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December 3, 2021 3:13PM

How Erdogan’s Pseudoscience Is Ruining the Turkish Economy

By Mustafa Akyol

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One 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.


The dramatic decline of the Turkish lira

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” he declared 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 Erdogan’s obsession with interest rates exactly come from? As I briefly explained in my latest book, “Why, As a Muslim, I Defend Liberty,” it comes from “Islamic economics.” (Economist Steve Hanke rightly makes the same point.) This ideological construct, which appeared in the mid 20th century with unmistakably Marxist influences, is different from the 14‐​centuries‐​old economic experience of Islamic societies, which, especially in the beginning, reflected a vibrant and pioneering commercial capitalism. (Surely, interest was a problem also in this pre‐​modern Islamic capitalism, as the Qur’an strongly condemned riba, or “usury.” But some jurists distinguished “excessively exploitative” moneylending from “reasonable” interest rates, allowing the “cash foundations” in the Ottoman Empire, which functioned as pre‐​modern banks. More importantly, as historian Timur Kuran has noted, the concern with riba was never taken as the basis of a distinct economic system, until the rise of “Islamic economics,” which itself was a component of the modern‐​day Islamist movement.)

Erdogan, a veteran of Turkey’s Islamist movement, seems to be committed to this ideological construct, which he apparently cannot distinguish from being a pious Muslim. That is why, he recently defended his relentless war on interest rates by saying, “there is nass [Qur’anic decree] on this; so what is up to you or me?” In other words, he presented his economic theory as a religious truth that good Muslims should not question.

Yet all of this would be less of a problem if Erdogan did not have the power to impose his peculiar beliefs on the whole nation. (For a comparison, recall that President Trump believed at some point that hydroxychloroquine was effective against Covid‐​19. But this pseudoscientific view did not become government policy, and it was freely criticized, if not ridiculed, by a free press.)

Which brings us to Turkey’s real problem. It is not just that there is an ideologically delusional and personally hubristic president. The real problem is that this president has unlimited power. Throughout the past decade, with all the well‐​tailored constitutional and legal redesigns, as well as dirty tactics of patronage and intimidation, Erdogan has taken control of the whole state apparatus: the executive, the legislation, and the judiciary. He has also taken control of some 90 percent of the media, all universities across the nation, and the central bank, which controls the Turkish lira.

That is why Erdogan was able to impose his bizarre theory on interest rates on Turkey’s central bank, whose presidents he changed five times over the past ten years, at times publicly complaining, “they don’t listen to me.” In the meantime, his sycophants that filled the mainstream media sold the public the big lie: that the decline of the Turkish lira, as any other problem in the nation, was the work of a global cabal — the vague “mastermind,” sometimes specified as “Jews” — which is trying to sabotage Turkey’s glorious rise under Erdogan’s heroic leadership.

All this reminds me of a dark episode from the mid 20th century: the Lysenko Affair in the Soviet Union. It began when Russian biologist Trofim Lysenko convinced Soviet dictator Josef Stalin that Mendelian genetics was “bourgeois science,” and therefore worthless by definition. Instead, Lysenko promoted an alternative — and more “socialist” — theory of plant breeding and heredity, proposed earlier by Russian horticulturalist Ivan Michurin. Stalin embraced this pseudoscience and imposed it on Soviet institutions for years, even by purging and executing objective scientists who raised concerns. The result was mass experiments on Soviet crops, which had disastrous results, leading to prolonged famines that killed millions.

To be fair, Erdogan’s Turkey — a formal democracy where elections still matter and life seems normal — is not nearly as brutal as Stalin’s USSR. Still, under Erdogan’s authoritarian populism, it has devolved into a republic of fear, where vocal critics of the thin‐​skinned president fear ending up in jail, or at least losing their jobs. And the language of the regime, which depicts a great leader standing against endless conspiracies, saboteurs, and traitors, sounds disturbingly similar to Soviet propaganda.

Whether Turkey will find a way out this nightmare soon, before it gets worse, is unclear. There are elections scheduled for June 2023, and polls show that this time Erdogan may be finally defeated. But whether he would accept defeat is a difficult question with no clear answer.

