My Favourite Arab Leader at it Again

Phaedrus · Dec 15, 2004

The man just keeps on getting cooler, especially now that his father is dead and out of the way ...

 <TR><TD class=leadhed>Mohammad: Time for Radical Reforms</TD> </TR><TR><TD class=Readingreen> </TD>

by Dalal Abu Ghazaleh
Gulf News

</TR><TR><TD>DUBAI -- A wake-up call was issued to Arab leaders yesterday, telling them it was time for radical reforms. No longer can crises and foreign influence be used as a pretext for inaction, they were told.

In a strongly worded keynote speech opening the Arab Strategy Forum attended by 1,500 Arab and foreign leaders, General Shaikh Mohammad Bin Rashid Al Maktoum, Crown Prince of Dubai and UAE Minister of Defence, said: “I say to my fellow Arabs in charge: If you do not change, you will be changed.

“If you do not initiate radical changes, responsibly discharge your duties and uphold the principles of truth, justice and responsibility, your people will resent you. More than this, the verdict of history on you will be severe.”

He said the Arab world had lived in the midst of crises and unrest, represented by Israel’s occupation of Arab lands, high rates of illiteracy, lack of dynamic and responsive leadership and ancient rules dating back to the Ottoman empire of the last century.

“Many of us are used to blaming the failure of our efforts at economic and social development on those crises as well as on foreign influences,” Shaikh Mohammad told the participants, who included former US President Bill Clinton and former Lebanese Prime Minister Rafiq Al Hariri.

He asked Arab leaders to follow the deeds of Shaikh Zayed Bin Sultan Al Nah-yan. “He had a vision for change, and the will to introduce that change. This is exactly what we need in the Arab world today.”

Shaikh Mohammad also paid tribute to the role of women in building the society. “Women played a pivotal role in the UAE society. They are taking leading positions in both private and public sectors.”
He rejected the concept of importing from abroad, insisting “our democracy should emanate from our customs and traditions.”

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Phaedrus · Dec 15, 2004

See also:

You're Wrong About Islam. And Islam's Wrong About You.

Phaedrus

DarrylParsons · Dec 15, 2004

I visited Dubai 3 months ago and while I agree it is a great place, I cannot agree that the secret of their success is pure capitalism. Instead it is simply oil. The great wealth of that nation is not the result of the collective efforts of its inhabitants, or at least it is not primarily so. Its wealth is simply the direct result of oil which, as you correctly say is not being pilfered away but rather properly pumped into the economy.

And I can also tell you that there are far fewer miniskirts there per person than in American or European cities. :neenee:

Phaedrus · Dec 15, 2004

I'm glad you finally got to go! But you are incorrect in saying that the oil is the sole cause of the boom there. UAE is surrounded by oil-soaked nations who divert billions into such "investments" as social welfare, yet they are not doing nearly as well. The oil is where it got started, but the reforms originated by Maktoum's father and carried to a zealous extreme by Maktoum is what has made the UAE -- and Dubai in particular -- what it is today, because of the enormous amount of international trade that has flooded the country.

I am really looking forward to seeing what Maktoum does now that he is in charge of the entire UAE, rather than just Dubai.

Phaedrus

DarrylParsons · Dec 15, 2004

He's definitely a good marketeer that's for sure. It's a very good tourist destination from the point of view of quality of goods and services compared to the cost. And they go to great lengths to offer a full spectrum of activities all year round. Smart dudes running the place, no question about it.

Still, I can't consider it as the model of a pure capitalist society. Why? Because too much depends on other countries. They need western countries with rich tourists and oil consumers to supply their income and they need poor countries with harsh, unfavorable conditions to supply their labor. Instead of being an oasis of capitalism I see them as being a very successful entrepreneurial venture in an already mostly capitalist world.

Phaedrus · Dec 15, 2004

Just for the record my use of the term "pure, unbridled capitalism" was a bit of hyperbole, but still I think we're just going to have to agree to disagree.

--> The existence and importance of foregin trade does not in any way make a country "less capitalistic." On the contrary, attempting to hinder trade by "reducing foreign dependency" is the sort of nationalistic garbage that tends to exemplify the exact opposite of capitalism.

--> It is hard for me to think of a better example of an "oasis of capitalism" than a very successful entreprenuerial venture, yet you use the two terms as if they are opposite concepts.

