It’s the economy stupid, or is it?

In the last two years, Turkey has experienced a very intense political atmosphere.
Hopefully the results of Sundayand’s general election will put an end to this tension. According to the unofficial results the vote shares of the Justice and Development Party (AKP), the Republican Peopleand’s Party (CHP), the Nationalist Movement Party (MHP) and the Peoplesand’ Democratic Party (HDP) are 41 percent, 25 percent, 16 percent and 13 percent, respectively. The same parties won 50 percent, 25 percent, 13 percent and 7 percent of the vote in the 2011 election. So it looks like Turkey will once again have a coalition government.
To be frank I cannot summarize these results with a coherent story. There are indications about voter behavior regarding economy and also the rise of identity politics. So let me briefly note my take on different aspects of the results.
First, we see that voters deeply care about economic variables. Turkish economist Mahfi Eiilmez estimated the simple correlation between the economic growth rate in the year before the election and the incumbent partyand’s vote share as 0.83. The historical record of the 50 percent vote share of the AKP in the 2011 election was obtained when the annual income growth rate was also at a record level of 10 percent. Indicating a very slow income growth rate in the last year (it is expected to be around 2 percent), last month he predicted the AKP vote share very accurately to be around 40 percent. More complicated analyses that take into account the unemployment rate, inflation, etc. have predicted similar results.
The second aspect of the results I want to emphasize is related to corruption. In the last days of 2013, the biggest graft probe in Turkish history erupted. The probe implicated the very top officials of the AKP government. The government officials successfully thwarted the judicial process. However, the allegations were so serious and credible that major political injuries were expected. In the local and presidential elections in 2014, the AKP did not seem to be affected in any serious way. Many commentators, including me, utilized the results of Joshua Tucker and Marko Klasnjaand’s latest study to explain that interesting situation. According to their survey-based study, in low-corruption countries, voters punish public officials for corruption regardless of the state of the economy. On the other hand, in high-corruption countries, voters punish public officials for corruption only when the economy is also bad. If economic conditions are good, voters appear less concerned about corruption. Prior to the two elections in 2014, the annual income growth rate was approximately 4.5 percent, which is around Turkeyand’s historical average. Moreover, the AKP sympathizer media outlets, including public ones, were suppressing bad news about the economic conditions of the country and bombarding viewers with good news.
So I concluded that, in accordance with Tucker and Klasnjaand’s predictions, Turkish voters did not punish the incumbent party in the elections.
However, during the last year, economic conditions deteriorated considerably. The media could not hide the economic reality anymore because people have a better source of information than media outlets. They learn about the economic conditions by living them. The unemployment rate, inflation and income growth rate deteriorated significantly. Then voters rightly remembered the graft allegations and blamed the incumbentsand’ and”corruptionand” as the source of worsening economic conditions.
I also want to underline the effect of information on the election outcomes. In previous columns I used Guriev and Treismanand’s framework to explain the utilization of information by authoritarian regimes. Guriev and Treisman show that the manipulation of information can be a good substitute for different forms of repression. By bribingrewarding andor punishingrepressing media outlets, incumbents can make economic conditions seem better than they actually are. Media outlets can deceive citizens for a while. Thus incumbents might look like they do a better job of governing the country than they actually do.
Their model suggests that when economic conditions are somewhat bad, bribingrewarding favorable media outlets is more effective and used more. However, when economic conditions are really bad, the authoritarian regime opts for censorship and punishingrepressing unfavorable media. We have seen that in Turkey suppression and censorship has increased tremendously in the last year. As Guriev and Treisman predicted, that strategy was not very successful in terms of affecting election results. So we have seen once again that deceiving the citizens in the long run is not possible.
On the other hand, I should also point out that the biggest winners of the election are two parties which stress the Turkish and Kurdish identities: the MHP and the HDP. The CHP was not able to increase its votes at all. Though its election campaign, based on sound economic policy proposals rather than ideological and identity issues, was admired by most, it is widely believed that many constituents who would have voted for the CHP voted strategically for the HDP to help it overcome the 10 percent national hurdle.
Finally, I also want to note that the very next morning after the election, among the top losers in the stock market were the shares of ihlas, Metro and Katmerciler, almost fanatical pro-AKP companies, and among the top gainers were ipek, Bank Asya and Dogan, which were harshly targeted by the AKP. That is a small indication of what kind of regime Turkey has avoided in the last election.

SOURCE: Today’s Zaman