Yet there is something else that is clear: In the past decade, Turkey has experienced a growingly deepening autocracy, which has proven increasingly destructive. It is a sad story that confirms that good‐​old liberal lesson, proven repeatedly throughout world history:

Never give too much power to one man. His delusions of grandeur may be the making of your own misery.

Related Tags
Global Freedom, Center for Global Liberty and Prosperity
December 3, 2021 2:30PM

Friday Feature: Merit Academy

By Colleen Hroncich

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One reason educational freedom is so important is that it allows a variety of learning options to sprout and flourish. In recent years, classical education has experienced a resurgence.

Last year, a group of parents in rural Colorado wanted to open a classical charter school in their community because they weren’t satisfied with the local district’s curriculum. The district rejected the charter application.

Fortunately for the families involved, they discovered an alternative way to create their school. In Colorado, there are Boards of Cooperative Education Services (BOCES) that provide various services to local school districts. BOCES (pronounced BO‐​sees) are also empowered to start their own schools.

Education reEnvisioned BOCES (ERBOCES) operates statewide and its mission is “to expand availability and access to quality, innovative public education programs Colorado families and students seek.” When the local district rejected the classical charter school application, ERBOCES was there to help. And Merit Academy, which opened this year in Woodland Park, CO, is the result.

John Dill is one of the founders of Merit Academy. A 20‐​year Army vet, he and his wife were homeschooling their twins until this year because they didn’t like the Summit Learning program used by their district. He’s amazed how quickly they were able to get the new school up and running. Due to a legal challenge against ERBOCES, their approval was delayed until April. But they still managed to open the school on August 23. The school already has 185 full‐​time students as well as around 65 students participating in Merit Academy’s homeschool programs.

A primary goal at Merit Academy is to “grow students’ intellect and character to prepare them to be well informed and productive citizens.” The school utilizes the Core Knowledge® sequence (which, they emphasize, is not to be confused with Common Core) and a classical approach. School leaders believe this combination is the best way to provide students with great depth and breadth of knowledge—both within and across the various fields of study.

John says the community—especially the faith community—has been enormously supportive of the new school. The classes are currently split between a Methodist (K–5) and Lutheran (6–8) church while the school renovates a former hardware store. At first, they weren’t sure the store would work because there was no safe play space outdoors. Then the neighboring Catholic church offered to let the children use its playing fields. They hope to move to the new space later this month.

Merit Academy is currently K‑8 and plans to add one grade each year until it goes through 12th grade. John noted there were some unanticipated challenges at the start of the year as many of the kids hadn’t been in school for 18 months. It took some time to get them used to it again. But now John says the children—including his own—are thriving.

Even in very rural areas, children need educational options. Thanks to the work of dedicated parents and the help of ERBOCES, Merit Academy is providing an option for kids in the mountains of Colorado.

Related Tags
Education, Center for Educational Freedom, Public Schools, School Choice
December 2, 2021 1:47PM

A General Thought (And a Personal Update) on Gerrymandering

By Walter Olson

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We’re at the height of the decennial redistricting season, which occasioned this thought:

When you defend drawing a partisan gerrymander in your state, you’re not just sticking it to the opposing national party. You’re rationalizing unfairness toward voters in your state who’ve done nothing to deserve that.

This is why the “we won’t stop gerrymandering until the other side behaves” excuse falls so flat. Your obligation to stop arises not from some duty you owe the opposing party, but (if you are a legislator) from a duty you owe citizens of your own state.

As longtime readers know, my interest in this topic goes beyond my various writings and the talks I’ve given around the country in states like North Carolina, Virginia, Pennsylvania, and Indiana. Separately from my work at Cato, I’ve also taken an active part in efforts to remedy the practice in my home state of Maryland.

This year I was honored when Gov. Larry Hogan appointed me as a private citizen to serve as one of the three co‐​chairs of the newly formed Maryland Citizens Redistricting Commission, a non‐​partisan panel charged with developing Congressional and legislative maps based on the 2020 Census that would be free from favor toward any party or candidate. Not all nonpartisan commissions on this subject have functioned well: Virginia’s fledgling commission, dominated by incumbent lawmakers, proved a fiasco, even as its counterparts in Colorado and Michigan enjoyed a fair measure of success. I believe ours was a model for how such a panel can work, representing a wide variety of Marylanders and working in collegial, fair‐​minded style to bridge the inevitable disagreements.

