The great lesson of the financial chaos enveloping Turkey is that you just don’t mess with markets. For they’re not some option, some taste or fashion, they’re the reality of what everyone’s thinking. Tell people they’re not allowed to think that way and they’ll carry on or worse, redouble their efforts to do so. This being the problem that all economic planners suffer from. They think all should be thinking as they do and get most upset when they don’t.…See More
A useful little proof from the current Turkish shenannigans that speculation, as speculation itself, is a zero sum game. Whatever is made by one participant on one side of the ledger is lost by another over on the other side of that same bet. At which point we can have two views about it all, something basically harmless that we should leave alone or perhaps something wasteful as it has no use and thus something we should limit or ban.…See More
When a currency collapses, as the Turkish Lira is right now, there are always questions about, well, what is happening to make it so? The answer, almost always, being no, what has happened? That is, not that there’s a disaster happening, but which disaster happened? The answer here, essentially, being Erdogan’s taking ever more control over the economy. It’s not that everyone sees some looming problem. It’s that having the one authoritarian controlling the direction of the economy makes a disaster near certain to happen, thus the disaster is that authoritarian control over the economy:
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The Turkish lira has collapsed to an all-time low against the dollar, but the country’s leader has brushed aside concerns, telling Turks “we have our God.” The Turkish President Recep Erdogan then followed those comments up Friday by urging Turks to sell dollars and gold and buy lira.
It’s possible to view Turkey as retreating – advancing if you prefer – to something like the power and economic status it had as the Ottoman Empire. The point being back then that just everything depended upon the Sultan. Sure, sometimes it was the Vizier who had the real power, but the legal status was that the entire thing belonged to said Sultan. State employees were in fact slaves – quite literally in law – of said Sultan.…See More
The Turkish President, Tayyip Erdogan, has just closed down Uber in that country. In the process he’s shown, once again, that he doesn’t really quite get how market economies work nor why we use them. The aim is to find out what the consumers want, not what the producers do. Thus if someone launches a service, produces a good, which people want we should let them get on with it. Not close it down because other producers complain.…See More
We’ve another of those complaints by a politician that reality is just such a bitch. Here it’s Erdogan in Turkey complaining that the Lira is falling in value. But then the lira should be falling in value given the economic policies being pursued by Erdogan. Hmm, OK, so we can see why Erdogan doesn’t like the markets here but also we should see the reason why we use markets. For we prefer reality to the dreams of politicians.…See More