Camel greeting

Showing posts with label Turkish economy. Show all posts
Showing posts with label Turkish economy. Show all posts

Wednesday, 18 June 2014

Queuing for One Scoop of Food

The following brief article appeared in our local Turkish newspaper today. I couldn’t find it in Hürriyet's English edition, so I’m supplying a translation:

Izmir’s Basmane  neighbourhood has long been a sanctuary for fugitives from countries like Iraq, Afghanistan, and Somalia seeking refuge from civil war. They have now been joined by Syrians hoping to escape from poverty in their own land.

Living in unsanitary conditions, the only hope for these Syrians desperate to put food in their stomachs is aid from humanitarian organisations operating in the area. Women with children, and men, wait in separate lines with empty yoghurt containers for the arrival, every day at 12.00, of a minibus with İnsan Der[1] written on the side. Every day the numbers of people waiting for food increases and the amount available for each is less. The food distributed with a little bread is their sole hope of sustenance. Families of five or six return home with one ladleful of food and a portion of bread.




[1] A voluntary group offering food, clothing, education opportunities to destitute people

Friday, 13 June 2014

Positive Signs for Turkey’s Economy

‘Turkey Plunges Down in Ultra-Rich Ranks Amid Growing Global Wealth’

The headline introduced an article I came across in the English version of our local newspaper Hürriyet:

‘With the number of millionaire households in Turkey remaining at around 22,000, showing no significant change from the previous year, Turkey dropped three places in the global rank to 42nd[1], according to the BCG study, “Riding a Wave of Growth: Global Wealth 2014.”

‘Turkey is also left out of the top 10 countries with the highest number of ultra-net-high-worth households, (households that have private financial wealth of more than $100 million), retreating from 9th to 12th place.

‘While there were 357 people worth more than $100 million in 2012, this number fell to 288 in 2013, according to the study.’

Syrian refugees in Turkey - Let them drive Lamborghinis
Well, sympathetic as I am trying to feel for those 69 citizens whose worth dipped below $100 million last year, I have to tell you, I’m not convinced that they (or the other 288 who are still in the club) are actually doing the country’s economy a whole lot of good. Another news item I chanced on the other day announced that German luxury car manufacturer Mercedes Benz was awarding Turkey the prize for being ‘Europe’s Most Successful Market’ in 2013. The Lamborghini people reportedly expect to sell seventy of their ludicrously over-powered and over-priced boyztoyz to Turkish boy-racers this year. Prices in the USA range from $200-550 thousand – double that for Turkish Liras and add another fifty percent to find the local price. Then there are the Ferrari buyers who will pay 550,000 (around 1.5 million TL) for a ride that’ll do 350 km/h and 0-100 km/h in 3 seconds flat. Tell me where you can actually do either of those things.

Getting back to that Hürriyet article, how do you read the tone? It seems to me that words like ‘no significant change’, ‘dropped’, ‘left out’, 'retreating' and ‘fell’ suggest that the writer implies there is something Turkey should feel ashamed of here. Interestingly, the article goes on to note: the report also draws attention to the substantial overall wealth boost that Turkish households have recorded over five years. The total assets of individuals in Turkey amounted to around 840 billion Turkish Liras in 2013, up from around 500 billion liras in 2008.’

What should we make of that? The ranks of the super-rich in Turkey have declined by nearly twenty percent since 2012 while average household wealth has increased nearly seventy percent in the five years since the 2008 global financial crisis. And these figures are not doctored stats released by the Turkish Government – they are published in a report presented by an outfit styling themselves the Boston Consulting Group (BCG). Check them out. If you thought the Trickle-down Theory of wealth redistribution was dead and buried, there’s a gang of corporate whizz kids who will put you straight.

I wasn’t able to read the full report on their website because you have to be a member of the club to do that. However, I did check out a couple of other items. One that particularly interested me was entitled: For Mining Companies, Productivity is the Key to Value Creation’. It grabbed my attention, of course, because of the tragedy in Soma, Turkey last month where 301 coal-miners died in a dreadful accident.

