Will the Boom Continue?

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As
a longtime anarchist, I'm of the opinion that the best government
is no government at all. The fact that Hong Kong has been, until
recently, just a u201Cnight watchmanu201D state is responsible for its spectacular
success; it (was) as close to a political ideal as exist(ed) in
today's world.

But,
perhaps because of some atavistic genetic coding, humans generally
seem to want somebody in charge, a father figure who can give them
the illusion of security and somehow guarantee that they live in
the best of all possible worlds. It's often been said that a benevolent
dictatorship is the best practical form of government, and that
may be true, as long as the dictator stays benevolent; generally,
however, only the most flawed type of person actually gets to be
a dictator. There are exceptions, of course, like Lee Kwan Yu of
Singapore who, despite his somewhat laughable and idiosyncratic
attempts at social engineering, not only did an excellent job, but
found an able and non-corrupt successor. I do know that u201Cdemocracy,u201D
a vastly over-rated, currently quite fashionable and widely misunderstood
system, is not the answer.

Dubai's
Sheikh Rashid, who ruled from 1958–1990, said: u201CWhat's good
for business is good for Dubai.” He not only talked the talk, but
walked the walk. His son, Sheikh Mohammed, is apparently at least
as business-oriented. They intelligently directed revenues from
their oil, when it still flowed, to prime the pump, and then let
the market do its thing. Can things change? Of course. This is a
hereditary monarchy, and the next Sheikh (like the next U.S. President,
for that matter) could be a psycho. But I rather doubt it will happen
in Dubai. This country is literally run like a corporation, with
the Sheikh acting as the Chairman. The aristocracy are the other
directors, and the 100,000 citizens the shareholders. Any serious
deviation from a proven corporate culture simply wouldn't be tolerated.

A
benevolent dictatorship that's run like a profitable business, not
a dictatorship, actually can work.

People
are, in most ways, very conservative. Sometimes I want to say stupid.
One definition of stupidity is doing the same thing – like socialism
– over and over again, and expecting different results. Another
definition of stupidity is the ability to learn something – like
u201Ccapitalism worksu201D – only very, very slowly. You'd think that after
enough people had been to the United States in its halcyon days,
all the world would have wanted to model itself after America. But
nooo… they stupidly kept buying into every cockamamie socialist
scheme that came down the pike from Europe.

It
was argued that, somehow, America was anomalous, or that its success
was due to something other than its free market practices. So America
acted as an example to individuals, but not to other states. Hong
Kong – basically a barren rock, devoid of any resources other
than poor opportunity seekers and the free market – wasn't
planned as a free market entrepot, but anyone could see how successful
it was. Singapore, watching Hong Kong, was probably the first country
in the modern world to consciously adopt capitalism (albeit in a
rather paternalistic and adulterated form) to achieve success. Then,
in the early '80s, China started copying Singapore: a socially and
politically circumscribed free market. Far from ideal, but an outstanding
success nonetheless.

Dubai
will be, I predict – this is easy because it already is – the most
successful city in world history because it is, in most ways, the
freest. But what's more important is that as leaders of other countries
– especially small, poor ones – visit the place, they will increasingly
see that they have no alternative but to emulate it. Dubai has truly
let the cat out of the bag. There's no doubt in my mind that in
the next 10 years, other Dubai look-a-likes will spring up around
the world, variations on a theme. For most countries, it's either
that, or plan on becoming a petting zoo for those who do.

What's
happening in the Emirates makes me think that even when things go
bad in the United States – and if they go bad in China – the world
economy will still continue apace. The reason is that any leader
of a backwater country who sees what's happening here will understand
that if a boom can be created in an absolute desert in the world's
most notoriously unstable region, then it can be created anywhere.
For all anyone knows, the leader of some fly-blown place in Africa,
Asia, the South Pacific, the Caribbean, or Latin America is even
now planning on replicating the success of Dubai.

But
Dubai is important in another way. It's an example to the Arab world
that they can do something as spectacular as has ever been done
– and do it without the deus-ex-machina device of oil. Arabs that
see Dubai can view themselves and their culture on a level with
the Europeans, Americans, and Orientals, not just as some u201Ccamel
jockeysu201D that got lucky by sitting on a pool of oil somebody else
discovered and developed.

The
success of Dubai is due, partly as a result of this ongoing change
in self-perception by Arabs, to the withdrawal of their money from
America. Because of the absurd War on Terror, anyone from the Middle
East who keeps substantial capital in the U.S. has to be an imbecile.
But where, then, to put their money? Before Dubai, there was no
place within the Arab culture that was safe. Now there is. It's
safer than America, and much more profitable.

And,
lastly, Dubai shows the West in general, and America in particular,
that Islam in general, and Arabs in particular, are not necessarily
their enemies any more than any other culture. Of course the Bush
regime will disregard the lesson.

I
wish I'd gone through Dubai pre-9/11, before property prices doubled.
I would have bought a few apartments off the plans of a new high
rise on the beach, and urged you to do the same. I still think property
is going a lot higher, despite the immense supply, simply because
Dubai is still only for the people from the Mid-East and the sub-continent.
It's barely been discovered by Europeans, less by Orientals, and
not at all by anyone in the Americas. But it will be. So property
is going higher. If you don't yet have a bolthole outside your home
country, this is an excellent time, and Dubai is an excellent place
to secure one. With purchase of property comes a permanent residence
visa, a valuable document in today's world. That's first on the
list.

If
you're in any business that has interests abroad, this place is
in a class with any other for buying, selling, trading, outsourcing,
or you-name-it.

If
you're looking for a good location for an offshore company, or a
secure bank account, look in this part of the world or the Orient.
These people aren't going to be pushed around by the U.S. and other
declining powers.

Most
important, call your travel agent and take a look. I've always thought
trying to deal in the financial markets without knowing more than
your neighbor was no better than gambling. Your neighbor is most
likely a rube whose idea of international travel is a jaunt to Mexico,
or maybe England. It's critical to know what's happening in the
rest of the world, first hand, or you're in no better position than
your neighbor. It's a variation of the old rule in poker: if you
can't figure out who the mooch is after a half hour, then it's you.
And when it comes to this part of the world that describes most
Americans.

Your
homework assignment, should you choose to take this seriously, is
to get on a plane. Soon.

April
6, 2005

Doug
Casey (send him mail) is
the author of the best-selling Crisis
Investing

and The
International Man
. He wrote this article for The
Daily Reckoning
.

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