
Good-bye to Dubai  - cwan
http://www.nybooks.com/articles/archives/2010/aug/19/good-bye-dubai/?pagination=false
======
brc
While Dubai is held out by many as an example of capitalism at work, I
actually see it as another case of socialism gone wrong. While you might scoff
at the suggestion of linking socialism and Dubai together, what you
effectively had with Dubai world was a government entity making investment
decisions seemingly with no regard to price signals as more land sat unsold,
and more buildings sat unrented, as more hotels sat unoccupied, but still the
construction went forwards. It's this central government command of the
economy that has arguably caused the problems with overinvestment and
overbuilding, and a tightly controlled workforce (no freedom to associate, no
rights) that supplied the labour to do it.

If there had been proper price signalling (insistence, for example, that the
existing hotels turned a profit before new ones were built) and a properly
free labour force, which would have seen rising wages during contruction
booms, then the growth would have slowed somewhat. Instead, because of these
artificial market conditions, overinvestment continued and tripped off a
speculative frenzy, which has caused the grief.

I'm not pretending this is the only cause, but when you have a central
authority blazing away wasting money, it's only a matter of time before the
economy as a whole suffers from overinvestment in unproductive assets.

~~~
blahedo
Correct me if I'm wrong, but my impression was that there were a _lot_ of
foreign investments in Dubai real estate, not just (maybe not even primarily)
the government. Certainly there were many people buying at the wildly inflated
rates, ignoring the "proper price signalling" that you suggest might have
solved the problem. Or are you suggesting that Dubai should have blocked the
private investors from building the new hotels and condos until more of the
unsold pieces were occupied? That might have been a good idea, but it is also
not the unfettered market you're advocating in the rest of your post, so I'm
not sure what you mean.

"The market" is not a magic wand, its invisible hand not nearly so reliable as
many, apparently including you, seem to think; and "socialism" is also ill-
defined as "everything short of rampant unregulated capitalism". Dubai's
market was pretty darn free, and its safety nets were effectively nonexistent
and certainly nothing even remotely worth of the name "socialism".

~~~
brc
Yes, there is (was) a lot of foreign investment in Dubai, but the government
was effectively underwriting much of it by starting off and feeding the Ponzi
scheme. The big headline projects (the world, Burj Dubai, etc) were all
underwritten by the Dubai government.

Perhaps I didn't make it clear enough in my post that I wasn't suggesting
Dubai was remotely socialist. My point was that centralised planning in an
economy leads to problems. Where I failed in my haste to post and move on, was
that I omitted the next part is that most socialist economies rely, and
expect, a greater amount of government control over the economy, right up to
the point where you get 100% control of the official economy in the case of
communism.

The point I'm making is that excessive government interference in the
marketplace leads to undesired outcomes. Everyone who is entrepreneurial
should have this as a startup message on their computer or phone. It's so easy
to mistake government money flows for real prosperity.

What I'm suggesting is that Dubai World shouldn't have borrowed and spent so
much money on non-productive investments. The [tenuous] link to socialism I'm
trying to make is that the hallmark of any truly socialist government is that
it spends too much money on unproductive investments (aka bridges to nowhere),
not because they are stupid, but because they evaluate investment on things
other than the ability to return their outlay and make a return in the future.

My post was designed to look absurd, because I'm truly concerned about the
reckless amount of government borrowing and spending taking place across the
world. It's unprecedented in scale and will affect us all in the fallout. We
all look at Dubai and think 'can't happen here' (wherever we might be) but so
many places can end up like this.

~~~
sesqu
> the hallmark of any truly socialist government is that it spends _too much_
> money on unproductive investments -- because they evaluate investment on
> things other

So your means of identification of socialist government is that you don't
agree with its valuations?

Perhaps you mean to say that without stringent focus on a numerical
performance measurement, like size of budget deficit or kLOC, optimization
theory breaks down. I don't see how that would be particular to _any_ form of
government. That said, communal ownership does suffer more here, because it's
an attempt at moving past local maxima in the poorly-defined utility space.
Perhaps Jesse Schell's point system for people would be a sufficient
compromise.

The problem with borrowing in particular is that it _leverages_ the assumption
that your use for the money is valued by society. However, you can't nail down
a worth and societies are fickle.

------
crux
Dubai's culture is so openly shallow and materialistic, and its social
structure is so patently corrupt—its once-vaunted development and luxury are
so directly built on the backs of slaves and oppressed people—that I must
confess, I think it's the only place in the world that I think less of people
for living in. China, Israel—of all the places whose governments I disapprove
of, I would never morally judge someone simply for moving to that state or
living in that city. But when I meet people, personally or in my business, who
live in Dubai, I really do immediately think less of them as people. I am
worse inclined to them; I find myself thinking it a moral failure to
participate in the waste and vanity that that city produces. It's probably not
fully defensible, but there you have it.