I wrote briefly about the process in an opinion piece for the Frederick News‐​Post. For more, check out coverage from the Maryland Association of Counties, from Matthew Liptak at Inside Sources/​Arundel Journal, and from Bethesda Magazine in separate coverage by Steve Bohnel and Ana Radelat. Earlier in the year, I discussed the challenges with Dan Sally at his You Don’t Have To Yell podcast.

At the same time, the leadership of the Maryland legislature appointed its own commission which recently proposed its own Congressional map, covered by William J. Ford at the Washington Informer. The Princeton Gerrymandering Project, which uses standardized metrics to rate proposed maps, awarded the MCRC map an “A” for partisan fairness, while giving the legislature’s proposal an “F.” We’ll know more next week when the legislature meets in special session to consider both maps.

Related Tags
U.S. Elections
December 1, 2021 1:39PM

On China’s Trade Practices, the United States Is Ramping Up Efforts with Allies

By Inu Manak

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This week, trade ministers from around the world were supposed to meet in Geneva to discuss a number of pressing trade issues, including new disciplines to rein in government subsidies in the fishing and agricultural sectors, and to develop a path forward to liberalize trade in areas such as environmental goods and e‑commerce. These meetings are now postponed due to the emergence of the Omicron variant. These face to face meetings are not only important for addressing multilateral issues at the World Trade Organization, but also provide an opportunity for countries to discuss other trade challenges. While trade commentators have been generally skeptical of international efforts to tackle modern trade problems due to the growing tide of protectionism and nationalistic industrial policy, we should not lose all hope. In fact, on one of the most pressing trade issues of the day—how to reconcile China’s place in the world trading system as a largely state‐​run economy—there was some headway in trilateral talks between the United States, the European Union and Japan. This is a positive sign.

The trilateral dialogue between the United States, EU and Japan began under the Trump administration to find “ways to strengthen existing WTO rules on industrial subsidies.” The WTO defines a subsidy as measures that involve a “financial contribution” from a “government or public body” that confer a “benefit” on the receiving firm. China’s state‐​led economic model has made it particularly difficult to push back against its heavy subsidies because current international rules don’t account for China’s unique form of governance, which is different than other forms of state capitalism. Law professor Mark Wu has labelled China’s model as “China Inc.” and explains it as follows:

What distinguishes China, Inc.? Contradictions pervade the Chinese economy today. While one might think of the economy as state‐​dominated, private enterprises drive much of China’s dynamic growth. In addition, economic intervention does not always flow through the state. Alongside the state is the Chinese Communist Party (“Party”), a separate political actor that plays an active role in the management of state‐​owned enterprises (“SOEs”). The economy embraces market‐​oriented dynamics, yet it is not strictly a free‐​market capitalist system. Networked hierarchies and embedded relationships exist among businesses, but not necessarily in the way they operate elsewhere in the world.

Essentially, unlike other state‐​capitalist systems, it’s much harder to see how the hand of the government intervenes in various aspects of economic policy. This makes it exceedingly difficult to hold China to account for its unfair trade practices in the area of subsidies. Chad Bown of the Peterson Institute for International Economics and Jennifer Hillman at the Council on Foreign Relations have a detailed paper that outlines the problems with the current multilateral rules, which also spells out the various proposals that have been put forward to reform WTO rules in this space. One of the challenges, of course, is that it is difficult to negotiate new rules with so many voices at the table—the WTO has 164 Members—so other forums can be a useful place to begin dialogue.

Enter the trilateral discussions between the United States, EU and Japan. On November 30th, Katherine Tai, the U.S. Trade Representative, Hagiuda Koichi, Minister of Economy, Trade and Industry of Japan, and Valdis Dombrovskis, Executive Vice President of the European Commission, met virtually to discuss the problem of subsidies reform generally—without mentioning China. However, it’s fairly obvious that these talks are meant to serve as a brainstorming session between the three economies to build agreement on how to address the problem of China’s subsidies, with the intent of later bringing their ideas to the WTO. The Joint Statement released after their most recent meeting identify three specific areas on which they hope to advance dialogue:

1) Identification of problems due to non‐​market practices

2) Identification of gaps in existing enforcement tools, and where further work is needed to develop new tools to address such practices, as well as discussing cooperation in utilizing existing tools

