Who’s Paying Your Economist?

Turkey gets a lot of visitors these days, in spite of some negative publicity. Tourism figures have gone up every year since 2001 (according to Wikipedia), from just under 10 million to almost 40 million in 2013. Of course there’s a price to pay. Ask anyone who remembers Bodrum or Kuşadası in the 1970s. But you can’t stop progress, right? And there aren’t many countries in the world saying NO to the tourist dollar.

When did he say that? Will we ever learn?

When did he say that? Will we ever learn?

On that topic, of course, the tourists most countries are happiest to see are those with the most dollars to spend. Luckily the global rich and famous aren’t too concerned about local politics and the downtrodden masses – they just want to have a good time. If you have any doubts about that, check out the Maldive Islands, popular destination for wealthy sun seekers, whose government is one of the world’s biggest floggers of women: ‘Earlier this year, the international community had to intervene to prevent the flogging of a 15 year-old girl who had been molested by her step-father. The girl was sentenced to 100 lashes and house arrest for having borne a child outside of matrimony. Before attracting international attention, the step-father was not even charged.’

Alongside that kind of justice system, anything that happens in Turkey pales into relative insignificance. Turkey’s beaches are pretty nice too; the land has played host to more civilisations than you can shake a stick at – plus a good deal of Christian history took place right here in Asia Minor – so it’s hard to keep people away.

Just last week we had a visit from a gentleman by the name of Robert Shiller, co-winner of last year’s Nobel Prize in ‘Economic Sciences’(sic). Now I have to tell you, I don’t have a lot of respect for people styling themselves ‘economists’. One of the few I have any time for is the late departed John Kenneth Galbraith, who once said, ‘Economics is extremely useful – as a form of employment for economists.’ George Bernard Shaw, well-known playwright, socialist and all-round sceptic went a step further, saying, ‘If all the economists in the world were laid end to end . . . they wouldn’t reach a conclusion.’ You may not have heard of Lawrence J Peter, but you have surely come across his famous ‘Peter Principle’: ‘In a hierarchy, every employee tends to rise to his (or her) level of incompetence.’ He is also reputed to have said, ‘The noblest of all dogs is the hotdog – it feeds the hand that bites it.’ What did this wise chap have to say of economists? ‘An economist,’ he said, ‘is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.’

Well, I don’t wish to show disrespect to the Swedish and Norwegian mavens of the Nobel Foundation or Mr Shiller himself. As Tristram Shandy once remarked, ‘so long as a man rides his hobby-horse peaceably and quietly along the king’s highway, and neither compels you or me to get up behind him, – pray, Sir, what have either you or I to do with it?’ It never ceases to amaze me, however, that, whenever I start looking into a matter we all think we understand, I seem to turn up little surprises. For instance, did you know that the Nobel Prize for Economics isn’t actually a Nobel Prize at all? In 1895, Alfred Nobel, armaments manufacturer, inventor of dynamite and trail-blazing oil tycoon, set up a trust to award prizes in Physics, Chemistry, Medicine, Literature and, somewhat ironically, Peace. It wasn’t until 1968 that the National Bank of Sweden commemorated its 300th anniversary by donating a large bundle of money to establish the prize in economic ‘sciences’ – awarded annually with the other ‘Nobels’ but not officially one of them.

Well, you can understand that. If every billionaire with a bee in his bonnet about some field of human endeavour could endow a Nobel Prize, where would it all end? Bill Gates funding a prize for shonky software development? The Saudi royal family establishing one for Kuranic recitation? Tony Blah setting one up for religious apostasy? You gotta set standards or you’ll lose your credibility, simple as that. Nevertheless, those economists do seem to have managed to weasel themselves in on the Nobel coat tails. The 2013 award is particularly interesting, in that two of the three co-recipients, our Robert Shiller and another by the name of Eugene Fama apparently hold diametrically opposed views on the very topic that won them the prize, namely ‘the empirical analysis of asset prices.’