~~~
phugoid
Well, I'm a Canadian expat in Dubai and I find it interesting that you're ill-
disposed toward me though we've never met.

I also wear Nike sneakers that were sewn by children working in some god-awful
Pacific Asian export zone sweat shop. Don't you?

~~~
endtime
Do you not realize that you live in a country where slavery exists? Do you not
find the expat culture in Dubai to be vapid and vile? If not, I'd be
interested to hear why; everything I've read about Dubai indicates that is
very much that way. If you do, then I don't know why you're surprised that
someone might think less of you for choosing to live there.

~~~
sjs
It's not really all that different in North America is it? If you want to
stretch the word slavery like that. We exploit people all over the world. I
don't think it's fair to be that judgemental towards someone unless you cease
to participate in any activities that facilitate someone somewhere being
exploited.

~~~
endtime
It's completely different from North America; your hand-wavy equivocation is
completely unwarranted. There aren't vast legions of workers brought into the
US under false pretenses, who then have their passports confiscated and are
forced to work for several years in excruciating conditions just to "earn"
their freedom, simply to build a fake city designed to attract morally blind
foreigners.

~~~
notahacker
There are vast legions of workers working in conditions which are neither free
nor pleasant to produce consumer goods for North American (and European)
markets. They just happen to be conveniently overseas, conveniently one remove
away from the multinational brands who contribute to the problem in their
quest for ever-cheaper suppliers.

------
lionhearted
It's in fashion to bash Dubai, but the article isn't exactly well written. The
author just grabs at everything potentially unappealing he can and throws it
in a pot:

> (The UAE was one of only three nations—the others were Saudi Arabia and
> Pakistan—to recognize the Islamic fundamentalist government in Afghanistan.)

There's no analysis of why there - notice how Dubai is one of the most
progressive countries in the Middle East about dress, culture, and women
working, and yet gets no trouble/bombings from fundamentalists? They kind of
have to appease knuckleheads geopolitically. Saudi Arabia do the same thing
because they control Mecca and Medina and want to recognize all even nominally
Muslim countries. Pakistan shares a really large, poorly guarded border with
Afghanistan and a lot of citizens live along that border with no particular
loyalty to either country's government - again, not rocking the boat for
geopolitical reasons.

A lot of world nations recognize backwards places, which just means they'll
negotiate with them - most of the world countries recognize North Korea, for
instance, where the rampant abuses are 1000x worse than anything you could
imagine in Dubai. That's not to say nothing is wrong in Dubai, but its demise
has been greatly exaggerated, and this particular article isn't particularly
well written.

------
api
Dubai is the Pets.Com of the real estate bubble.

There are things like it in China that have yet to crash. Look folks... cities
must grow organically. You cannot create an instant New York or London with
loads of debt. Buildings do not make a city. Culture makes a city. The
buildings are built _after_ the city is built, to contain it.

I also look at Dubai as the peak of something else: the idea that you can
literally create reality if you have enough hype. The same idea was beneath a
lot of hand-wavey dot.com business plans and bad accounting practices of
recent years.

~~~
maukdaddy

      Dubai is the Pets.Com of the real estate bubble without the awesome puppet.
    

FTFY

------
wallflower
My favorite picture of the Dubai skyline.

Skyscrapers in the clouds back when property values were reaching towards the
sky...

[http://www.flickr.com/photos/playing-with-
light/2399114248/s...](http://www.flickr.com/photos/playing-with-
light/2399114248/sizes/z/)

Also: <http://secretdubai.blogspot.com/>

~~~
Retric
If you really want to understand Dubai look at:

[http://maps.google.com/maps?hl=en&q=google+maps+dubai...](http://maps.google.com/maps?hl=en&q=google+maps+dubai&um=1&ie=UTF-8&hq=&hnear=Dubai+-+United+Arab+Emirates&gl=us&ei=YJBoTLGSN4T7lwfJhKigBQ&sa=X&oi=geocode_result&ct=image&resnum=1&ved=0CB8Q8gEwAA)

It's a tiny strip of a few really tall buildings between the dessert and
water.

