Dubai Crash

A beloved (but rhymes with "tunecat") relative sends a link to a very interesting story in the Telegraph on the effects of the economic downturn on Dubai.

"The Dark Side of Dubai" really is good and well worth a read.

Dubai was meant to be a Middle-Eastern Shangri-La, a glittering monument to Arab enterprise and western capitalism. But as hard times arrive in the city state that rose from the desert sands, an uglier story is emerging. Johann Hari reports

Glad it's the Telegraph and not the Guardian, but the piece still suffers from rampant anti-capitalism and anti-consumerism. Hari says “Dubai is a living metal metaphor for the neo-liberal globalised world that may be crashing – at last – into history.” I would say that the ills he describes are not a failure of liberalism but a failure of despotism. For the MidEast, Dubai is a hotbed of freedom. And I would suggest that that accounts for much its economic rise. But the lack of real personal liberty as documented in the article prevents a solid foundation of prosperity from being created.

Even at best, it is going to be a marginal economy and likely to suffer great drops in a global downturn. He paints it as pretty dismal today, but I’d inquire whether he’d rather live in Iran, Syria or Saudi Arabia. At the bottom of the bust is it not one of the best countries in the area (excepting Isreal)?

I also have to take some exception to his overwrought examples. The first woman, Ms. Andrews is a pretty sad story. Over invested, lost it all and her husband died with a brain tumor. She admits they made foolish decisions. It is a sad story but she is living in her Range Rover and her designer clothes are creased. There are kids in Chicago whose designer clothes have never rubbed the leather seats of a Range Rover – talk about sad!

She lived the high life few on this planet has known, circumstances changed and she is in the soup. Sorry for her loss but can you remind me how this is allegorical of the fall of an international liberal economic order?

Mr. Hari seems more bothered by affluence than poverty. The lifestyle and all those *#%^@! malls receive more disapprobation than does the de facto slavery he describes. Ah yes, the workers have no rights whatsoever – but what really bugs me is the bored salesgirl at the Harvey Nichols.

Again, Dubai is Amsterdam in its neighborhood, but there is no concept of minority rights, equality, or structured government. Because the current sheik is content to let Dutch girls wear pink shorts and enforce general property rights, it is “game on” especially for a large amount of petrodollars from its neighbors with few choices. I don’t see a Dubai crash as a judgment on liberalism.

Economics and Markets Posted by John Kranz at April 7, 2009 3:57 PM