Thursday, February 12, 2009


A few weeks ago, the Sunday New York Times ran a review of Jeff Madrick's book The Case for Big Government. This past Sunday's Times featured a snippy letter in response from Donna Wiesner Keene, a bureaucrat in the last three GOP administrations and a visiting fellow at the right-wing Independent Women's Forum. In the letter, Keene informed us that

Madrick's statement, quoted by the reviewer, that "there really is no example of small government among rich nations," is unsupported nonsense. Think Dubai, free and rich.

Well, so much for "rich":

... With Dubai's economy in free fall, newspapers have reported that more than 3,000 cars sit abandoned in the parking lot at the Dubai Airport, left by fleeing, debt-ridden foreigners....

No one knows how bad things have become, though it is clear that tens of thousands have left, real estate prices have crashed and scores of Dubai's major construction projects have been suspended or canceled.

...real estate prices ... have dropped 30 percent or more over the past two or three months in some parts of the city. Last week, Moody's Investor's Service announced that it might downgrade its ratings on six of Dubai's most prominent state-owned companies, citing a deterioration in the economic outlook. So many used luxury cars are for sale , they are sometimes sold for 40 percent less than the asking price two months ago, car dealers say. Dubai's roads, usually thick with traffic at this time of year, are now mostly clear....

And so much for "free":

... Do the Emirates have "democracy"? "There are no democratic elections or institutions, and citizens do not have the right to form political parties," says State.

Do the Emirates have "rule of law"? "The constitution provides for an independent judiciary," says State, "however, its decisions were subject to review by the political leadership."

Do the Emirates have "freedom of speech"? "The law prohibits, under penalty of imprisonment, criticism of the government, ruling families, and friendly governments, as well as other statements that threaten social stability," says State. The government "approves the appointment of editors."

Do the Emirates have "freedom of assembly"? "The constitution does not provide for freedom of assembly or association," says State.

Do the Emirates have a "free economy"? "The country has a free market economy," says State. But based on State's own report, I don't believe it. Dubai Ports World isn't UAE's only state-owned enterprise. In a country where oil and gas is the dominant industry, "[e]ach emirate independently owns local oil and gas production." Also, UAE must have one of the world's most extensive guest-worker programs, since "98% of the private sector workforce is foreign."

"The law does not specifically prohibit trafficking in persons," says State ...

What about "freedom of women"? "Custom dictates that a husband can bar his wife, minor children and adult unmarried daughters from leaving the country," say State....

And so much for laissez-faire:

Dubai, home to the world’s biggest man-made islands and tallest building, will boost government spending 42 percent in 2009 to stoke the economy amid the deepening financial crisis.

The second-biggest of the seven states that make up the United Arab Emirates will also run up a budget deficit of 4.2 billion dirhams ($1.1 billion).... Infrastructure investment in 2009 will rise 33 percent....

Overall public sector spending, including the budgets of wholly-owned government companies like Emirates Airlines and Dubai Aluminum, will increase 11 percent to 135 billion dirhams....

(If I'm calculating the exchange rate correctly, 135 billion dirhams is about $35 billion in U.S. currency -- and remember, Dubai has a population of fewer than a million and a half people. The equivalent for the U.S. population would be about $8 trillion.)

... Whoops! Sorry, I just found this:

Head to Dubai for the world's lowest tax rates

Keene a right-winger, which means that, for her, low tax rates trump everything. So never mind -- by her standards, Dubai is "free and rich."

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