Read the BCG article, however, and you may come to feel that 'accident’ is the wrong word to use. In addition to BCG, I have now learned another useful acronym: TSR (Total Shareholder Return). The guys at BCG apparently analysed mining companies' profits over the previous decade, and found that they averaged sixteen percent per annum with the top ten companies averaging 35 percent. I’ll say that again in case you missed it – those mining companies made 35 percent profit on shareholder investment in a single year! Nevertheless, the Bostonian Consultants insist that there is a ‘profitability pinch’ in the sector with ‘the economics of mining under pressure’, and go on to suggest ways to ‘enhance productivity’. Well, you have to wade through a good deal of economists’ jargon here, which they use generally to avoid facing up to the reality that they are actually screwing real people by reducing wages, cutting back on work-force numbers and skimping on safety measures.

How about one of these? Click for a price
Another delightful press release you can read on the BCG site deals with the ‘Daunting Challenges facing Wealth Managers’ in the next few years. The text begins with the good news that ‘the growth of private wealth surpassed expectations in 2013’, but goes on to warn that ‘wealth managers nonetheless need to take action on multiple fronts if they hope to gain market share and increase profits over the next few years.’

“The key challenge in developed economies is how to make the most of a large existing asset base amid volatile growth patterns,” said Brent Beardsley, a BCG senior partner and a coauthor of the report. “The task in the developing economies is to attract a sizable share of the new wealth being created there. Overall, the battle for assets and market share will become increasingly intense in the run-up to 2020.”

I suspect that Brent B is not seeking ways to ‘attract’ the new wealth being created in those developing economies to the impoverished citizens of those countries whose children are dying of malnutrition and easily preventable diseases caused by lack of access to uncontaminated drinking water . . . but I could be wrong.

I am currently reading a history of Byzantium[2], the eastern Roman Empire centred on Constantinople back in medieval days. In the early chapters, the author, Cyril Mango, examines reasons for the decline of the Empire up to the 7th century CE. Let me share a quote or two.

‘Service in the army was a lifelong occupation and was meant to be well-rewarded. Even so, there was little enthusiasm for it in the more civilized parts of the Empire and evasion was widespread. By Justinian’s time recruitment had become voluntary and depended very largely on some of the ruder provinces.’

‘It is a commonplace of late Roman history that the municipal gentry was in a state of decline . . . [They] made increasing efforts to avoid their responsibilities which were openly regarded as a servitude . . . [T]he rich ones grew richer at the expense of their neighbours. They became magnates who bullied their fellow-citizens and usually had enough leverage at court to win for themselves posts in the imperial administration that exempted them from municipal duties . . . there was a staggering disparity between the rich and the poor . . . government service normally led to considerable riches . . . there must have been a very large number of people living on the subsistence level.’

Does any of that sound familiar? By good luck or good management (who knows?) Turkey managed to escape the worst of that 2008 global downturn. It seems to me that if a few local oligarchs have to make do with a little less than $100 million in personal wealth so that some others can get off subsistence level, it may not be altogether a bad thing.





[1] There’s that ‘42’ again!
[2] Byzantium, the Empire of the New Rome, Cyril Mango (Phoenix, 2005)

Saturday, 17 May 2014

Turkey’s Mining Disaster 2014 – and keeping up with the Joneses

Families of Turkish coal miners in Soma
The words of an old song have been running through my head for the last few days. Maybe you remember the Bee Gees. I guess they had a little something for everyone, since their musical career spanned five decades. The song I’m remembering, though, was their first major hit, released in 1967. It’s a fictional monologue by a coal-miner trapped underground, showing a picture of his wife to his mate while they wait and hope for rescuers to arrive:

In the event of something happening to me,
there is something I would like you all to see.
It's just a photograph of someone that I knew.

Have you seen my wife, Mr Jones?
Do you know what it's like on the outside?
Don't go talking too loud, you'll cause a landslide, Mr Jones.

I keep straining my ears to hear a sound.
Maybe someone is digging underground,
or have they given up and all gone home to bed,
thinking those who once existed must be dead.


