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Saturday, 21 March 2009

Do not let the ‘cure’ destroy capitalism


Capitalism has been wounded by the global recession, which unfortunately will get worse before it gets better. As governments continue to determine how many restrictions to place on markets, especially financial markets, the destruction of wealth from the recession should be placed in the context of the enormous creation of wealth and improved well-being during the past three decades. Financial and other reforms must not risk destroying the source of these gains in prosperity.

Consider the following extraordinary statistics about the performance of the world economy since 1980. World real gross domestic product grew by about 145 per cent from 1980 to 2007, or by an average of roughly 3.4 per cent a year. The so-called capitalist greed that motivated business people and ambitious workers helped hundreds of millions to climb out of grinding poverty. The role of capitalism in creating wealth is seen in the sharp rise in Chinese and Indian incomes after they introduced market-based reforms (China in the late 1970s and India in 1991). Global health, as measured by life expectancy at different ages, has also risen rapidly, especially in lower-income countries.

Of course, the performance of capitalism must include this recession and other recessions along with the glory decades. Even if the recession is entirely blamed on capitalism, and it deserves a good share of the blame, the recession-induced losses pale in comparison with the great accomplishments of prior decades. Suppose, for example, that the recession turns into a depression, where world GDP falls in 2008-10 by 10 per cent, a pessimistic assumption. Then the net growth in world GDP from 1980 to 2010 would amount to 120 per cent, or about 2.7 per cent a year over this 30-year period. This allowed real per capita incomes to rise by almost 40 per cent even though world population grew by roughly 1.6 per cent a year over the same period.

As they did Ozymandias, the dunes will reclaim the soaring folly of Dubai (Interesting diatribe and subsequent dialogue)

Hovering over Dubai is a cloud called nemesis. The first time I saw the place two years ago through a plane window, its towers were hovering in the heat over the desert, gulping up water and energy and fussed round by reputedly a quarter of the world's construction cranes. Even then the vision was unmistakable, of Ozymandias and his "vast and trunkless legs of stone".

When prices go up, buildings go up. When prices come down, buildings tend to stay up. Until recently visitors to Dubai returned gasping. This was truly a city designed from start to finish by autocrats and architects. It was the last word in iconic overkill, a festival of egotism with humanity denied. It was an architectural chorus line of towers, each shouting louder and kicking higher. People were ants.

Dubai must have as many publicists as it has towers. Business and travel journalists in need of a freebie can just call. So, too, did a stage army of British writers who went to last month's Dubai International Festival of Literature, pretending to discover that it was not a free country (and practises censorship) only after being installed in their luxury rooms. A "tower of Babel" of a place "with neither charm nor character", declared an ungrateful Germaine Greer.

Dubai issues list of prohibitted public behavior (Out of date, interesting dialogue)

Is holding hands in Dubai really illegal? apparently that question has finally been answered, yes it is illegal.

"Playing loud music, dancing, nudity, kissing and even holding hands in public is considered inappropriate behavior under new guidelines laid down by the authorities of Dubai, according to a press report on Saturday.

Dubai Executive Council issued a list of public behaviors that requires Dubai residents and visitors to respect the customs of the Muslim country and avoid what the council considers inappropriate behavior, according to the Arabic-language daily Al Emarat Al-Youm.

Crunch time for small businesses in UAE

Many have been turned away by the banks and have resorted to seeking other sources of financing

The credit crisis is bleeding Wayne's pockets dry. The Indian expatriate, who started his public relations firm in Dubai about two years ago, has just laid off eight of his 12-man staff.

For months, Wayne (name changed on request) has not made any profit. His clients are defaulting on Dh1 million debt and he's having difficulty closing new deals. To stay afloat, he sought help from banks, but to no avail.

Watchdogs consider hedge fund pay rules

Hedge fund pay may need to be regulated to prevent the pursuit of short-term profits at the expense of clients, a group of market watchdogs, including those from the US and UK, has provisionally concluded.

The International Organisation of Securities Commissions was asked to look at hedge funds on behalf of the G20 of large and developing economies.

It said regulators needed to consider whether to require “strong governance mechanisms” to “counter the short-term profit motives that are often inherent in hedge funds’ operations”.

Obama seeks ‘new day’ in Tehran relations

President Barack Obama has taken an important step towards engagement with Iran, using a video message to hold out the promise of a “new day” in relations between Washington and Tehran after three decades of hostility and mistrust.

In a video address that stressed that American respect for the Iranian nation and included an Iranian new year’s greeting in Farsi as well as praise for the medieval poet Saadi, Mr Obama made a point of speaking to the “leaders of the Islamic Republic of Iran” as well as “the people”.

The Iranian leadership will see in his words an acceptance of the regime, marking a significant shift from the attitude of the previous George W. Bush administration, which was suspected of seeking regime change in Tehran.

Dubai’s art fair defies gloomiest forecasts

Ahead of Art Dubai, the city’s annual contemporary art fair, New York and London galleries were phoning the organisers worried that tales of Dubai’s demise foreshadowed a disastrous fair.

Dubai’s economy may still be in a bit of a funk because of the global slowdown but the region’s nascent art market appears to be holding up better than the emirate’s tumbling property sector.

After quiet British and US fairs and a collapse in art prices, some gallery owners had feared the third running of the Dubai event would be a “bloodbath”. But the feeling at the fair on Friday was one of relief as the predictions proved misplaced.

Cold realities at Dubai’s Terminal 3

Waiting for a flight in the glitzy environs of Dubai’s Terminal 3 a few days back, my mind wandered away from the delights of duty free to the realities of the airline business. T3’s savage air-conditioning system makes it an appropriate place for cold, hard assessment.

It is the proud boast of Emirates Airlines, which has exclusive use of the terminal, that it has been profitable in every year since its launch in 1985, and that growth has never fallen below 20 per cent in any of those years. That remarkable track record has made the Dubai flag-carrier the Middle East’s favourite airline and the world’s fastest growing aviation business. Both will be tested in the coming weeks.

As Emirates nears its 2008-09 year end, it is becoming clear that the past 12 months have been unlike anything it has ever experienced before. The global financial crisis has deterred people from travelling by air, and those who have continued to do so have opted for cheap no-frills airlines, rather than the majors. In addition, business and first-class travel has taken a battering. Now, an increasing number of travellers turn right on boarding, into the depths of economy class, rather than left into the bliss of business or the fantasyland of first.

The last post for Nad Al Sheba



The first race was an hour and half away, the crowd was gathering in the Nad Al Sheba grandstand for the Dubai World Cup and there was already a palpable air of excitement. Then it happened. The skies opened, a torrential downpour ensued and the racetrack was turned into a giant puddle.

Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai and leading patron of the sport of kings, did something only an Emirati sheikh could do: he ordered a flight of helicopters to hover over the track and dry it out.

Such a magnificent gesture deserved to succeed but sadly nature triumphed. Turning to face the course’s commentary box, the sheikh slid his finger across his throat and the meeting was cancelled.

Transparency is Dubai’s future

Since the dawn of the global financial crisis late last year, Dubai has been portrayed around the world as a boom town whose bubble has burst.

Numerous reports have depicted this thriving emirate in a calamitous state, with thousands of cars abandoned at its airport as suddenly-unemployed expatriates embark on a mass exodus.

And yet, in my personal experience at least, Dubai remains a busy, sometimes crowded city. Traffic is still a problem, and despite the stories the airport is not overflowing with luxury cars.