Economies are funny things. I just noticed that I forgot to tie today’s video into one of the central messages of this “Markets Are Dumb” series. That’s the importance of Confidence to markets. I sometimes think that’s all there is to them. In our last installment on the Turkish economy I talked about how the fundamentals of the Turkish economy had been disastrous for half a decade. Everybody knew this. All the experts agreed. Yet the Turkish economy kept trucking along, and sometimes putting up very impressive growth numbers. How did it happen? Confidence.
The Turkish people weren’t exposed to the basic facts of their economy, and their misplaced faith, or confidence, kept the wheels spinning. The growth this led to prompted international investors to keep pouring money it. It seems that this perpetual motion machine may finally have stopped. As today’s video makes clear, Trump can’t be held responsible for any of the disastrous choices that Turkish policy makers have made over the past decade. But he is the guy who finally punctured that last bubble of confidence. And that’s actually pretty important.
Sigh. Sunday’s election in Turkey was pretty depressing. Erdogan won re-election as president of Turkey, and his coalition retained a majority in the Turkish parliament. This puts him in a dramatically more powerful position. The recently revised constitution makes the President the center of Turkey’s political system. And with this election, the office of the Prime Minister is done away with, and Erdogan is now in more full control of the country than he has ever been.
You can find an infinite number of articles talking about how bad this development is, and I largely agree with them. But I remain optimistic about Turkey, just in the longer term. Here are two things to make you feel a bit better…
First, this is exactly what we expected when the elections were announced a couple months back. I have said repeatedly in my Turkey videos that I expected Erdogan to win the next couple elections. This has happened. But over the past two months, something really exciting happened. The CHP, the party that has failed to adequately oppose Erdogan for almost two decades now, finally put up a candidate that people actually liked. Muharrem İnce is likable, has a compelling story, and actually seems to be a decent leader, which is at least two things, if not three things that the CHP’s leader Kemal Kılıçdaroğlu does not have. In the weeks leading up to the election, İnce held rallies attended by literally millions of people. This, combined with the founding of Meral Akşener’s Iyi party last year made people surprisingly hopeful.
Those hopes were dashed. The AKP, in an alliance with the (suspiciously successful) hyper-nationalist MHP party, has managed to hold onto a majority in parliament, and Erdogan himself was re-elected. This sucks. But it’s exactly what we expected out of this election before we got our hopes up. The opposition parties remain very successful in Turkey in spite of some truly extraordinary obstacles. We shouldn’t get too depressed about something we expected all along.
The Second reason not to get too depressed about this election is the topic of today’s video. Turkey’s economy is a mess. It’s been on the edge for years now, and 2018 has a good chance of being the year when it finally tips over. When that happens, whether it’s this year or next year, Erdogan will own it completely. Last week, as people were getting more excited about the possibility of an upset, all I could think about was 2015. In June of that year, Erdogan’s party, the AK party, lost its parliamentary majority for the first time. I was quite literally dancing in the streets that June. But because the opposition parties were a disaster, they couldn’t get it together to form the coalition government necessary to get rid of Erdogan. He was able to create a new crisis with the Kurds, and call a new election. He won that 2nd election in November 2015. That felt a lot worse than Sunday did. For me anyway. If the opposition had won this time, I could have easily seen that happening again. It wouldn’t have been the Kurds this time. The economy could have crashed, and as President, Erdogan could have blamed the opposition and called a new election. We’re not going to have to do 2015 again, and for that at least I’m grateful. Today’s video lays out just how difficult a time Erdogan is about to have with the Turkish economy.
This one is part sequel, part explanation. A couple weeks back I published a video entitled “Washington, DC Has Won The War In Syria”. One of my central points was the thought that while the US government had met many of its messed up priorities, the US people and the world and general had in fact lost. It became clear from the comments that this did not get across.