--> I want to visit your planet sometime, this "mostly capitalistic world" of which you speak. Perhaps we Earthlings could learn from such an enlightened culture.

:103631605

Phaedrus

DarrylParsons · Dec 16, 2004

I guess what I'm trying to say is not that Dubai is not capitalist -- sure it is and within that they are wonderfully successful. But since they require partners from all over the globe, they cannot be an isolated island of capitalism; rather, the world must be more or less capitalist for them to be able to play on the world market like that without some sort of intervention from some higher anti-capitalist power.

I suppose if the venture is large enough in both size and scope and utilizes resources from all over the world, then it seems there is little interference to capitalist forces. But if it is more localized, like say the automotive industry in Europe, then mafia forces control things. And of course there are countless examples of mafia type structures in the USA. So maybe we could say that within a mafia, capitalism is stifled to a great extent, but between mafias it still thrives!?

Phaedrus · Dec 16, 2004

<TABLE class=tborder cellSpacing=0 cellPadding=6 width="100%" align=center border=0><TBODY><TR vAlign=top><TD class=alt1>I suppose if the venture is large enough in both size and scope and utilizes resources from all over the world, then it seems there is little interference to capitalist forces. But if it is more localized, like say the automotive industry in Europe, then mafia forces control things. And of course there are countless examples of mafia type structures in the USA. So maybe we could say that within a mafia, capitalism is stifled to a great extent, but between mafias it still thrives!?
</TD></TR><TR><TD class=alt2>

</TD><TD class=alt1 align=right></TD></TR></TBODY></TABLE>

I see what you're saying here, and that last point especially is a good one: look at all of the trade between communist Yugoslavia and the U.S. in the 1980s, and between the USSR and the so-called "satellite republics" and "client states" from the 1960s up to the collapse of the USSR.

However, black market and grey market operations, which proliferate everywhere, regardless of the "framework" culture in which a given operation functions, suggest that a capitalistic endeavour need not be large in order to be successful. Not to be showy, but what success I have found in life has always come from keeping things small, selling any business that reached a certain level of worth and activity because the ROI as a % (usually) gets smaller and smaller the larger a business is, while the associated headaches get larger and larger.

Interesting points though.

Phaedrus

xpanda · Dec 16, 2004

Darryl Parsons said:
... and they need poor countries with harsh, unfavorable conditions to supply their labor.

To expand a bit on this thought ... I have always found it rather ironic that Phaedrus champions the capitalists' use of international labour (I understand he is championing free competition, and that the value of labour is driven by market forces, at least to some degree) yet he seems to ignore the fact that oftentimes these wages are kept at an artificially low rate by state interference. Free Trade Zones, for example. Or loan conditions from the IMF to divert funds away from the public sector (such as education) which, ultimately, keep the supply of low-wage labour flowing. (Nations which have prospered on the backs of IMF loans have often ignored these conditions.)

Would capitalism be a championed success if free market competition were a universal standard, rather than simply the lot of one side of the equation?

(A less boisterous parallel -- I recall P once stating that there is no reason why Americans should not be able to buy Canadian pharmaceuticals -- and I agree -- but he doesn't mention the fact that our prices are lower because our government does all our buying and price negotiation. Nothing laissez faire about that.)

P: sorry about the third-person talk when I know you'll be reading this. I usually reserve that tactic for Game. Apologies.

DarrylParsons · Dec 17, 2004

X,

I think P's view is that, even if labor markets become more expensive, our loss from that will be more than offset by better trade opportunities, a higher contribution to the world economy, less aid to pay etc. So the current micro decision is to exploit the labor, but the macro goal is to have free markets so we can eventually all be better off.

I should say I'm in agreement with capitalist principles but I put radically different values on the various constituents of the economy, placing WAAAAYYY higher values on permanent natural resources and much lower values on most luxury goods and just about all services. Therefore, from my perspective modern capitalists are behaving in ways which are detrimental to the world, but not because they embrace the capitalist ideal, but because of the distorted value they place on things which overemphasizes the present and underemphasizes the future.

charleslanger · Dec 17, 2004

http://www.usatoday.com/travel/destinations/2004-10-04-dubai-islands_x.htm

nice little plots to live in.......

