Sunsday 14th October, 2007

 

Small man looks at land of the future

 
 
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Dubai International Airport has a fascinating billboard that welcomes the world to the land “of the future.” This is no experimental prototype community of the future where for a fee, you view world pavilions as is done at Disney’s EPCOT Center, this is it!

With a per capita income of some US$21,700, and a population of only 1.2 million, up from half a million 12 years ago, the economy shifted from heavy dependency on oil, to a status where oil contributes less than five per cent of GDP.

So what happened here?

Dubai lies in the middle of the United Arab Emirates, a country that was born 50 years ago, and they discovered oil 40 years ago. But it was always a trading centre, a watering hole for the merchant class.

But what is this place?

Yesterday, I looked out my window as the sky became overcast, and thought I would view the spectacle of rain. But the leaves swaying in the wind, didn’t get wet, instead everything, including the cars, was being covered in a film of sand. I was in a sand storm!

That is this place: desert sand full of heat, hot like an oven.

In the Mall of the Emirates

A massive mall complete with a ski facility, the Bedouins Arabs were beautifully dressed, but the head wrap speaks to a lifetime of tradition in the desert sands.

I heard accents and languages so far and wide that I wondered aloud whether the New York subway commute could claim such diversity as I was gifted to see. And in the interplay of Islamic and Western clothing, and every combination in between, was testimony to something else.

I felt as if I was on a film set for the Star Ship Enterprise, so futuristic is this place, in terms of technology. Even the car park places in the mall were digitally monitored and little signs posted the number of spaces available in each row.

Several things juxtapose. They have open airspace, landing more international carriers than any other airport; they have 30,000 locals unemployed, while the private sector employs a foreign-based higher skill set of workers.

Economics at work

So the factors of scarcity, supply and demand, in the economic equation, come to bear. There is more real estate for rent and purchase then meets the demand, by far. There is also a high inflation rate. What pattern will emerge?

In 1817, David Ricardo developed an economic theory about the Napoleonic wars based on the supply and price of wheat, in relation to supply and price of agricultural land.

He was able to show how the power shifts from the landlord to the tenant, and back again.

It would seem that the landlords hold little power now in Dubai, since there is so much property available, and the tenants have all the power. If one day a mighty power broker enters the picture he can buy up a huge slice of the pie, and reverse the scales.

So what’s left for the small man? A little piece of pie is better than no pie at all!

—continues next week.

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