So I put together the video I’m uploading with this post. I think it answers criticisms, but it also does more with that. It reckons with the larger consequences of the Syrian war for geopolitics, and the prospects of world peace and prosperity in general. It starts specific and gets very very general. Syria is a depressing issue, and my weariness with its unrelenting horror may come across in this video. But I try to end on a hopeful note.
The conflict in Afrin may have been my most requested topic ever. I’m glad that folks have forced me to at Syria again. I was dreading it a bit, though, because the subject is super depressing. The war is both horrific and infantile, where some players are desperately hanging on, and others are just idly running around destroying things and destroying people.
The United States would be the prime example of the latter. We’re barely aware of what we’re doing, and what has happened. We are constantly told that Syria somehow means that US leadership is waning, or that other actors are “winning” the war. Believing this requires complete ignorance of the real power dynamics here. The US is much more powerful than any other belligerent, and by any objective analysis my government is the only entity that has “won” anything here. If Syria was a board game, Washington, DC would be the winner. But Syria isn’t a board game. It’s a country that has been destroyed. It may take decades, but there will be consequences. This video lays out the whole depressing state of affairs in Syria today, and yes, it also deals with Afrin.
Nobody has anything nice to say about Turkey anymore. That’s a shame. If there’s a news story it’s about Turkey’s president, Recep Tayyip Erdogan, and the ways he’s taking new powers, purging and repressing. That’s all very important stuff, but I think it’s missing the forest for one particularly tall tree. I lived in Turkey for five years, and I’ve been thinking about the country for a while. There are some basics that the doomsayers are avoiding. This video presents what sort of functions as my Grand Unified Theory of Turkey Optimism. Islam is important, Erdogan is important, and the economy is important. But what is most important is Urbanization.
This theory can actually be applied to the politics of a lot of countries, not least the United States of America. The tension between rural and urban populations is a universal, whether we’re talking about China’s Hukou issues, or the 2016 US election. Thailand is another country that pops to mind. We’re all, as a planet, still going through a pretty insane process of transition. Our parents or great-grandparents were mostly farmers, and now we’re mostly urban dwellers. That’s going to keep having an impact for centuries to come. I hope this video helps you think through these issues a bit more.
“Turkey is Turning into Saudi Arabia” is a bit of a straw man, but it’s something I have actually heard. Looking into why this statement is incredibly silly is helpful though, and that’s exactly what today’s video does. One of the central problems of Saudi Arabia is that there was very little there before there was Oil. When Ibn Saud took Mecca and Medina in the 1920s he reportedly did it with an army of 5,000. As recently as 1960 there were still only 4 million Saudi Arabians. There are around 30 million today, and their entire lives, and parents lives, have been lived in the context of this medieval state. The Universities are all Wahhabi, because they’ve always been Wahhabi. There weren’t any universities (give or take one or two) 50 years ago.
Turkey only had around 19 million people in the 1920s. But there was already a range of universities, and a very complex and almost first world history of institutions and learning from the Ottoman Empire. The Turks have developed for the past 90 years in the context of secularism, and at least surface competition in a national- European context. That simply can’t be eradicated. The form of Islam that Erdogan and the AK party is pushing isn’t Saudi. It can’t be. That particular pathology is only possible with endless oil resources, and a pre-modern blank slate.
The secular elites are being culled from Turkey’s institutions. But Turkey can’t close itself off completely. The Secular elites that control most business in the country are probably showing up at the mosque more often, but they’re still there, and they still believe in what they, their parents and grandparents have always believed. The recent constitutional referendum actually showed some green shoots. Erdogan lost all the major urban centers of power, including Ankara and Istanbul. In the last election he won both those districts handily. Don’t get me wrong. Turkey is in for a rough decade or two. But the bones of that house are good. At the end of the day Erdogan needs international engagement and business. And a lot of the people who he needs for that will never fit into even his version of Islam. Also, the longer the AK party(Erdogan) is on top, the more western and cosmopolitan they become. I’ve partied a fair amount with high profile AK party members and their kids. Saudi Arabia isn’t going to happen in Turkey.