A real city looks like:
[http://maps.google.com/maps?hl=en&q=new+york&um=1...](http://maps.google.com/maps?hl=en&q=new+york&um=1&ie=UTF-8&hq=&hnear=New+York,+NY&gl=us&ei=6ZBoTJy1PIOKlweB7Y2fBQ&sa=X&oi=geocode_result&ct=image&resnum=1&ved=0CDEQ8gEwAA)
[http://maps.google.com/maps?hl=en&q=new+york&um=1...](http://maps.google.com/maps?hl=en&q=new+york&um=1&ie=UTF-8&hq=&hnear=New+York,+NY&gl=us&ei=6ZBoTJy1PIOKlweB7Y2fBQ&sa=X&oi=geocode_result&ct=image&resnum=1&ved=0CDEQ8gEwAA)
[http://maps.google.com/maps?hl=en&q=beijing%20china&...](http://maps.google.com/maps?hl=en&q=beijing%20china&cts=1281921421896&um=1&ie=UTF-8&sa=N&tab=wl)
or [http://maps.google.com/maps?hl=en&q=New+Delhi&um=1&#...</a>

~~~
sjs
Since when does the shape of a city define it as being "real" or not? Maybe
I'm missing something.

Any modern city that had all that prime beach land waiting to be developed
would probably grow in a similar manner. Now that Dubai is rather "long" it's
growing out into the desert too. e.g. newer areas such as Barsha and whatever
that area is called where the dragon market is (edit: Mirdif).

If you don't like Manhattan then it might just look like a strip of tall
buildings sandwiched between two straights, but you can't say that it's not a
real city.

Dubai is certainly a giant bubble, but it's as real a city as any other city.

~~~
Retric
There is no reason to build buildings that tall when land is so cheap around
it. And not just closer to the desert but also to the north and south. Just
looking at the place you can see poor economic choices being made.

For comparison the strip in las vegas is basicly a tourist trap in the middle
of the desert
[http://maps.google.com/maps?hl=en&q=las+vegas&ie=UTF...](http://maps.google.com/maps?hl=en&q=las+vegas&ie=UTF8&hq=&hnear=Las+Vegas,+Clark,+Nevada&gl=us&ei=5yJpTP2lNsKblgfz1MCfBQ&ved=0CDoQ8gEwAA&ll=36.115153,-115.17103&spn=0.008251,0.015857&t=h&z=16)
but it still has plenty of support around it.
[http://maps.google.com/maps?hl=en&q=las+vegas&um=1&#...</a>

~~~
sethg
There’s a very simple reason: air conditioning. One skyscraper with a thousand
residents is going to be more energy-efficient than a thousand single-family
homes or even a hundred smaller apartment buildings. It also allows the
developer to offer tenants some other amenities, such as restaurants or
shopping, just an elevator ride away, and others within a few blocks or a
short drive.

Most Americans aspire to live in a detached single-family house with a yard,
if they don’t live that way already, but I don’t think this is a worldwide
preference.

~~~
Retric
Buildings rappidly increase in cost as the height increases. A 30 story
building has vary close to the same amount of surface area as a 60 story
building, but a 60 story building needs to support the full weight of the 30
storys on top of it, and at the same time have spare elivator capacity to
reach the top 30 floors.

<http://www.burjkhalifa.ae/language/en-us/the-tower.aspx>

~~~
sethg
Yes, the cost is nonlinear with height, but my point is that the benefit to
density can also be very high.

(I can believe that in the specific case of the Burj the cost outweighs the
benefit, given that the skyscraper was built primarily to give Dubai bragging
rights. But even if the infrastructure of a 124-story skyscraper is too
expensive, that doesn’t refute the value of 60-to-80-story buildings.)

------
kalmar
I have difficulty understanding the rather sudden and drastic change in regard
of "the West" for Dubai. None of what is brought up in these articles was
unknown or much hidden. I can only suppose that the marketing of Dubai's brand
was simply that successful, as suggested by Syed Ali, an author cited in the
article

"Ali [...] accuses Western journalists of buying too easily into the Dubai
myth".

Could the poster or any upvoters comment on why they find this to be
compelling?