Despite the song’s title, Wikipedia assures me there was no mining disaster in New York in 1941 – though there apparently was one in Pennsylvania that year, and there had been one in New York State two years earlier. The Bee Gees were perhaps inspired by a tragic accident in the Welsh coal-mining town of Aberfan. In 1966, 144 people including 116 children were killed when a mountain of debris from the mine collapsed, burying a village primary school under 40,000 cubic metres of rock and shale. Very definitely, however, a mining disaster has taken place in Turkey in the town of Soma, Manisa, where almost 800 miners were underground when an explosion occurred. So far 300 have been confirmed killed – with that death toll likely to rise.

Unlike the Bee Gees’ miners, who had some hope of survival, so long as rescuers arrived before their pocket of air was exhausted, the Turkish miners were mostly doomed from the beginning. Some of them were working 420 metres below ground when the explosion occurred. The horror of what happened down there in a hell of pitch blackness, burning coal and an atmosphere of deadly poisonous methane gas can scarcely be imagined by those of us for whom an electricity outage above ground is a scary experience.

The other aspect of the tragedy, of course, is the shocking bereavement for hundreds, perhaps thousands of Soma townspeople who have, at one blow, lost husbands, fathers, sons, neighbours, friends and workmates. What makes it worse is that miners and union representatives had apparently been expressing concerns about safety in the mine for some time – with little response from company management.

Prime Minister Tayyip Erdoğan reportedly cancelled a trip to Albania to visit the stricken town and express his sympathy. He also apparently urged people to refrain from using the tragedy as a political football. Some hope! Already there have been demonstrations across the country, adding fuel to the fire of political unrest that has been growing against the government for the past year, with some protesters adding ‘murderer’ to the list of accusations they are levelling against Mr Erdoğan.

How fair is it to blame the AK Party government for the disaster in Soma? First of all, it must be accepted that the Soma mine is operated by a private company, not the Turkish state. On the other hand, say opponents, that is the heart of the problem – the privatization of former state activities results in the application of bottom-line accounting and principles of short-term profit such that worker safety and conditions of employment figure very low on a list of management priorities.

Well, I have no personal experience of coal mining, thank God, but I have been working in the private education sector in this country for some years, and I have seen how owners and managers of educational institutions treat teachers. With no union or professional organisation to represent their interests, teachers often work in a state of fear, knowing that their employment can be terminated without redress, and that any comments they make about pay or working conditions can be a reason for termination. If employers can treat university-educated professionals in this way, it is easy to imagine that the lot of a coal-miner will be little removed from servitude. Clearly, whatever social and economic gains have been made in Turkey in the first years of the 21st century, there is a crying need for improvement in workplace conditions, and the right of employees to collective bargaining is fundamental to this.

To be fair, however, these problems are not confined to Turkey. In 2010, 29 coal miners died in a similar tragedy in New Zealand, again in a mine operated by a private company. A Royal Commission found that government oversight of safety regulations had been inadequate and that company management had been aware of dangers such as high levels of methane gas. As a result, the company was ordered to pay compensation to the bereaved families, but it was unable to do so, since it went bankrupt. The CEO was absolved of blame on the grounds of insufficient evidence. I would have thought that, in these days of grossly overpaid CEOs, one of the few justifications for their obscene pay-packets would be strict liability in such circumstances – but who am I?

Anyway, I thought it was a little unfair that reports in NZ news media on the Soma disaster concluded with the words, ‘Mining accidents are common in Turkey, which is plagued by poor safety conditions.’ There is a website called the Coal Mining History Resource Centre which publishes a list of recent fatal mining disasters. According to CMHRC, apart from the New Zealand explosions, three of the worst in the past ten years occurred in the United States.

The fact is that coal mining is an extremely nasty business that few would willingly undertake if they had alternative means of making a living for themselves and their families. According to CMHRC, at the peak of coal mining in the United Kingdom, between 1900 and 1950, there were 84,331 injuries and deaths in mine accidents. In the same period in the United States, according to the Mine Safety and Health Administration of the US Dept of Labour, there were 452 accidents in coalmines involving injury and death. It is, of course, technologically possible these days to make conditions underground safer. Reports in the Turkish media are saying that there are safe-room installations available for miners to take refuge in in the event of high gas levels or explosions – but they are so expensive that mining companies do not consider them economically feasible.

