Welcome to the age of global reckless driving
Donald Trump will become U.S. president in a few weeks. The silence is deafening. I feel a deep anxiety around the globe, twisting and turning under the surface. Trump has already made more than a few blunders just during the transition period. Portfolio managers and investment officers are now half-jokingly talking about the new phenomenon of “presidential tweet risk.” “Just wait until he gets his hands on executive authority,” people say. The talk in the global village is about a new age of uncertainty.
When I was a kid, Fidel Castro was a symbol of a backlash against globalization. Now we have Trump. This is beyond anything we could have imagined in my times. If Castro’s Cuba provided the occasional pothole along the road, Trump is the drunk driver sitting next to you. Welcome to the age of global reckless driving. If you are not worried yet, either you haven’t been paying attention or you’re in a part of the world where you’ve grown numb to this sort of thing. Let me explain.
There are two types of countries: Ones living under perpetual uncertainty, and ones that can identify (sometimes even quantify) risks and prepare for potential outcomes. This is the famous risk and uncertainty distinction of John Maynard Keynes. Risk is something where the probability of outcomes can more or less be measured. Uncertainty is different. It’s an amorphous blob of something that may or may not happen. Risk is the likelihood of your plane going down, or the chances you take on the blackjack table. But uncertainty is entering a pitch black room for the first time. There is fundamental uncertainty moving from this moment to the next, and you cannot assign a probability value to that. The future is just blank. It’s a matter of environment.
Recently I was speaking to a foreign diplomat in Ankara. During the conversation, I found myself comparing a diplomatic posting in Ankara with a diplomatic posting in Bern. I told him how lucky he was professionally in coming to Ankara. Consider being posted to Bern, where essentially nothing changes, (i.e. nothing happens and no rapid structural changes occur). Therein lies the difference between Turkey and Switzerland: One lives under fundamental uncertainty, while the other has a system that suffocates the unknown, quantifies risks and acts accordingly.
Just consider the things that have happened since I wrote a column for this paper last week. I write every week at around noon on Friday. Last Friday afternoon, a few hours after I was finished, the ruling Justice and Development Party (AKP) presented to the Parliament Speaker’s Office its draft law for constitutional amendments. We’re expected to read and analyze the text as soon as possible, but I don’t think the country has been able to digest it yet; in other words, the system hasn’t yet been able to absorb this new source of fundamental uncertainty. But essentially the draft gives the president the authority to define or redefine any public entity through a Presidential Decree, without the need for parliamentary approval. That’s basically the power to singlehandedly redefine the Turkish administrative system. If you ask me, this is a fundamental source of uncertainty as it has the potential to render centuries of institutional evolution obsolete with the stroke of a pen.
Then, on Saturday evening, we had the twin bombs in Istanbul, killing 44 citizens, wounding 155, and devastating the nation once again. It was the 31st bombing in Turkey in the last 18 months.
Finally, on Monday, our State Institute of Statistics (TÜİK) surprised us. It announced the new GDP figures after an adjustment to ESA 2010 standards. ESA stands for the European System of Accounts, and our adjustment to them indicates once again that Turkish accounts continue to converge toward European standards. The change has fundamentally altered our understanding of the Turkish economy. With the change, the average growth rate of the Turkish economy for the 2012-2015 period jumped to 6 percent from the 3.5 percent average of the old series. Overnight, Turks have become more prosperous as well, with GDP per capita jumping from $9,300 to $11,000. So are we really richer, or is this our Greek moment? This needs a lot of explaining.
All the above took place between noon on Friday and Monday morning.
Thank goodness that President Trump is living in the part of the world where you can assign probabilities to risks, and not in some country where anything can change at any given moment. His reckless driving can only change the probabilities assigned to some global risks – at least that’s what we should all hope.