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Sunday, 12 August 2018

Turkey’s economic crisis is a glimpse into the future of Trump’s America (Independent)

Subtitle: "Turkey’s situation is what happens when you undermine independent institutions, trample over norms of good governance, ignore expert advice and give free rein to nepotism"

"The charismatic president wins elections, but he’s also an unabashed authoritarian.

He fires up his predominantly rural and religiously conservative base with populist and divisive rants. He trashes multilateral institutions and insults nations that displease him. He puts his relatives in positions of power. He propagates idiotic economic theories. He complains about interest rate hikes by the independent central bank.

Donald Trump? No, Recep Tayyip Erdogan, the president of Turkey.

Erdogan proclaims that phrases such as “democracy, freedom and rule of law” have “absolutely no value any longer”. Trump describes the media as the “enemy of the people” and attacks judicial decisions with which he disagrees. Erdogan has appointedhis son-in-law, Berat Albayrak, as finance minister. Trump’s 37-year-old son-in-law, Jared Kushner, is his “senior advisor”.

Erdogan believes, despite all the evidence in the world, that low interest rates curb inflation, rather than stoking it. Donald Trump thinks, contrary to the view of every credible economist, that the US trade deficit can be eliminated by tariff hikes and trade wars, and that a current account surplus represents some kind of a national economic victory.

Erdogan says the United Nations has “collapsed” and describes the Dutch as “Nazi remnants”.

Trump labels the World Trade Organisation a “disaster” and talks of “shithole countries” in Africa.

Erdogan describes high interest rates as “the mother and father of all evil” and pledges to “take responsibility” for such issues.

Trump says he’s “not happy” about the Federal Reserve putting up the cost of borrowing.

The big difference between the two men? That, for Erdogan, the economic reckoning for all this populist destruction has arrived.

The Turkish lira is in free fall. After Erdogan’s interference with its independence, few trust the central bank to be allowed to do what is necessary to restore calm to foreign exchange markets. The son-in-law finance minister lacks any credibility.

This is what happens when you undermine independent institutions, trample over norms of good governance, ignore expert advice and give free rein to nepotism.

Turkey is, of course, in a profoundly different place from the US. The failed coup in 2016 was what accelerated Erdogan’s march into autocracy. Opponents of Trump are not locked up, unlike in Turkey. Journalists are not jailed in the US, unlike in Turkey.

Yet things can unravel remarkably quickly.

Just 14 years ago, Turkey’s institutions were considered to be of such sufficient quality – with its politics, too, moving rapidly in the right direction – that EU membership was a serious proposition. In 2006 even one Boris Johnson was making the case for its entry into the club. In those days Erdogan took advice from technocrats and experienced, credible political figures such as Ali Babacan and Mehmet Simsek. Few predicted he would morph into today’s demagogue.

Now consider the US’s trajectory under Trump. Degrading conduct by the president that would have been jaw-dropping from any of his predecessors has become routine. Republicans turn a blind eye to behaviour that would have sent them running to start impeachment proceedings had it come from Barack Obama, or Bill Clinton (or Hillary).

There is a great deal of ruin in a nation, as philosopher and economist Adam Smith once told us.

By that, he meant that it’s usually premature to announce that a country is finished. Nation states can cope with a great deal of stupidity and corruption from their leaders and folly from their populations.

There’s momentum in an economy. Foreign capital continued to sluice into Turkey in great volumes despite Erdogan’s authoritarian turn. The US economy is growing at its fastest rate in years, partly thanks to the decent foundation from the Obama years and partly thanks to Trump’s unfunded tax cuts. Unemployment is at its lowest in two decades. The stock market is booming.

Yet there comes a point when the ground gives way. And when the breakdown happens, it can happen very fast.

Turkey, under Erdogan, appears to have reached that point. How long will it be before America does the same? To have posed that question only two years ago would have seemed absurd. Alas, thanks to Trump and his enablers in the Republican Party, no longer."