, love/belonging, esteem, and self-actualization. According to my reading the total of first three constituents add up to 90 million and I’m certain that at that point I may be interpreting the estimates wrong. Thanks.

  14. Çok ilginç bir analiz. Bence konunun temeline işaret ediyor. Kuşkusuz -Maslow piramidinin de gösterdiği gibi- sorunun çok boyutu var. Toplum psikolojisi, tarihsel birikim… gibi. Çalışma için çok teşekkürler.
    Kaya Yazgan, Ankara.

  15. Great analysis and application of the Maslow pyramid. The problem is Maslow is mistaken and life is not that simple.

  16. Great work…if analyses is correct, and I think it is, then there is no need to do anything. Every credit binge comes to an end, this one will too. It is than an individual choice to stay around to help those who reside on the 4th bracket and pretend we share some sort of principles, believes or something other than language with them. Keep your work in English, minimizes distortions.

  17. There is a truth in this piece in terms of economical disparities in Turkey and how people are motivated to vote, etc. And i appreciate that the author points out the importantce of dialoge between the secularists and akp voters.

    I grewup in a family with mixed political views and i have seen both sides of the equation. I feel like this piece is lacking really crutial information about why akp was able to increase it’s votes despite the corruption scandals and the authoritarian ruling of mr. Erdogan. To begin with Turkey have never been a true democracy before the akp the turks are ruled by the leaders hand picked by the elitists namely military. One can go back and look at the historical facts and this would tell you nothing but we were not any differen 12 years ago fron today’s Egypt. And the freedom of speech have never been promoted in Turkey and it was a military state. Even 15 years ago people were afraid to say they were religious they would faced. Until recently people were not allowed to work because they are wearing a headscarf merely practicinng their freedom of religion. So this was the extend of the freedoms I Turkey. So akp voter is not just voting for money but also they are boting for their freedoms which has recently been granted to them by akp government…..

    1. Also another thing I want to point out is the reaction of the mr. Erdogan to the opposition and arising demand on the freedom especially I want to point finger on gezi ‘movement’. I want to give a current example again from Egypt. Take the ousting of the mr. Morsi. How did that happen? A secular movement founded and funded by a media giant and got enormous participation from the secular youth in Egypt started as a propoganda machine and grew to aust the morsi gov. this sounds like a technique that has been historically used to direct and manage crowds to fit the political spectrum to the elitist agenda. Now I do not know how the gezi movement started but what I know is chp and some media organisations got too much involved and it looked like deliberate mobilization of crowds to oust mr. Erdogan. And I also would like to point out that the gezi movement did not have a clear demand other than a collective hateret towards mr. Erdogan. So turks are, because of our political history, familiar with these turn of events. That made mr. Erdogan look like a victim on the eyes of akp voter. And the authoritharian behaviour of erdogan regarded as heroism by akp voter. if you want the Akp to be weaken this can only be done by preparing and proving that another party, another leader can take this country further both economically and otherwise. I think it would be an illusion to think that the turkish middle class is merely voting for akp out of economical reasons it is a fact that akp expanded the freedom of expression especially on the religion and people in this country regarding it as an important improvement in their lives.

      1. Thanks. The article does not claim anything about income being the sole reason behind voting patterns. Clearly there are other issues. I fully agree w your views regarding religious freedom but fully disagree w your views on egypt and gezi park. Both were grassroots movements that could have found support in intl circles but certainly was not instigated by them.

      2. You are completely wrong about gezi. It was a spontaneous grassroots movement. The chp famously did NOT get involved or help. Furthermore, no one took to the streets in support of the chp. The akp did however try to make themselves look like victims. The lack of real opposition leadership is a completely different issue than the frustration that boiled over during gezi. How this frustration will be used by established and new political powers remains to be seen.

      3. There were five clearly and repeatedly stated demands from the occupiers of the park voiced by the forum representatives through the press, on the street and in direct negotiations with city and national officials. None of them included the ouster of the prime minister. All of this happened less than a year ago.

  18. Why USD? Why do you compare USA and Turkey? Life is much more expensive in US than in Turkey. So, of course Americans earn much more. It’s not a fair comparison. The minimum wage people earn in Turkey are more than in many countries in the EU. By the way, I am not a tayyip or akp supporter, I hate them. Bu yazdiklarinizla akp den cok Türkiye yi karaladiginizin farkina varmanizi isterim.

    1. Usd kullandim cunku okuyan yabancilar try nin degerini bilmeyebilir. Abd turkiyeden daha ucuz mu cok emin degilim. Kaldi ki ben satin alim gucune gore degerlendiriyorum ve bu da turkiye de gercekten buyuk bir orta sinif olmadigini gosteriyor. Son olarak, amacim Turkiye’yi karalamak degil, yapici bir sekilde elestirmek. Tesekkurler.

  19. Thanks for the interesting analysis. Yet, there seems to be one more basic flaw in your argument: You automatically assume that the top 10% is also the “most educated”. This is correct in the rest of the world but not in Turkey. Actually, Turkey is the only country in the world that is (or “appears to be” according to your argument) that rich with so low level of education. The nation’s average is 7 years of education but comparatively the per-capita income is extremely high. Of course, anybody who lives in Turkey knows the reason: It is “unearned income” (rant). In other words, the top 10% are mostly constructors, people who live off the income through the land (selling their land and acquiring hundreds of flats in return) etc. The country lacks manufacturing any value-added product. Hence, education suffers because you can be very very rich without any. This may also explain why some of the rich also vote for AKP. According to your theory, they should be more worried about issues of censure, freedom of speech and privacy but they seem to be doing fine without such worries. This is another mistake the secular Turks and foreign observers keep making: They assume that the level of income and the level of education are directly proportional. Not in Turkey.

    1. Thank you. I agree w everything ur saying but the crowd ur talking abt is not the top 10%…its the top 0.1%. Their votes do not significantly impact election results but their clout does. Thats what i refer to regarding income inequality and the less wealthy looking up to the wealthy.

      1. Hello, congrats, super article! I used it for my thesis and now need to quote the source… may I ask you name pls? thank you

      2. Great article, congrats! I used it for my thesis and need to quote the source… may I ask your name? Thanks

  20. I really like your articles – some of the best and most enlightening analyses on Turkey. Respect! In this case though, your understanding of ideology is rather limited. In addition, I do not think it it possible to explain AKP success without talking about nationalism and religion in Turkey, as well as their relation to globalization.

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