Oh Dubai!!


While officially the project has just been delayed, the islands are rapidly merging together and also appear to be sinking.”

I grant you the operative word here is “appear” to be sinking. However, considering the amount of work that the Dutch and the Italians have to do to keep their cities from disappearing under the swells, it would be surprising that Dubai would have less trouble. The difference of course is that Venice and the Netherlands are productive areas of human interest. Thus the efforts to keep them above water is, so far, less expensive than the return. Personally I don’t think the same rationale can or should (in anyone’s right mind) apply to such frivolous idiocy as The World or Palm Island.

What I wrote many years ago stands. As a self proclaimed wow destination, Dubai is doomed to outdo itself year in year out. A wow project is such because it is not economically viable. If that were not the case, then it would lose its wow factor because anyone could build it. Thus, the economics of wow projects are inherently and necessarily self defeating. If one wow project is uneconomic, then a whole bunch of wow projects are horrendously so. The more wow projects you embark upon, the more you eat into your bottom line profit… if, indeed, you have any profits to eat into.  But if, as it is now becoming clear, you make up for the lack of profit with debt, then wow projects have by necessity an exponentially short life span.

Dubai is the poster child of inflationist supply side economics. Dubai is the poster child of that misguided neo-conservative doctrine that holds that sovereigns can create their own reality if enough money is thrown at something. The trouble of course, is that Dubai has been throwing money at things that are not efficient or viable and that do not build intrinsic value such as knowledge. Dubai is the poster child of misguided expediency.
Read more: http://www.mailonsunday.co.uk/sciencetech/article-1247651/World-Islands-Is-end-world-Nasa-picture-suggests-Dubai-globe-sinking-sea.html#ixzz0eMyXSFy1

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2 Responses to “Oh Dubai!!”

  1. guidoamm Says:

    Dubai employed supply side economics to the extent that they overspent on projects that were not dictated by commercial/economic need. The projects Dubai has embarked upon were purely whims. Thus they got waaaaaay ahead of themselves in needed infrastructure. Furthermore, all their projects were geared towards finance, IT and real estate; nothing else. They tried to completely bypass the foundational requirements needed to build a solid solid economy.

    Of course, it could be argued that there is no way on God’s green earth that Dubai has anywhere near the number of citizens required to put in place economic foundations – and I would agree. But therein lies the problem. What is the sense in trying to become the IT hub of the region when you are going head to head with India that has many folds your population and where intellectual capital is far higher without mentioning, by the way, that your entire national industry is predicated on importing Indian nationals anyway? Talk about self defeating strategies.

    Dubai threw money it didn’t have at projects that make little economic sense purely on the expectation that if you build enough outlandish projects people will come. And they would come too if global finance and economic practices had not been jolted. The problem is that this time around, this jolt to the financial system is, in my opinion, terminal. Dubai is nothing but the result of inflationary dynamics brought about by the fiat monetary system.

    Now, if you think about it, that is a strategy that has worked for Disney for example. Now, provided Dubai might be ready to countenance becoming a holiday destination, then I suppose there is an argument for carrying on as it does. However, having spent a good many years at Disney myself and knowing first hand the economics and the dynamics required to get 10Million people through the doors year in and year out, I’d say Dubai would have its work cut out for it.

    But from there to becoming a viable nation that can contribute to overall human development not only locally but globally, I’d say Dubai’s efforts have been misguided at best… but in truth, whimsical…

  2. David W. Lincoln Says:

    Sorry, Guido, but I have to argue a point. What Reagan did, in the name of
    Supply Side Economics, or Reaganomics, was the same as what JFK did, and what Warren G. Harding did. They let people keep more money.

    Given that Reagan had to deal with hostile Congresses (A Republican majority for a bit, and successful coalition in the House with Blue dog Democrats, for a bit, the spending of more than the rate of inflation and population growth belongs to the likes of Tip O’Neill).

    Throwing money at the problem is hardly a description of Reaganomics, or Supply Side Economics. After all, it was an abandonment of John Maynard Keynes, and a rapprochement with von Mises and economists of the Austrian school of economics.

    Here is an example, in more fluid terms: http://www.nationalpost.com/opinion/columnists/story.html?id=0f64111d-d479-486d-96d8-bce8f40b5b55

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