What happens to Dubai w/ no oil money-- & with the Islamic frown on interest rates? That's the problem i see. Take for instance, their horseracing without betting, which is banned(how big can any type of entertainment ever be in that part of the world?)-- it's like everything's a welfare of oil & the individual largesse of those w/ money. The ventures opened are bankrolled by other money, so without the risk of failure, where are the business lessons to be learned, can they ever stand up on their own? The country, in large part because of societal restrictions & customs, is now basically a who do you know/ are related to-- & so many have guaranteed jobs/positions/inheritances, that few want to work too hard...

Yes, Maktoum is probably the best leader EVER in that part of the world, and a good person to boot-- but he's got a stacked deck against him to work with-- maybe w/ another century's continued societal progress........

X: congratulations on your mastery of Ebonics, with the very last short phrase!! (just kidding)

xpanda · Dec 17, 2004

Darryl Parsons said:
I think P's view is that, even if labor markets become more expensive, our loss from that will be more than offset by better trade opportunities, a higher contribution to the world economy, less aid to pay etc. So the current micro decision is to exploit the labor, but the macro goal is to have free markets so we can eventually all be better off.

And I understand that, and agree. I just wanted to point out that this fact seems to get glossed over at times.

I should say I'm in agreement with capitalist principles but I put radically different values on the various constituents of the economy, placing WAAAAYYY higher values on permanent natural resources and much lower values on most luxury goods and just about all services. Therefore, from my perspective modern capitalists are behaving in ways which are detrimental to the world, but not because they embrace the capitalist ideal, but because of the distorted value they place on things which overemphasizes the present and underemphasizes the future.

Agreed 100%.

I've developed an interest in learning more about real-cost economics, an interesting philosophy, for the reasons you state. For the most part, Phaedrus' commentary makes me more imaginative and optimistic about a laissez faire system, though I can't quite shake all of my reservations.

Phaedrus · Dec 18, 2004

posted by xpanda:

To expand a bit on this thought ... I have always found it rather ironic that Phaedrus champions the capitalists' use of international labour (I understand he is championing free competition, and that the value of labour is driven by market forces, at least to some degree) yet he seems to ignore the fact that oftentimes these wages are kept at an artificially low rate by state interference. Free Trade Zones, for example. Or loan conditions from the IMF to divert funds away from the public sector (such as education) which, ultimately, keep the supply of low-wage labour flowing. (Nations which have prospered on the backs of IMF loans have often ignored these conditions.)

To pretend that the state (any government at any level) does not exist would be idiotic. But to explore these examples a little farther:

1) How is a FTZ "state interference?" Many are set up by private companies (such as TSG and are contingent on endless haggling with the state over leaving them the hell alone. Perhaps you meant "free trade agreements" which are usually anything but.

2) The IMF is a joke, but to single out education as being the target of IMF conditions re: public spending is disingenuous at best. It is exceedingly difficult to imagine that any Third World nation receiving IMF funds is spending much in the way of education relative to its other government expenditures, and I'm confident that a detailed analysis of IMF agreements to reduce public sector spending would turn up exemptions for such programs.

You make an interesting point there that nations often simply ignore conditions set out by the IMF -- yet the IMF is accused of "manipulation" if it attempts to enforce those conditions. You can't be in breach if you didn't agree to the terms.

Additionally, cheap labour is not strictly the result of squalid conditions at home. If this were the case, the entirety of sub-Saharan Africa would be a booming empire of outsourced labour. It isn't. Why not?

Would capitalism be a championed success if free market competition were a universal standard, rather than simply the lot of one side of the equation?

How is it one-sided? Company A needs workers. It finds them in Country X. The workers aren't forced to work for Company A. Company A gets its widgets manufactured for more cheaply than it could in Country Y, and the workers in Country X don't starve to death. Win-win.

(A less boisterous parallel -- I recall P once stating that there is no reason why Americans should not be able to buy Canadian pharmaceuticals -- and I agree -- but he doesn't mention the fact that our prices are lower because our government does all our buying and price negotiation. Nothing laissez faire about that.)

A good point. There is also a sort of Schroedinger's Cat variation at work there, because if every American bought his prescription medication in Canada both the American and Canadian systems would collapse -- unprofitability on the part of American drug sellers, and the inevitable result of socialism on the part of the Canadian government.

posted by Darryl Parsons:

I should say I'm in agreement with capitalist principles but I put radically different values on the various constituents of the economy, placing WAAAAYYY higher values on permanent natural resources and much lower values on most luxury goods and just about all services.

