Numbers are last on Meadow\u2019s list of leverage points because she thinks numbers are diddling with details, arranging the deck chairs on the Titanic. She writes that \u2018\u2026probably ninety-five percent of our attention goes to numbers, but there’s not a lot of power in them\u2026\u2019.\u00a0\u00a0 For example Fed\u2019s fiddling with the interest does not make the business cycles go away.\u00a0 As she says numbers can be important in the short-term to the individual who\u2019s standing directly in the flow; but they rarely change behavior.\u00a0 The common kind of critical number is the length of delay in a feedback loop; for example how late the Fed reacts to a change in inflation level.<\/p>\n
The first thing that comes to my mind regarding Turkish economy and powerlessness of numbers is the inflation rate and the reaction of the monetary policy.\u00a0 Considering the complexness of the monetary policy (and how much effort we put into understanding it), I often wonder whether monetary policy is worth all the attention it receives. \u00a0Because looking at the graph below, one thing I see is that both the trough and peak of core inflation have been rising steadily since 2010.\u00a0 Monetary policy reaction does not look sufficient to decrease or even keep the level of inflation steady.\u00a0 Most probably, it does not have an impact on the level of long-term growth rate as well and it will not be sufficient to change the course of Turkish economy; but surely we will keep talking about it.<\/p>\n
7. Material Stocks and Flows: It is the Female Labor Participation Rate,\u00a0Genius!<\/strong><\/p>\n Here, Meadow talks about the stocks and flows and their physical arrangement (plumbing structure), which can have an enormous effect on how a system operates.\u00a0 Even though some stock-and-flow structures are just plain unchangeable, she finds the possible exceptional leverage point here as the size of stocks, or buffers.\u00a0 She gives the example of baby-boom swell in US pressuring the education and health infrastructure.<\/p>\n How do I relate this to Turkish macroeconomic story? Current picture of Turkish growth rate points out to a potential growth rate of around 4%.\u00a0 Given the cyclical downturn of the global economy, there will be pressures in the next 5-10 years to bring the average growth rate below the potential.\u00a0 Here the exceptional leverage point, which can increase Turkey\u2019s average growth rate as well as the potential one is the female labor participation rate.\u00a0 If this rate is increased from the current 30% levels to 40-50% levels in the next 10 years, it will be like creating a buffer for the Turkish economy for higher growth rates.<\/p>\n 6. Feedback Loops: How Prepared\/Willing Are the Policy Makers for Controlling Feedback Loops?<\/strong><\/p>\n According to Meadow, a complex system usually has numerous negative feedback loops it can bring into play, so it can self-correct under different conditions and impacts. Nature evolves negative feedback loops and humans invent them to keep system states within safe bounds. A mechanism that is created to control negative feedback systems in our economic system is regulatory agencies, which control that risks run out of control for a specific sector.<\/p>\n A positive feedback loop, on the other hand, is self-reinforcing. The more it works, the more it gains power to work some more.\u00a0 If not controlled, positive feedback loops drive growth, explosion, erosion, and collapse in systems.<\/p>\n So the leverage in both positive and negative feedback loops in economic systems is in controlling them at the right time with the right amount of intervention.\u00a0 The leverage point here is whether the Turkish economy has the capacity to prevent feedback loops getting out of control.<\/p>\n On the negative feedback front, quality of regulatory agencies becomes critical.\u00a0 Many of the regulatory agencies in Turkish economy were formed or made independent after the 2001 crisis.\u00a0 Maintaining their independence will be a leverage point in Turkish macroeconomic story.<\/p>\n 5. Information Flows: How Much do the Economic Policies Improve Opportunity and Inclusion?<\/strong><\/p>\n According to Meadows, systems malfunction because there is usually a missing feedback. Adding or rerouting information can be a powerful intervention.\u00a0 She believes that the common cause such malfunctions is the tendency on the part of human beings to avoid accountability for their own decisions. That’s why there are so many missing feedback loops\u2014and why this kind of leverage point is so often popular with the masses.<\/p>\n Turkish economy\u2019s capacity to create a leverage point on missing information flows will depend on its capacity to increase opportunity for its citizens as well as increasing tolerance and inclusion within the society. As can be seen in the below graph, Turkey needs clever policies to improve information flows and improve in rankings.<\/p>\n![\"Screen](\"https:\/\/i2.wp.com\/longviewturkey.com\/wp-content\/uploads\/2014\/12\/Screen-Shot-2014-12-02-at-2.29.15-PM.png\")
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