Dif tor heh smusma
I present to you the first Hürriyet Daily News column, and probably the first economics column ever, titled in Star Trek’s Vulcan language. You are probably familiar with its English translation, the salute “live long and prosper.”
You see, economists have used different measures of prosperity. While some look at income, others have adopted a more general approach by trying to measure subjective well-being. The Legatum Institute, a London think-tank, gets inspiration from Mr. Spock to bring the two together with its Prosperity Index.
“The Legatum Index is a unique and robust annual assessment of global wealth and well-being, which benchmarks 142 countries around the world in eight distinct categories”: economy, entrepreneurship and opportunity, governance, education, health, safety and security, personal freedom and social capital. Each sub-index is made up of several variables that capture both income and wellbeing.
Turkey is ranked 86th in the 2014 index, which is being released today. It fares relatively better in the entrepreneurship and opportunity, health and governance categories. This last one might be startling, but that sub-index includes variables relating to government stability and approval as well as the rule of law, separation of powers and corruption. But I am still surprised by Turkey’s 48th place there.
Turkey’s positions in the economy, education and safety and security categories are not that different from its overall ranking. The country fares worst, quite unsurprisingly, in the personal freedom and social capital sub-indices, with ranks of 134 and 114, respectively. Did I tell you that I am using a virtual private network to access Legatum Institute’s website, which has been blocked?
The indices go back five years for a smaller set of 110 countries. Turkey’s relative position has stayed more or less the same in all but two categories: It has considerably worsened in the personal freedom sub-index and somewhat improved in social capital – which I found to be weird until I looked at the variables used to construct it: Donations, marriage and religious attendance are there, along with more standard measures of social capital like reliability and trust.
The Legatum Prosperity rankings, along with last week’s Doing Business and Global Gender Gap reports, pinpoint where Turkey’s real weaknesses lie. They also explain why short-term investors are still bullish for the country: They care about short-term macro variables like inflation, interest rates and the global sentiment that affect Turkish assets rather than such long-term structural and micro indicators.
President Prime Minister Recep Tayyip Erdoğan is well aware of this fact. That’s why when asked about Berkin Elvan, the 15-year-old kid who got shot in the head by a gas canister after leaving home to buy bread at the height of the Gezi protests and died nine months later, he said the stock market was not affected too much.
He is probably not aware of the potential long-term investors who are starting to get cold feet because of Turkey’s worsening record in the indicators that matter to them. But he will really miss them when the hot money disappears faster than a Klingon Bird of Prey.