I also tend to eschew luxuries, preferring quality over panache.

Therefore, from my perspective modern capitalists are behaving in ways which are detrimental to the world, but not because they embrace the capitalist ideal, but because of the distorted value they place on things which overemphasizes the present and underemphasizes the future.

Unless you subscribe to the notion that advertisers somehow hypnotise consumers into wanting things, capitalists are not the ones putting the value on present consumption -- it's the consumers who are.

posted by charleslanger:

What happens to Dubai w/ no oil money-- & with the Islamic frown on interest rates?

UAE has the lowest oil dependency of any oil-producing Arab nation. They also have a thriving banking and finance sector and massive foreign investment, regardless of what the Mythology of Mohammed has to say on the matter. There is actually a rationale behind this that a Muslim friend shared with me once -- the gist of it is that investing in a business with an anticipation of enhanced return is not considered usurious in the same vein as charging interest on a personal loan.

Take for instance, their horseracing without betting, which is banned(how big can any type of entertainment ever be in that part of the world?)

That's a bit naïve -- betting is as rampant there as anywhere else, legal or otherwise.

The ventures opened are bankrolled by other money, so without the risk of failure, where are the business lessons to be learned, can they ever stand up on their own?

A good question, but all of those ventures funded by Maktoum, Bahraini bankers and other foreigners are most assuredly counting on profit, not welfare. Maktoum might be one of the richest men in the world, but I'm sure that just like Gates, Buffet and his other companions on the Forbes short list, I doubt very seriously that it "doesn't matter" to him if he loses money -- if this were the case UAE would be just another welfare state propped up on oil, like most of the rest of the Middle East, would it not?

Phaedrus

xpanda · Dec 18, 2004

Phaedrus said:
1) How is a FTZ "state interference?" Many are set up by private companies (such as TSG and are contingent on endless haggling with the state over leaving them the hell alone. Perhaps you meant "free trade agreements" which are usually anything but.

Well, I certainly agree (and have stated previously) that free trade agreements are anything but free. But when I talk of FTZs, I'm referring to specific geographical areas that often are exempt from minimum wage laws and other labour protections (more state interference, I know.) Because these 'zones' are geographical, there must be consent of the state to exempt these areas, at a minimum, if not outright complicity. Again, I don't necessarily argue against them (though for altruistic reasons they do bother me) as a job is better than no job. To deny that the host state is not assisting corporate endeavours would be naiive, I believe.

2) The IMF is a joke, but to single out education as being the target of IMF conditions re: public spending is disingenuous at best.

I said 'such as.' There are often other domestic spending measures that must be waived and then privatised for the express benefit of the lenders, usually rich financiers, not concerned economists. I cannot begin to state how much I despise the IMF.

You make an interesting point there that nations often simply ignore conditions set out by the IMF -- yet the IMF is accused of "manipulation" if it attempts to enforce those conditions. You can't be in breach if you didn't agree to the terms.

I think the IMF should be accused of 'manipulation' every time they do more than demand transparency and charge interest on their loans. If you haven't already, I recommend reading Globalization and Its Discontents, by Joseph E. Stiglitz. A hippie with a point.

Additionally, cheap labour is not strictly the result of squalid conditions at home.

Of course it's not. And I'm not making the case that all instances of so-called 'sweatshop labour' are akin to slavery. I'm just asking you to recognise that the WalMarts of the world don't just have capitalism to thank, they also need to give due diligence to desperate states willing to organise a labour market on their behalf.

In many ways, capitalism owes statism a big thank you.

Unless you subscribe to the notion that advertisers somehow hypnotise consumers into wanting things, capitalists are not the ones putting the value on present consumption -- it's the consumers who are.

I think Darryl may have been referring to predominantly environmental degradation by short-sighted corporations (and states who could give a crap) rather than consumerism.

Phaedrus · Dec 18, 2004

posted by xpanda:

Well, I certainly agree (and have stated previously) that free trade agreements are anything but free. But when I talk of FTZs, I'm referring to specific geographical areas that often are exempt from minimum wage laws and other labour protections (more state interference, I know.) Because these 'zones' are geographical, there must be consent of the state to exempt these areas, at a minimum, if not outright complicity. Again, I don't necessarily argue against them (though for altruistic reasons they do bother me) as a job is better than no job. To deny that the host state is not assisting corporate endeavours would be naiive, I believe.

