DISTRIBUTIONAL DIMENSIONS AND MACRO-ECONOMIC POLICY 65 agencies to permit interest rate and fiscal subsidies created huge gains for the approval of the relevant 'project* by public agencies. 3. As will be discussed later on, positive interest rates for deposits under conditions of high inflation result in exorbitantly high loan interest rates. Bankruptcies and salvaging operations for insolvent firms were the inevitable consequences. Government decisions on which firms ought to be saved were crucial and resulted in creating gains and losses of extremely high magnitudes. 4. The establishment and development of a capital market was also a high priority. Due to the reluctance of large family-based corporations to go public, Istanbul Stock Exchange (ISE) came to be dominated by public sector corporations. The public agency authorized to undertake transactions price movements. Prior access to the decisions of KOI on its stock market activities created huge capital gains for speculators in ISE. Evidence exists that the presidential family, inter alia, was intimately involved. 5. Closely related with the preceding phenomenon are privatization operations which were organized through ISE. Price decisions on shares to be offered to the public and price levels to be realized in the secondary market for the same shares were all based on government and KOI decisions. Once again, there is strong evidence on large scale capital gains based on insider trading. Advantageous treatment, corruption and profiteering abounded in other privatization operations in which public enterprises were sold to local or foreign capital through negotiations and special arrangements. 6. The drive towards 'less central governments' and decentralization resulted in transferring a number of policy areas such as urban planning and building licences on the basis of such 'plans' to the competence of local government. The magnitude of capital gains on real estate in large cities is totally dependent on such decisions and they exceed conventional 'rents' by high margins. Local politicians acting in close collaboration with privileged business groups and the ruling party were intimately involved in a number of scandals during the 1980s. It could safely be proposed that the phenomena represented by these examples are not specific to Turkish conditions and similar processes have been observed in other countries following the path of orthodox liberalisation recipes. It could, however, be objected that this overview of areas in which new types of 'rents' are created by the state and appropriated by private interests is irrelevant within the context of a liberalisation paradigm since in a fully liberal setting with minimal government, most of them would disappear. This is why orthodox economists and the Bretton Woods institutions may have considered these phenomena uninteresting and, therefore, consider them to b^ beyond the scope of essential policy issues.