Yesterday in Izmir, today in Adana… I continue to provide insight and info on what has been going on lately across the country. As Ramadan and early elections approaches, I keep receiving invitations from various sections of the business world.
I guess these info sessions will continue during fast-breaking meals in Ramadan. As far as I could see, the Business World does not see eye to eye about early election’s reflections on the economy. However, there’s a consensus on the CBRT decision: “It was wrong”.
Yes, that’s what they say, because, businesses operating with small capital but making large profits do not tend to be happy about a rise in the cost of funding. They are using debt and other liabilities to finance their assets, in other words, they have a high financial leverage ratio. Sadly, I had to bear bad news: “Interest rates will continue rising”.
As a matter of fact, there’s no solution in economy that works like a miracle. We like to call “miracles” the solutions that we did not think of but others did. Some kind of Mediterranean approach to life I guess.
“For how long will we resist the truth?”
From foreign trade policies to Central Bank rate decisions, all the steps taken so far have been aimed at either “kicking the ball out from the goal line” or “kick the ball to the corner”. It is obvious that economic actors cannot manage to score a goal; because, there’s a reactive aspect to each and every decision that has been taken so far, including imports regime, interest rates, taxation. In other words, the Government is acting like a goalkeeper.
And the reason for it is simple: Natural selection can take place, making weak actors fade into history, when the economy is left on its own. Equipped with the power to get the Government to do their bidding (instead of power to engage in global competition), these actors demand “intervention”. The more the Government intervenes, more intense becomes the “negative selection”. In other words, inefficient use of resources… And the education is being shaped in accordance with the presence or non-presence of these highly-protected sectors. However, Turkey will never be able to find a cure for unemployment by letting sectors that do not require well-educated and skilled workforce, to live.
The economic theory emphasizes one important thing: “Achievement in sustainable development only possible through technological progress and strong education”. Trade walls built to hide from the truth, higher interest rate policies implemented to reduce external fragility side effects are no cure, and they will never be.
I just wonder when the people will see the truth.