~~~
mcantelon
I think people were willing to ignore the exploitation of workers and human
rights abuses when Dubai was still a money train. Now that it has crashed
outrage can be expressed without financial impact.

~~~
zalew
That's not exactly true. BBC's 'Dubai Dreams' is sth like 2005/2006 and one
episode includes slave labour.

~~~
whakojacko
Its maybe not entirely true, but still generally the case IMO. You really
didnt start seeing the mass of articles critical of Dubai until mid-2008 or
so.

------
ryanlchan
Dubai strikes me as the ultimate endorsement for agile development. Even
seemingly unlimited investment, near dictatorial power, and a war room stocked
with the smartest development minds in the world could not turn a small patch
of desert into a world class tourism and financial center. None of the pieces
made sense, yet they charged onwards to some higher, more perfect vision only
Dubai could see. Could've been a lot easier if they'd just failed early, and
failed fast.

------
AlexMuir
Any HN people in Dubai?

~~~
shrikant
I've been there off and on in the early-to-mid 90s, and kalmar's point above
would've held even then - it was (and evidently still is) a tad too opulent
for my taste.

------
tomwalker
I have a good friend that lives in Dubai and echoes the article in saying that
racism is incredibly apparent- "British stick with British, Americans with
Americans, Indians with Indians etc."

I will be very interested to see what the place will be like in 50 years time.

~~~
hugh3
_"British stick with British, Americans with Americans, Indians with Indians
etc."_

That's not so much racism as pretty much the way it is with expat communities
all over the world. Dubai, though, has far worse racial problems than that.

~~~
tomwalker
Sorry, I was just paraphrasing a line from the article.

He has talked a lot about the slave labour and the way groups are treated
unfairly.

------
raheemm
Gosh when did risk-taking and failure become so objectionable? Dubai made some
bad mistakes just like the rest of the world during the credit-fueled binge.

~~~
potatolicious
I think that's an oversimplification.

People object to Dubai because the rise of the city was never based on any
real economic activity. There was no real tourism, no manufacturing, little
resource industry, nor a knowledge economy. It was all hype - in the same way
that we frown and look down upon the unrealistic, borderline scammy dotcoms of
yesteryear, we look on Dubai with some disdain for what we perceive as
dishonest business.

I may disagree with the politics of, say, China, but one cannot deny that
their economic rise to power was based on real growth, in real industries,
providing tangible benefit to people.

Secondly, the objection to Dubai (and the schadenfreude you often see at its
downfall) is fueled by the notion that much of Dubai's construction and
service industry was built on indentured labor, if not borderline slavery; the
labor abuses in Dubai during its hey-day would make a 19th century robber
baron blush. Hell, if the reports are anywhere near accurate, labor conditions
in Dubai makes a Chinese sweatshop a veritable paradise.

So, in short, the perception (whether or not reality jives with this will be
answered by history) is that: Dubai was built on hype, no real substance,
fueled by shallow people, upon gross human rights abuses.

It is far from as simple as making bad business decisions.

~~~
raheemm
Dubai economy may seem shallow but it is based on logical strategies. It
placed its bets on real estate, tourism, finance and trade.

The global real estate meltdown is not unique to Dubai and Dubai is paying for
it just like Miami or Vegas. Its bet on tourism is based on the theory of
providing an alternative vacation destination to the larger middle east and
northern Africa population. The tourism bet is also linked to the growth in
global travel. Dubai conveniently sits in between West and East airline
routes. Emirates airline has prospered precisely by taking advantage of this
opportunity. So if Dubai just happens to be a transit stop, its quite logical
to try to entice those travelers to vacation in Dubai. Dubai does not have any
natural tourist attractions so they tried to build some. Some of it has been
garish and comedic (indoor sking, etc) but some of it is quite fascinating
from an engineering persective.

Dubai's tradition of trade goes back hundreds of years. Its been the primary
trading port between the middle east and the Indian subcontinent. It has
invested in its trade hub status by encouraging other industries to use Dubai
as the trading hub. This has lead to the creation of Media City, IT City, etc.

Dubai's bet on finance is closely related to its admiration for NYC's
financial status and history. Also, after 9-11, it was felt that some of the
middle eastern oil wealth should be reinvested back in the region. Dubai tried
to seize this opportunity by creating the Dubai stock exchange, and other
related financial reforms. Dubai is not alone in these efforts. Bahrain (where
I used to live), Kuwait, Qatar and Saudi Arabia are all trying similar things.
As far as the migrant labor situation, the entire Middle East region should do
a better job of treating migrant workers.

There are shallow people who abuse human rights in Dubai. But there are also
visionaries, entrepreneurs and hard working folks who are trying to build real
businesses (see <http://www.startuparabia.com/>). The best thing about all
these strategies and efforts is that it provides a space for hackers, creative
folks, entrepreneurs, investors and the young of the middle east to try at
other human endeavors.

