The American economist Herb Stein, whom I had the privilege of meeting a few times before his death in 1999, is famed for the aphorism, “If something can’t go on forever, it will stop.” I found myself thinking of him often a few weeks ago during my first trip to Dubai.
Dubai has the feel of a boomtown. The airport, of course, is one of the world’s largest — and yet not large enough, for a second airport, to be even larger, is under development a few miles away. The container port, also among the world’s largest, has just opened its third terminal, and plans for terminals four, five, six, and seven are on the drawing board. Forests of skyscrapers would leave Manhattan in the shade. Dubai Mall, reachable by riding no fewer than seven automated sidewalks from a station on Dubai’s automated metro, boasts Bloomingdale’s, Galleries Lafayette, Marks & Spencer, a two-story walk-through aquarium, an ice rink, a dozen stores selling high-end wristwatches and two dozen selling diamonds, and even a bagel shop.
And the boom is isn’t over. Construction cranes are visible in every direction. An entirely new freight railroad linking the United Arab Emirates and Saudi Arabia is under construction. When one of my interviews fell through and I decided to go to the beach, I found that much of the beach was closed for refurbishment. I mean that literally: the municipal government fenced off not just a few hundred yards, but five or six miles, effectively rebuilding the emirate’s entire beachfront in one go.
It’s all extraordinarily impressive. And it’s successful because Dubai has positioned itself as a place that works in the midst of a lot of countries — South Asia on one side, Africa on the other — that don’t work so well. If India were ever to have smoothly functioning infrastructure and Tanzania to develop an honest and efficient customs service, Dubai might be a much less busy place.
Dubai is also a relentlessly optimistic place, at least at the official level. Doubts and doubters are not encouraged. Yet one can’t help but wonder whether a shakeout is coming in the oasis business. A few miles to the northeast, Dubai’s sister emirate, Sharjah, has its own international airport, its own container port, its own dreams of expansion. A few miles to the southwest, Abu Dhabi has much the same. All of this is happening at a time when the growth of international container trade is slowing and the price of oil spiraling down. Since many of the big investments are being undertaken by entities that don’t publish reliable financial statements, it’s hard to know which parts of Dubai’s investment boom are paying off. But Herb Stein’s words offer a useful caution: the boom can’t go on forever, and at some point it will stop.