I’ll agree with half of that, the “productivity is crucial” part. Then, there’s the “decision to borrow.” You might think, “We’re so poor; we might not be able to pay back this loan in the future, but we’re dying now, so we have to borrow!” But we’re not like that! Or you might believe the future will be better and take out a loan, fully convinced you can pay it back.
It’s clear the future doesn’t look better, but we take out these loans anyway. Of course there are people who take out loans truly expecting their situation to improve.
Since the birth of the Republic we’ve had an unshakeable belief that this country is destined to achieve much more. No matter how roughly we get knocked down, as a nation we convince ourselves that we’ll get back on our feet. The current account deficit is one manifestation of this approach.
One thing to consider, though, is why the current account deficit has now shot through the ceiling. Instead of savings growing parallel with national income, as expected, the current account deficit has increased its relative share. Why’s that? It might partly be due to this: Once Turkey’s national budget was put into order and banks started behaving like banks, the private sector and households in particular gained access to loans in ways they had been unable to before. That wasn’t something we understood all that well or understand fully today, and it’s important. I fully agree with what Professor Üçer said about our focus on savings: Whenever we mention the current account deficit, savings, and the savings deficit, we talk about the measures government could take to promote household savings. Our government is also a player in this market, able to spend and therefore with the capacity to save. Yet it has never regarded itself as a potential saver, nor has it ever put itself to the same test.
On the other hand, in the public sector we need a surplus. We need a surplus for demographic reasons, in view of future social security costs and to cover unexpected circumstances. In a country with 10 percent inflation, government shouldn’t be encouraging demand this way. Look at government spending, and you see that our government collects a considerable sum in taxes and spends it freely. A better approach: collect the taxes, save the revenue instead of spending it, and reduce the savings deficit! It really makes sense to consider the role of public savings here.