The Folly of Government Intrusion...and the Return to Good Old Fashioned Family Values

I have been reading a lot about UAE economics recently and find a re-curring theme among the many, many (and growing) UAE-based business-news websites. While the effects of the economic crisis have been digested (and suffered) we look at how a city like Dubai can make a comeback, and we find that going back to basics is the solution. Basics means a halt to massive intrusions by the government at the detriment of business and individuals and a return to a time when living and visiting the UAE was affordable (for 5 member families, let alone bachelors and bachelorettes). On ArabianBusiness.com's new blog, two posts have been dedicated to reversing this folly. Rob Corder writes:

In the past few years, we have seen ministries trying to engineer prices of groceries in supermarkets, home and office rents, and now school fees. For a capitalist government - and it is passionately free market at heart - these price controls appear out of character. Meddling with prices is done with the best intentions, but conflicting interests always lead to the wrong solution emerging.

Be sure to read the whole thing. Corder shows how bureaucratic intervention in two key areas, housing/office rent and school tuition, can have a detrimental effect on real sustainable growth. The other post is from Mazhar Mohad, entitled "the Middle Class Tourists for Dubai"

...since the advent of this millennium, with rising rents and increasing inflation, it seems this has all just been a myth now for the incoming new visitors with expensive products and hardly any options. It is such a shame, even the shopping festivals have gotten boring and expensive. Let us draw what should happen in reality to save the long term economics in Dubai tourism.

He goes on to list what an affordable Dubai for tourists would look like including:

The government service fees are also charged at an affordable rates and simplified minimalist procedures to keep costs down. Country builds an amazing transportation infrastructure with various transport modes, trains, buses with several parallel roads and freeways. Visit visas are also reversed to previous attractive rates.

Once again, read it in its entirety. The National's blog also picked up on the idea, albeit indirectly, through a guest post by Chris Dommett, the chief executive of the mortgage advisory John Charcol in Dubai:

A more stable market and a sounder legal infrastructure should give them the opportunity when the dust clears to innovate on their products, meaning greater choice for the consumer, and a closer match between the products and the real needs of the borrowers. In the meantime however, what the market needs is the greater availability of basic mortgages to allow people living and working in Dubai to own their own home at an affordable rate. This gives them a longer term stake in the future of the city, with their property regarded primarily as a home rather than as a means to get rich quick.

Consumer choice, affordable rates, innovation, long term future,, etc... the same terms are used over and over again. An affordable UAE is the buzz word, and this will move the over-all economy towards a brighter more stable future (with less governemtn and more consumer choice). It will also stabilize the future of the tens of thousands of people who can no longer afford the UAE dream, as housing rents remain unrealistically high, school tuition continues its steep upward movement, Dubai is no longer a viable tourist destination, and home ownership for potential long-term residents are unviable. Something the higher-ups in the Dubai government have finally began to understand. ... Another recurring theme is the "once upon a time in the UAE you could - but in the last decade..." Before the 21st century, when the UAE was really booming, you could enjoy all the goods and services on offer today for a fraction of the price, with better quality and superior service. Traffic was low and parking abundant. The Dubai Shopping Festival was the most anticipated tourist event of the year on this side of Jerusalem. It was based on good old fashioned family values, and subsequently attracted families. What has Dubai attracted recently? A who's who of sinister characters from Chechan gangsters, murdered Arab pop-stars, gay bars, sex on the beach, to Roberto Cavalli nightclubs, pimps, financial fraudsters, Baathists from Saddam's former regime, etc, etc... No wonder families no longer want to come. Worse still, even if they wanted to, they couldn't because on top of all the shady types, it is not economically feasible. The only demographic that the UAE seems to attract is a younger (single) crowd. Great! Except these youth are usually alone and are sold the lifestyle choice of an Al Capone or a Paris Hilton (on credit cards). Out went the large family villas in Jumeraih (whom I thought would continue to be built westwards) and in came the 1BR/studio apartments that has become Dubai Marina. Young people have become the only demographic than can realistically live in Dubai - and the marketers know that and so the marketers target that group. (Blog Sheikh thanks Rosh the UAEian for the heads up on the UAECB post). UAE 2010 and beyond starts now...