Open-cast coal mine in Alabama, USA
I recently came across the fascinating story of a coal-mining town in Pennsylvania called Centralia. Apparently, back in 1962, a fire started in an exposed vein of anthracite coal which then began to burn underground. All attempts to extinguish the fire proved unsuccessful and the town eventually had to be abandoned because of noxious gases emerging at the surface. Reports say that the fire could burn for another two hundred and fifty years before the 12 km coal seam is exhausted. In the mean time, the ghost town of Centralia has been erased from maps, and roads that used to pass through it have been diverted.

Now, I understand, when regulations are passed obliging companies to spend money on health and safety, they either close their mines, or do what seems to be the norm in developed countries – revert to open-cast or strip mining. The method here is to use massive digging machines to excavate down to the seam and load the coal on to trucks without the need for a large labour force of subterranean workers. Admittedly this process does create a significant amount of environmental damage – but as yet governments are less responsive to that cost. In the case of the New Zealand Pike River mine, however, the fact that coal extraction was taking place in a national park means that strip mining has so far not been approved.

One report I read about the current issue said that Turkey meets 40% of its current electricity needs from coal-burning plants. I’m sure the government recognises that this is undesirable, and in fact, they are planning to build at least two nuclear power plants to reduce dependence on coal and imported natural gas. Nuclear energy itself, of course, has its down side, as Chernobyl, Three Mile Island and Fukushima have shown us. So what’s the government of a developing economy to do when its industrial base is expanding and its middle class is growing and demanding higher living standards (read ‘energy consumption’)? Out of curiosity I checked how the US and the UK meet their electricity needs and the results were surprising, to me at least:

In the US, the largest source of electricity is coal-burning plants (37%), followed by natural gas (30%) and nuclear energy (19%). In the UK, natural gas (40.4%) nudges out coal (32.3%) as the major source, with nuclear power supplying 17.6%. According to Wikipedia, coal-fired power plants are still far and away the largest provider of electricity in the world. So what’s the answer? If you really feel sorry for those coal miners, reduce your electricity consumption – but be aware that those guys will then need alternative means of employment.

Clearly this whole business is not merely a problem that Turkey alone is facing. In developed and developing countries alike, the pressure is on to privatise activities that were once considered the primary responsibility of the state, from education and health, to public transport, telecommunications and energy supply. I will readily admit that some of these services are more effectively and efficiently supplied by private sector owners and managers. I well remember, for example, how long we used to wait for a telephone connection in days gone by. On the other hand, I question whether private enterprise can provide satisfactory health and education to the majority when its first responsibility is always to its shareholders, and turning a profit is inevitably the number one priority. Short-term employment contracts, out-sourcing of functions formerly carried out in-house (such as cleaning and catering), as well as the tendency to look for cheaper labour in countries with lower standards of living and less stringent labour protection laws, have created a global environment where concern for human dignity and rights are given scant attention.

I really would like to think that things are getting better, but I have serious doubts. I recently had reason to look up statistics on car ownership around the world. As you would expect, the USA ranks pretty high, though its rate of 80% puts it in 3rd place behind billionaire playgrounds San Marino and Monaco. New Zealand and Australia also feature pretty well up the list, with 71 and 72%. Northern Europe, again as we might expect, is less dependent on the private car. Denmark, for example, where the bicycle is a lifestyle choice, has a 48% rate of car ownership. City-dwelling Turks, suffering for hours in the gridlock of Istanbul traffic, will perhaps be surprised to learn that their nation’s rate is a mere twenty percent. If Turks and the Chinese (current ownership rate 10%) approach even the proportion of cars owned by Danes, never mind Americans, what hope is there for planet Earth?

So I say to my Turkish neighbours (and American and New Zealand friends across the oceans could set an example here) – if you really care for those coal miners, get yourself a bicycle and an Akbil[1], start using the Metro and the Metrobus, and give serious thought to reducing the size of your carbon footprint.




[1] Intelligent ticket – usable on most forms of public transport in Istanbul