3) Identification of areas where further work is needed to develop rules to address such practices

These are all issues that have been identified by a number of trade experts as areas worth building more clarity in order to craft new rules. Furthermore, the fact that the Biden administration has resumed these talks with the EU and Japan is notable, and could open the way to a more concerted approach towards China’s unfair trade practices instead of engaging in tit‐​for‐​tat tariff battles that do nothing to address the actual problem at hand. It also may provide a way for the Biden administration to move away from the China Phase One deal, which has not been able to address longstanding complaints on China’s trade practices that my colleagues and I have described here, here, and here.

It’s not entirely clear how these discussions will unfold, and what impact the current administration’s own efforts to encourage industrial subsidies here at home will complicate the dialogue. What is important, for the time being, is that the United States is engaging with our allies on this issue, because they are just as impacted by China’s behavior as we are. It is important that the United States not go it alone, not least because having more countries on board that support overall reform efforts could encourage China to accept some difficult changes to its economy, if it intends to remain an active and rule‐​abiding country in the global trading system. As my colleagues have catalogued, China’s track record at meeting its existing obligations at the WTO has been as good as any other country, and when brought into litigation, China has generally responded by changing its behavior. Updating WTO rules so that trade practices that currently sit outside of them can be effectively challenged will go a long way to addressing China’s subsidies regime, and also move us towards a more competitive international market.

Related Tags
Trade Policy, China
November 30, 2021 5:40PM

Merck Antiviral Drug Moves Closer to Approval

By Jeffrey A. Singer

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A Food and Drug Administration Advisory Panel just approved, narrowly, the Merck antiviral drug Molnupiravir. This is just step one. We now have to wait for the FDA to decide on emergency use authorization.The U.K. approved Molnupiravir on November 4.

Merck applied to the FDA for approval on October 11. Vaccines are the best long‐​term defense against COVID-19, but antivirals are the best first‐​line defense, especially when new variants can develop that escape the immunity provided by vaccines. Rather than wait weeks for the vaccine to take effect, antivirals—like antibiotics—work immediately to kill the pathogen.

The FDA’s bureaucratic foot‐​dragging must stop, especially with politicians considering reinstating lockdowns and bans on elective procedures.

Pfizer submitted its antiviral, Paxlovid, to the FDA on November 20. Let’s hope the FDA is quicker on Paxlovid—especially since the clinical trials were so impressive that, for ethical reasons, Pfizer interrupted the trial and immediately sought emergency use authorization.

Related Tags
COVID-19, FDA and Drug Regulation
November 30, 2021 2:58PM

Build Back Better Act Immigration Provisions – Summary and Analysis

By David J. Bier

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The House has now passed the Build Back Better (BBB) Act (H.R. 5376), which the Senate may or may not pass through the reconciliation process. The bill includes several important immigration‐​related provisions. This post will explain them in detail.

Sec. 60001 – Parole and Work Permits for Long‐​Term Residents

BBB would authorize (or require)[1] the Department of Homeland Security (DHS) to temporarily provide a legal status known as “parole” to any noncitizen in the United States (including both illegal immigrants and legal temporary workers and their families) who meets the bill’s eligibility criteria.

Eligible immigrants: Applicants must only[2] prove that they have “continuously resided” in the United States since before January 1, 2011 (i.e. since at least December 31, 2010). DHS currently uses two different definitions of “continuous residence.” For naturalization purposes, “continuous residence” would typically exclude absence from the United States of more than 1 year and exclude absences of more than 6 months but less than a year unless the applicant can prove they maintained residence here. For Temporary Protected Status (TPS), Deferred Action for Childhood Arrivals (DACA), and the green card registry programs, the government excludes absences that are “brief, innocent, or casual.”

Population size: The Congressional Budget Office (CBO) estimates that 6.5 million noncitizens would receive parole. The Center for American Progress’s Philip E. Wolgin, Nicole Prchal Svajlenka, and Claudia Flores estimate that these provisions would allow 7.1 million undocumented immigrants to apply. The Center for Migration Studies puts the number of undocumented immigrants who could qualify at 6.3 million. None of the estimates specifically say how many legal temporary workers, students, and other legally present temporary residents could apply, though the CBO estimate appears to include them. A couple hundred thousand is a reasonable guess (though other provisions of the bill might benefit them more).