Well, call me naïve if you will, but I had this misguided belief that Nobel Prizes were awarded for some activity that tended to the benefit of humanity: discovering x-rays, identifying the structure of DNA, bringing peace to South Africa etc. Do I need a doctorate in economics to understand why some anonymous moneybag paid $9.5 million for a one-cent postage stamp issued in 1856 by the government of British Guiana? Or another forked out $657,000 for the guitar George Harrison used when the Beatles recorded ‘I Wanna Hold Your Hand’? They’ve got too much damn money, that’s why – some of which needs to be compulsorily redistributed to Syrian refugees dying of hunger in Turkey (see my previous post).

But I digress. Mr Shiller came to Turkey for a visit, hosted, as I understand, by a local bank, Şekerbank. In an article that appeared in our local newspaper Hürriyet, the ‘Nobel prize-winner’ said that Turkey’s rate of economic growth is getting people excited. Things are looking good for Turkey, he said – much better than for Europe and the United States. The headline, however, picked up on Shiller’s comment about a debate over interest rates between Turkish Prime Minister Erdoğan and the President of the Central Bank. ‘I didn’t know the prime Minster was an economist,’ he apparently said. ‘Does he have a background in economics?’

Our man went on to say that America’s own President, Barack Obama, knows his place – he doesn’t presume to interfere in the business of the US Federal Reserve Bank. Well, I’ve given up trying to understand how most Americans think – but I’d be prepared to bet that a good number of them wish Mr Obama would have a word to those economics geniuses at The Fed. According to a website called Demonocracy Info, ‘the USA is the nation with the most debt by far in the history of civilisation’ and they have some marvellous info-graphics to illustrate the scale of the problem.

I'd substitute 'sins' for 'mistakes'

I’d substitute ‘sins’ for ‘mistakes’

If you happen to live in the United States, there’s another website you should take look at, US Debt Clock – but be warned, it may scare you a little. Last time I looked, the US national debt had passed $17.5 trillion, or $55,000 per citizen. If you want to exclude non-tax-paying babies, retirees etc, a more realistic average is $151,000 per actual tax-payer. The Wall St Journal tells me that this figure vastly understates the true magnitude of the debt, however, and claims that the actual liabilities of the federal government exceed $86.8 trillion – to which, if you have a moment, you can add borrowings by state governments, the private sector and individuals. Then go have a big toke on your medically prescribed weed.

Anyway, there are 300 million people in the US. It’s a big country, with the world’s biggest economy, so you’d expect it to have the biggest debt. For a more useful comparison, you need to calculate debt as a proportion of Gross Domestic Product – which those Demonocracy people have kindly done for us. It turns out that there are nine countries in the world with worse debt ratios than the US: Greece is number one with a debt to GDP ratio of 173%, followed by Japan, Lebanon, Portugal, Grenada, Italy and Ireland, all over 100 percent. Not quite there, but working on it are Antigua and Barbuda, and Cape Verde, sneaking just ahead of America on 87 percent. Sure doesn’t look like a club you’d be proud to join, whatever a highly qualified economist might tell you.

When I first set foot in Turkey back in 1995, the country had a woman Prime Minister, Tansu Çiller. According to her biography, Mrs Çiller had an undergraduate degree in economics from a good Turkish University, a masters from the University of New Hampshire, a doctorate from the University of Connecticut, and completed post-doctorate studies at Yale. Before going into politics, she taught economics in Turkey, becoming professor at the prestigious Bosporus University and was later appointed President of the (now defunct) Istanbul Bank. During Mrs Çiller’s time at the helm of the Turkish ship of state, inflation reached banana republic proportions:

1993:   65.64%

1994:   103.17%

1995:   92.44%

1996:   80.37%

Inflation subsequently dropped to 22 percent in 2003 and since 2004 has averaged around 8% p.a. I have a question for Mr Robert Shiller. I wonder if you can guess what it is?


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