I've posted about some of Dubai's eccentric and excessive construction projects, and reader JV sent along this article that describes Dubai's Sheikh and culture.
As a sweepstake in national prideâ€”Arabs versus Chineseâ€”this frantic quest for hyperbole is not of course, unprecedented; recall the famed competition between Britain and imperial Germany to build dreadnoughts in the early 1900s. But is it an economically sustainable strategy of development? The textbook answer is probably not. Architectural gigantism has always been a perverse symptom of economies in speculative overdrive, and each modern boom has left behind overweening skyscrapers, the Empire State Building or the former World Trade Center, as its tombstones. Cynics rightly point out that the hypertrophic real-estate markets in Dubai and urban China are the sinks for global excess profitsâ€”of oil and manufacturing exports, respectivelyâ€”currently being pyramided by rich countriesâ€™ inability to reduce oil consumption and, in the case of the United States, to balance current accounts. If past business cycles are any guide, the end could be nigh and very messy. Yet, like the king of the enigmatic floating island of Laputa in Gulliverâ€™s Travels, al-Maktoum believes that he has discovered the secret of eternal levitation.
The lodestone of Dubai, of course, is â€˜peak oilâ€™ and each time you spend $50 to fill your tank, you are helping to irrigate al-Maktoumâ€™s oasis. Fuel prices are currently inflated by industrial Chinaâ€™s soaring demand as well as growing fears of war and terrorism in the global oil patch. According to the Wall Street Journal, â€˜consumers will [have paid] $1.2 trillion more in 2004 and 2005 together for oil products than they did in 2003â€™.  As in the 1970s, a huge and disruptive transfer of wealth is taking place between oil-consuming and oil-producing nations. Already visible on the horizon, moreover, is Hubbertâ€™s Peak, the tipping point when new petroleum reserves will no longer offset global demand, and thereafter oil prices will become truly stratospheric. In some utopian economic model, perhaps, this windfall would become an investment fund for shifting the global economy to renewable energy while reducing greenhouse gas output and raising the environmental efficiency of urban systems. In the real world of capitalism, however, it has become a subsidy for the apocalyptic luxuries that Dubai is coming to epitomize.
Take it with a grain of salt!