Duration of status: DHS would have to start accepting applications status 180 days after the date of enactment. If it were enacted in January 1, 2022, the first applications could be received by about July 1, 2022, and based on current processing times, most applications would not be approved before July 1, 2023, and the parole status would expire September 30, 2031. Therefore, BBB would probably provide the normal applicant only about 8 years and 3 months of guaranteed legal status and employment authorization. What would happen next is unpredictable. A future administration could potentially extend parole for those who entered without inspection under its existing authority under section 212(d)(5)(A) of the INA. It could also create a parole readmission program for the parolees under this program who were inspected and admitted.

Benefits: Parolees under this program would receive legal status and work authorization for the duration of the program. They would also be allowed to apply for state driver’s licenses. Anyone who is married to a U.S. citizen, is the parent of an adult U.S. citizen, or is the minor child of a U.S. citizen could immediately adjust to legal permanent residence after receiving parole because being “paroled” removes the illegal entry bar to adjusting to permanent residence. The Congressional Budget Office (CBO) estimates that 3 million would gain permanent residence after receiving parole.

Ineligible immigrants: Anyone establishing residence in the United States after December 31, 2010 would be excluded. The normal criminal and security bars and waivers to them would apply. Immigrants are ineligible if they are barred from admission to the United States for torture, genocide, terrorism, material support for terrorism without duress, recruitment of child soldiers, money laundering, severe human trafficking, smuggling of illegal immigrants, polygamists, international child abductors, unlawful voters, and any violator of any drug law (except for a single conviction for simple possession of 30 grams or less of marijuana). Those with multiple criminal convictions with aggregate sentences of more than 5 years, offenses involving prostitution in the last ten years, or anyone who has committed a crime “involving moral turpitude” would also be presumptively banned. Moral turpitude is defined at the local level, but common crimes include murder, rape, aggravated or sexual assault, robbery, burglary, drugged driving, drunk driving with a suspended license, voluntary manslaughter, spousal violence, child abuse, and welfare or check fraud.

Read the rest of this post →
Related Tags
Immigration
November 30, 2021 2:18PM

New York City Joins Philadelphia’s and Rhode Island’s Effort to Create Safe Consumption Sites in Defiance of Federal Law

By Jeffrey A. Singer

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The City of New York announced today that it has authorized two safe consumption sites (sometimes called “overdose prevention sites”), both of which will be operated by a pair of non‐​profits. One will be in East Harlem and the other will operate in Washington Heights.

This comes about 6 months after Rhode Island’s governor signed legislation authorizing a safe consumption site pilot program that becomes effective in early 2022. The City of Philadelphia has been trying without success to establish Safehouse, after the project was challenged by federal prosecutors. This past October the U.S. Supreme Court refused grant certiorari after the 3rd Circuit Court of Appeals ruled 2–1 that safe consumption sites violate federal law.

In March 2019 the Cato Institute held a policy forum evaluating harm reduction strategies for the overdose crisis, and a very interesting panel was held on safe consumption sites that included former Pennsylvania Governor Ed Rendell, a principal in the Safehouse endeavor.

As I’ve mentioned previously, safe consumption sites have existed since the mid‐​1980s, and now operate in more than 120 locations in 66 major cities throughout Europe, Canada, and Australia. The Government of Canada has authorized 38 safe consumption sites since 2016, after studying the success of its first site, Insite, which was founded in Vancouver, BC in 2003.

An unsanctioned safe consumption site has been operating in this country clandestinely since 2014, and researchers have been tracking and reporting on its success reducing overdoses (without revealing its name or location) in the peer‐​reviewed medical literature. Others operate underground in cities like Seattle, sometimes using apartments and operating like “speakeasies.”

Unfortunately, federal law, specifically the “Crack House Statute,” makes safe consumption sites illegal in the U.S. But a growing number of jurisdictions, aware that safe consumption sites are saving lives throughout much of the developed world, appear willing to test the resolve of federal prosecutors as overdose deaths continue to mount. Congress should repeal the Crack House Statute and get the federal government out of the way of cities and states trying to prevent overdose deaths.

Related Tags
Health Care, Drug War

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