Having been party to the negotiations of a couple of FTZs in my life, I have always found that all the state cares about is its cut. Either as a measure of direct monetary recompense, or in getting good press about how "progressive" it is, or both.

... I'm talking about two different scenarios. In one scenario, the country is compliant with IMF conditions and often finds itself in near-permanent debt.

I guess it would be unthinkable to just, you know, not borrow the money in the first place?

If you haven't already, I recommend reading Globalization and Its Discontents, by Joseph E. Stiglitz. A hippie with a point.

More a talking nutsack with an agenda. Stiglitz himself contends that the World Bank, IMF et al. are neccesary institutions, just the way he says, not the way you say. A statist to the core. Also, a Keynesian, which suggests that despite being an economic professor his knowledge of economics does not exceed that of an housecat.

I'm just asking you to recognise that the WalMarts of the world don't just have capitalism to thank, they also need to give due diligence to desperate states willing to organise a labour market on their behalf.

In many ways, capitalism owes statism a big thank you.

How? Why? I have contracted employees all over the world; I've never checked in with any state on the matter.

I think Darryl may have been referring to predominantly environmental degradation by short-sided corporations (and states who could give a crap) rather than consumerism.

But why do they do it? Did they all just wake up one morning and say. "Hey -- ozone depletion. Dig it." No. Obviously there are many cases through history where pertinent information regarding e.g. environmental impact of a given venture was marginalised, ignored or even suppressed, but it has also been in many instances marginalised, ignored and suppressed by the public at large, and the businesses and consumers combined have nothing on the state in the field of disinformation and willful ignorance of consequences.

Phaedrus

DarrylParsons · Dec 18, 2004

Phaedrus said:
Unless you subscribe to the notion that advertisers somehow hypnotise consumers into wanting things, capitalists are not the ones putting the value on present consumption -- it's the consumers who are.

Of course it's hard to separate the parties in any transaction and say which one is responsible for the transaction taking place but consider the following example...

Suppose my neighbor is a complete idiot and puts a sign on his door that says "Duuhhh, I'm a complete idiot. I don't lock my door and I've got lots of valuable stuff inside and I'll let you take any of it if you leave me a piece of paper with a picture of George Bush on it"

Some people would say "great, what a bargain, I'm gonna make sure I'm the first to take advantage of that". This is what someone with a modern capitalist mindset would do. They would make sure they take a photo of his sign to make sure nobody questions the legality of it.

Some would say "poor guy, has no idea how to take care of himself, must be from an unfortunate background...I'm gonna work with him and try to rally others to do the same and see if we can teach him how to take care of himself". This is what someone with a modern liberal mindset would do.

I on the other hand would do nothing because my conscience cannot live with wealth gained in such a way, nor would I feel it my duty to take from him and give to someone else, nor would I feel it my duty to protect him from himself or second guess his motives. I may ask him out of curiosity why he's doing it but that's about it.

I see the average consumer more or less like this guy. They are easily manipulated and it is fairly easy to predict their behavior and reaction to various stimuli sent to them via advertising and media channels. The consumer offers up certain ways you can take his money, getting something cheap or useless (or even harmful) in exchange (true only CERTAIN ways), and then it is up to you and your conscience how much of that you want to take. (there are also many ways to offer something of value and that are useful, but lets face it -- in today's world a rapidly declining percentage of western consumption is in this category)

And if the overall effect of that transaction is something that jeopardizes the long-term survival prospects of the human race, then I place greater responsibility on the party who understands that than the party that just behaves like a trained ape and doesn't understand sh*t.

But that's just me...it does suck that just because we have a brain we lose certain rights like the right to behave like a wild animal etc. (this "right" I'm referring to is granted or denied by our own conscience, not by any external party), but I think the added vision it brings more than compensates for that and so it is a net good thing overall.

eek. · Dec 18, 2004

nice read.

Isnt the picture system the step up from bartering that world trade needed to expand?

(Everyone needs to trade, whoever they are.)

Have you got a better system than the picture system?

