Tuesday, April 25, 2006

Wonders of Capitalism

Capitalism is advancing quite surprisingly in a region of the world least expected to have free market policies given its location - and this region is a kingdom, no less! According to this AP report, Dubai is the fast growing city in the middle-east, and its government's flagship airline "Emirates" is gaining tremendous momentum in its race to compete with global carriers. Emirates Airlines, despite being government owned, "receives few, if any, government favors. In the Middle East, not usually considered a bastion of bare-knuckle capitalism, Emirates was born and raised in ultra-competitive Dubai, where 110 airlines compete under an "open skies" policy." "Over the past six years, Emirates' capacity and traffic have leaped by more than 25 percent a year as its network spread relentlessly wider." It has also consistently received awards and recognition for its superior service. ""That's how you hone your competitive survival skills. You don't do it by getting all kinds of protection," said Daniel Kasper, an airline consultant in Cambridge, Mass. with consultancy LECG. "That's a feather in their cap to be able to do this in a market that's as open as Dubai." Emirates plans on spending around $33 billion on purchasing 123 new airplanes to compete with Western and Asian carriers. According to the report, Emirates Airlines has profited immensely from Dubai's heavy investment on infrastructure and a "zero-tax rate". Dubai also has managed to keep labor costs and salaries low by absolutely prohibting unions. ""European carriers have not seen a competitor like this before," adds the UBS report. "


Anonymous Anonymous said...

I'm absolutely dumbfounded by Dubai. How is it possible in a country (and region) so dominated by religion? The tallest skyscraper in the world is being built there and will stand 1/2 mile high (160 stories). Its projected cost is an estimated $300 million. In New York to get the proper building permits may cost damn near that. I would love to read some good (possibly Objectivist) commentary explaining how Dubai is possible and why Islam isn't killing it like it has killed basically the entire middle east.

D. Eastbrook

4/25/2006 08:43:00 PM  
Blogger Ergo Sum said...

I agree, it is quite confounding. Though, I'm very glad to see Dubai progress so rapidly.

I'm sure there are many socio-economic analyses and commentaries out there, though I doubt any of them come from an Objectivist perspective.

I suppose a large part of it has to do with the fact that the Sheikh of UAE has allowed the country's economy to grow organically with minimum, if any, protectionist laws which consequently created a scenario of rigorous competition and drive to excel. Moreover, being that UAE makes a decent profit for its oil resources, it has much money to invest in infrastructure, research and development.

I suppose as long as you keep religion and statism out of a country's economy, progress and prosperity is inevitable. I'm noticing that here in India, albiet at a very moderate pace, the slow loosening of government control on the economy and assets.

4/26/2006 12:10:00 AM  

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