~~~
potatolicious
I get the feeling from your post (and username) that you may be Emirati, and I
certainly understand your wish to defend your home, but I think there's a
certain amount of whitewashing going on here.

> _"There are shallow people who abuse human rights in Dubai"_

Based on what I understand, this is an extreme and gross understatement. The
_entirety_ of the construction industry was based on borderline, if not
outright slavery of foreign nationals. This is not the case of "yeah, there
were a few bad apples in the bunch", this was widespread and almost universal.
(Again, if you'd like to contest this perception, please feel free). The Dubai
skyline as we see it today was impossible to create at that cost, in that
timeline, without labor abuses that would make most developing nations look
like Eden.

I find it hard to believe that a hacker-friendly and creative-friendly space
can exist amidst so much moral corruption and especially in such a closed
society.

I am unsure if you've had the opportunity to visit some of the more tech-
centric and creative-centric cities of the world - but you will notice that
creative types (hackers included) tend to be a weird bunch. Around me right
now are people with strange haircuts, strange sexual preferences, strange (and
to some, offensive) clothes, strange habits... etc. Hell, even in a socially
liberal place like the US many of these people are decidedly non-mainstream
and are merely tolerated, not celebrated. Nonetheless, here they are protected
and free. They also thrive on liberal, bohemian substance - not the glitzy,
luxurious sophistique that Dubai is shooting for.

Dubai does not sound at all like a place where hackers and artists would want
to call home. In fact, half the creative types I know would be at risk of
imprisonment in that country. IMHO it is impossible to nurture a creative
space in a closed, socially hyper-conservative country. Social conservatism is
historically the antithesis of artistry - and this includes the middle east.
The most scientifically and artistically prolific eras of the middle east all
came during reigns of particularly secular (or at least, non-fundamentalist)
governments.

------
z92
I am following Dubai closely. If rents fall more, it might be a good place to
settle down and work on my projects.

~~~
qq66
You will seriously find a much more supportive environment in a random town in
rural America for $250 a month rent than in a shallow racist metropolis openly
employing slave labor.

------
olihb
I think it might be a bit early to write Dubai off. Maybe the overbuilding
will drive the rent down and attract businesses. The middle-east seem to be a
very good emerging new market.

I'm pretty sure that innovation and real solid businesses don't come from
hype, but away from the media spotlights and pundits.

~~~
siculars
> The middle-east seem to be a very good emerging new market.

Not bloody likely. In which way, exactly, is the Middle East a "good emerging
new market"? Beyond their natural resources and strategic positioning there is
nothing at all to speak of in any industry.

------
known
I think Dubai is doing <http://en.wikipedia.org/wiki/Embrace_and_extend>

------
blantonl
you have to wonder if Dubai is Islam's deliberate way of showing their
followers that the western world is messed up?

My comment is not an attempt at being racist or judgmental, but even the
"highest class" Americans probably shake their heads at what is going on
there.

~~~
kloncks
I'm sorry but I don't understand what you're getting at. Could you please
elaborate on your point?

~~~
FlemishBeeCycle
I think he is suggesting that a nebulously defined "Islam" orchestrated the
rise and fall of an entire emirate as plot to convince people that "the West"
is wrong?

~~~
adrianwaj
It could also be a lesson that "if you build, they will come" is misguided -
even in the Muslim world.