Phaedrus · Dec 18, 2004

posted by Darryl Parsons:

Suppose my neighbor is a complete idiot and puts a sign on his door that says "Duuhhh, I'm a complete idiot. I don't lock my door and I've got lots of valuable stuff inside and I'll let you take any of it if you leave me a piece of paper with a picture of George Bush on it"

Some people would say "great, what a bargain, I'm gonna make sure I'm the first to take advantage of that". This is what someone with a modern capitalist mindset would do. They would make sure they take a photo of his sign to make sure nobody questions the legality of it.

Some would say "poor guy, has no idea how to take care of himself, must be from an unfortunate background...I'm gonna work with him and try to rally others to do the same and see if we can teach him how to take care of himself". This is what someone with a modern liberal mindset would do.

I on the other hand would do nothing because my conscience cannot live with wealth gained in such a way, nor would I feel it my duty to take from him and give to someone else, nor would I feel it my duty to protect him from himself or second guess his motives. I may ask him out of curiosity why he's doing it but that's about it.

This is highly fallacious reasoning, inasmuch as it categorises "typical capitalists" as being amoral and greedy and "typical liberals" as being paragons of virtue, neither of which holds any water in the real world.

Phaedrus

DarrylParsons · Dec 18, 2004

Thanks Eek...I really have nothing against trade per se, although if I were in charge of the world economy I would never have taken currency off the gold standard (except maybe with a silver standard or pork bellies standard or the like), and my views on usury are similar to those of the Muslims. If everyone agreed on these two points but otherwise market mechanisms were exactly the same, then we'd have a lot less superfluous consumption and environmental danger than we do now, and we'd all be a lot richer under the assumptions of true cost economics.

The western world will surely pay the price for these two sins and it will be in the form of a major war. It's a shame it has to be that way because wars are no fun at all, but just like a spoiled kid the masses are incapable of learning just by having things explained to them. They need a smack on the butt unfortunately.

Phaedrus · Dec 18, 2004

posted by Daryl Parsons:

I really have nothing against trade per se, although if I were in charge of the world economy I would never have taken currency off the gold standard (except maybe with a silver standard or pork bellies standard or the like)

...

The western world will surely pay the price for these two sins and it will be in the form of a major war.

Don't forget, the reason for being off of the gold standard is to pay for war. States have always paid for war by going massivle yinto debt then debasing the currency to pay it down. Britain set the gold standard (pardon the horrid pun) in this practice by going off gold "temporarily" to finance its efforts in WWI, which really was the death knell for gold because of the vast expense of that endeavour for most of the allegedly civilised nations in the world at that time. After WWI, at the Conference of Genoa the US and UK set the tone for permanent, long term debasement of currency by switching from a true gold standard to the "gold exchange standard," which wiped out currency imbalances caused by war debt by doubling the amount of dollars and pounds in existence without doubling the amount of gold -- thus basically creating a 100% overnight inflation rate for the two main currencies in the world.

This is a subject which unfortunately 99.99% of the world is completely and hopelessly ignorant, and about which the other 0.01% have widely divergent views. Keynes bemoaned gold as a "barbarous relic" because it prevented the state from expanding at the "needed" rate to its "just" capacities, and politicians picked up the ball and ran with it just like they did most of Keynes' proclamations. Americans labour under the idiotic idea that Nixon "took us off the gold standard" despite the fact that US gold was debased in 1900, fractional reserve banking introduced in 1913, the standard replaced with the "exchange standard" in 1923, gold ownership prohibited and redeemability outlawed in 1933, and the Bretton Woods standard being adopted in 1947.

For some real fun, have a look at the Bureau of Labour Statistics homepage. Near the top left there's a link for the "Inflation Calculator." If you play around with it some, you'll see that $ 1.00 in 1913 is now worth $ 19.28 here in 2004 -- meanwhile, an ounce of gold was worth $ 20.67 in 1913, which adjusted for inflation is just a hair under $ 400.00 -- basically unchanged from its current value (in fact the difference could be easily accounted for by the slide in the value of the dollar this year.)

You're spot on there -- a return to a real gold standard would help immensely. But what would help even more is if currency was taken out of the preview of the state and made the preview of private interests (see Dowd's Laissez-Faire Banking and Hayek's Denationalisation of Money for some excellent reference on this idea.)

Phaedrus