How Erdogan ’s Pseudoscience Is Ruining the Turkish Economy

Mustafa AkyolOne of the most startling stories in the world these days is what the Wall Street Journal recently called “The Erdogan Lira Crisis. ” The crisis is that Turkey’s national currency has been plummeting at an astonishing rate: in 2012, 1 U.S. dollar equaled 1.8 Turkish liras. Today,after an accelerating downward spiral of the Turkish currency, 1  dollar equals 13.7 liras.This economic catastrophe is really an “Erdogan crisis,” because its key factor is what experts have called “Erdoganomics”: Turkey’s all‐​powerful president believes in a bizarre economic theory that if the central bank lowers the country’s interest rates, it will lead to lower levels of inflation.Which is exactly the opposite of what Economics 101 will tell you. (Hence in 2015, when Erdogan began pushing for his theory, a  former head of the central bank, a sane one, said that to believe in this theory, one must “burn the books of Adam Smith. ”) Yet President Erdogan doesn’t care much about such conventional wisdom, which for him means “Western,” which also means worthless. “We don’t care about what George or Hans says” hedeclared repeatedly in the past five years, in populist denigrations of the Western standards of liberal democracy and the market economy. (Which are the very standards he used to follow in his earlier years in power, when he was not yet overtly ideological and arrogantly unrestrained, making Turkey then quite successful.)Where does Erdog...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs