This is an Arabic word that has pretty much crossed over to the lexicon of English speakers in the UAE. Meaning tower, it first came into popular use with the opening in 2000 of the Burj Al Arab--the famous, or notorious, 7-star hotel. More recently the Burj Dubai, the soon to be completed 162-floor super tower, has both added further popularity and a good amount of confusion to the term. It is funny that it is usually the local Arabic speakers who translate the word into English for English speakers when referring to either of the towers.
Although I know quite well that one is the Burj Al Arab and the other is the Burj Dubai, my tongue quite regularly mixes the two up. The situation could easily get worse as other tower builders are often inclined to add Burj to the name of their towers.
Beyond the symantics, the Burj, as in the 162-floor tower, is quite an amazing addition to Dubai's already amazing skyline. It isn't just a super-tall structure, but rather quite a beautiful edifice, especially when seen gleaming in the shining sun. Interestingly as well, it has been constructed as not a single, lonely monument but as part of a larger development which includes numerous other towers, an artificial lake and the so-called Old Town, which provides an artful contrast of old and new architecture. It is very much a job well done by its developer, Emaar.
It has been noted that when previous tallest buildings in the world have been built, their completion has ushered in a serious economic crises of one sort or other, as though there is a jinx associated with such feats. Perhaps we could call it the curse of the Tower of Babel. I came across this observation a couple of years ago, before any signs of the current global meltdown. At the time I thought, interesting coincidence, but surely the Burj Dubai will be the exception.
The economy of Dubai after all had been booming for years and the only hint of a slowdown was the forecast eventuality of over-supply in the local property market. No one would dare suggest that this was not going to happen at some point with the massive scale of construction going on. But the conventional wisdom was that, with rampant project delays and overly ambitious predictions of project completions, the day of reckoning was still a couple of years off and slipping.
Alas, come September 2009 the Burj Dubai too would seem to be headed toward the same fate or curse as the super-towers which preceded it. In 2004 the Tapei 101 tower was completed--no recession or dramatic economic events then. But the Petronas Towers in Malaysia, completed in 1998, seemed to usher in the Asian flu, the Chicago Sears Tower and New York World Trade Center towers in 1974 and 1973 respectively saw the emergence of the first world oil shock, and perhaps most notorious of all, the Empire State building witnessed the start of the Great Depression at its completion in 1931.
Certainly, it is not coincidence but rather symptomatic of great booms that they spawn builders to reach for the stars, while as a matter of course, they eventually engender their own bust. In the years that it takes to go from vision, to plan, to realization of a world's tallest tower, the boom will have crested and then begun its hasty retreat. So it is again for the Burj Dubai.
In this instance, there is perhaps a silver lining. The severity of the bust is as spectacular as the great feat represented in the construction of the tower. The Burj Dubai is the first super tower since the Empire State building to rise to such elevation as to leave any challenger far in its stead. It is probably now destined to hold onto the title of world's tallest tower for decades to come.
Saturday, February 28, 2009
Friday, February 27, 2009
Consumerism
Very much related to the credit crunch and global economic downturn is the problem of consumerism. On the one hand, a return to rampant consumption might be just the thing to turn economies around today. On the other hand, the day of reckoning has finally come after too many years of rampant and every-growing consumption.
A large part of today's mass consumption has been funded by debt. Consumer debt is at least one element of the current credit crunch. I heard on the radio today that the amount of consumer debt in the United States is equal to 100% of the country's entire GDP.
To put this into perspective, that number was at about 50% as of year 2000--a more or less manageable ratio--but then rocketed up over the next 8 years. Only twice, since such things have been measured, has the ratio of consumer debt been so high. The other instance was in 1929, the year of the great stock market crash, which led ultimately to the Great Depression.
Consumerism, then, might be considered the big, bad gorilla. It seems to become a problem in societies where a large percentage of the population has increasing levels of disposable income. It is quite logical, of course, that if one has more to spend then one will spend more. Then again, one could save more, instead.
Why don't people save more when they earn more? The issue, in fact, is not only one of rising incomes, but there is the pressure on the consumer that marketing brings to bear. Marketing is so rampant in modern societies that people are in a sense pressurized into buying more and more.
At some point, the marketing pressures reach such hyperbolic levels that disposable income once exhausted is quickly supplemented by credit or consumer debt.
The Nature of Consumerism
Consumerism follows an aggressive trend. If I think way back to my youth in the 1960's, the United States was, of course, already a very much consumption-driven society.
My reckoning of history tells me that it pretty much started post WWII, when the United States emerged not only from years of economic depression but became the world's leading industrial economy, practically unscathed by the devastating war and, in fact, positively energized through the experience.
Back as far as I can remember, however, people wanted things--mostly connected with home and car: a new refrigerator, a black & white or better yet color TV...
By the mid-70's the more common preference became the second TV or the second car. By the 1980's and beyond it was not only these rather nice and convenient household and transportation goods, but people began to fill their homes ever more with every manner of thing big and small.
By the 90's, when one would think there were few new avenues open for consumerism, services of every sort became the big thing. People began spending much more on eating out, grooming, those increasingly expensive cups or coffee, hotels, flights, etc.
Remembering the Time
It is that ever so aggressive trend that consumerism follows. When I think back to my early teen years in the 1970's life seemed pretty good. What more could a family need than what my family already had--a car, a color TV, the usual household appliances. But today, one of anything seems not enough.
If traveling in America over 500 miles then one feels he needs to fly. In former times most would have been content to drive, or take a bus. Clothing for children was something that was still often made at home, or if bought, handed down to siblings. Coffee was coffee was coffee--a 25 or 50 cent refillable cup!
The problem that underlies too much consumerism is, I would argue, not so much rising disposable incomes as over aggressive marketing and the relative space which people have in which to store the things they accumulate.
I lived in Japan for over a decade, during its booming years--the mid 80's to the mid 90's. The Japanese were no less bombarded with pressures to buy and spend money on goods and services than in similarly affluent America. But at the end of the day, they saved a big portion of their disposable income and bought less.
The secret of Japanese frugality was, in part, memory of the hardship that they had emerged from much more recently than had the Americans. But equally important was the fact that the Japanese lived in small houses. There was quite simply no space for a second sofa, an easy-chair or a second 29-inch TV. Closets were where beds were kept, leaving no space for overflowing consumer goods. In fact, many Japanese homes had little space for any furniture at all.
Cross borders and decades to the UAE of 2008-09. This has been a society of increasing wealth, with ever increasing pressures on the population to spend, spend and spend. The pattern of consumerism that took over 40 years to emerge in the United States has taken place rapidly here, in less than even a single decade.
Similar to Japan, however, the forces of consumerism have been held in check to some extent. More than half of the population has very little living space--from merely the space of a single bed to that of a single room. And many, in recent years, have been forced to spend 20-80 percent of their income on accommodation, as bare as it often is.
A Role for the Powers That Be
Whatever the society--Eastern or Western, developed or developing--consumerism is something that evolves and often follows a rather aggressive trend line. Left unchecked, people will easily cross the threshold of spending disposable income to funding their purchases by ever-increasing debt. I have personally witnessed this phenomenon in the USA, Japan and the UAE.
The biggest problem with consumerism, as I see it, is not capitalism per se or people's desire to obtain goods and services. The main problem is the aggressive marketing campaigns. People are bombarded with messages from every source to buy and spend.
I would argue that while governments should allow their citizens and resident population to buy and spend at will, it (the government) should play a strong role in curbing and restricting marketing.
This already happens with regard to issues of health, as in bans on cigarette and alcohol advertising. But there should also be some effort to control the extent to which advertising is allowed to proliferate overall.
The extent of advertising in publications could be restricted in any number of ways, e.g. no front or back cover adverts and adverts limited to a quarter-page size. The extent of billboards and streaming ads along the highways could be restricted, and so on.
Quite simply, if it isn't staring you in the face along every highway or every other inch of page in magazines and newspapers, the consumer will be a little less driven to part with hard-earned cash and credit facilities.
Economies develop and grow on the basis of increasing production, sales and delivery of goods and services, and marketing and advertising feed and nurture this essential economic activity--so the counter argument would go. Restrict the scope of marketing activity and you inhibit growth.
Then, let it be so! The sins and inherent danger in of over-consumption were already apparent even before the global economic meltdown. I suppose, however, that there was the somewhat credible belief that the cyclical economic corrections were sufficient to keep things in balance, negating the need to ever have a dramating day of reckoning.
The reality today, however, is that modern society will have to innovate other ways to develop and prosper, sans mass consumption.
In the end, too much consumerism is harmful to individuals, to societies-at-large and, as we can see now, to the entire global community. It is government's role at the end of the day to establish rules and frameworks that protect people and nations from destructive, and as the case may be, self-destructive activities.
A large part of today's mass consumption has been funded by debt. Consumer debt is at least one element of the current credit crunch. I heard on the radio today that the amount of consumer debt in the United States is equal to 100% of the country's entire GDP.
To put this into perspective, that number was at about 50% as of year 2000--a more or less manageable ratio--but then rocketed up over the next 8 years. Only twice, since such things have been measured, has the ratio of consumer debt been so high. The other instance was in 1929, the year of the great stock market crash, which led ultimately to the Great Depression.
Consumerism, then, might be considered the big, bad gorilla. It seems to become a problem in societies where a large percentage of the population has increasing levels of disposable income. It is quite logical, of course, that if one has more to spend then one will spend more. Then again, one could save more, instead.
Why don't people save more when they earn more? The issue, in fact, is not only one of rising incomes, but there is the pressure on the consumer that marketing brings to bear. Marketing is so rampant in modern societies that people are in a sense pressurized into buying more and more.
At some point, the marketing pressures reach such hyperbolic levels that disposable income once exhausted is quickly supplemented by credit or consumer debt.
The Nature of Consumerism
Consumerism follows an aggressive trend. If I think way back to my youth in the 1960's, the United States was, of course, already a very much consumption-driven society.
My reckoning of history tells me that it pretty much started post WWII, when the United States emerged not only from years of economic depression but became the world's leading industrial economy, practically unscathed by the devastating war and, in fact, positively energized through the experience.
Back as far as I can remember, however, people wanted things--mostly connected with home and car: a new refrigerator, a black & white or better yet color TV...
By the mid-70's the more common preference became the second TV or the second car. By the 1980's and beyond it was not only these rather nice and convenient household and transportation goods, but people began to fill their homes ever more with every manner of thing big and small.
By the 90's, when one would think there were few new avenues open for consumerism, services of every sort became the big thing. People began spending much more on eating out, grooming, those increasingly expensive cups or coffee, hotels, flights, etc.
Remembering the Time
It is that ever so aggressive trend that consumerism follows. When I think back to my early teen years in the 1970's life seemed pretty good. What more could a family need than what my family already had--a car, a color TV, the usual household appliances. But today, one of anything seems not enough.
If traveling in America over 500 miles then one feels he needs to fly. In former times most would have been content to drive, or take a bus. Clothing for children was something that was still often made at home, or if bought, handed down to siblings. Coffee was coffee was coffee--a 25 or 50 cent refillable cup!
The problem that underlies too much consumerism is, I would argue, not so much rising disposable incomes as over aggressive marketing and the relative space which people have in which to store the things they accumulate.
I lived in Japan for over a decade, during its booming years--the mid 80's to the mid 90's. The Japanese were no less bombarded with pressures to buy and spend money on goods and services than in similarly affluent America. But at the end of the day, they saved a big portion of their disposable income and bought less.
The secret of Japanese frugality was, in part, memory of the hardship that they had emerged from much more recently than had the Americans. But equally important was the fact that the Japanese lived in small houses. There was quite simply no space for a second sofa, an easy-chair or a second 29-inch TV. Closets were where beds were kept, leaving no space for overflowing consumer goods. In fact, many Japanese homes had little space for any furniture at all.
Cross borders and decades to the UAE of 2008-09. This has been a society of increasing wealth, with ever increasing pressures on the population to spend, spend and spend. The pattern of consumerism that took over 40 years to emerge in the United States has taken place rapidly here, in less than even a single decade.
Similar to Japan, however, the forces of consumerism have been held in check to some extent. More than half of the population has very little living space--from merely the space of a single bed to that of a single room. And many, in recent years, have been forced to spend 20-80 percent of their income on accommodation, as bare as it often is.
A Role for the Powers That Be
Whatever the society--Eastern or Western, developed or developing--consumerism is something that evolves and often follows a rather aggressive trend line. Left unchecked, people will easily cross the threshold of spending disposable income to funding their purchases by ever-increasing debt. I have personally witnessed this phenomenon in the USA, Japan and the UAE.
The biggest problem with consumerism, as I see it, is not capitalism per se or people's desire to obtain goods and services. The main problem is the aggressive marketing campaigns. People are bombarded with messages from every source to buy and spend.
I would argue that while governments should allow their citizens and resident population to buy and spend at will, it (the government) should play a strong role in curbing and restricting marketing.
This already happens with regard to issues of health, as in bans on cigarette and alcohol advertising. But there should also be some effort to control the extent to which advertising is allowed to proliferate overall.
The extent of advertising in publications could be restricted in any number of ways, e.g. no front or back cover adverts and adverts limited to a quarter-page size. The extent of billboards and streaming ads along the highways could be restricted, and so on.
Quite simply, if it isn't staring you in the face along every highway or every other inch of page in magazines and newspapers, the consumer will be a little less driven to part with hard-earned cash and credit facilities.
Economies develop and grow on the basis of increasing production, sales and delivery of goods and services, and marketing and advertising feed and nurture this essential economic activity--so the counter argument would go. Restrict the scope of marketing activity and you inhibit growth.
Then, let it be so! The sins and inherent danger in of over-consumption were already apparent even before the global economic meltdown. I suppose, however, that there was the somewhat credible belief that the cyclical economic corrections were sufficient to keep things in balance, negating the need to ever have a dramating day of reckoning.
The reality today, however, is that modern society will have to innovate other ways to develop and prosper, sans mass consumption.
In the end, too much consumerism is harmful to individuals, to societies-at-large and, as we can see now, to the entire global community. It is government's role at the end of the day to establish rules and frameworks that protect people and nations from destructive, and as the case may be, self-destructive activities.
Thursday, February 26, 2009
Crunch
I don't really know what is the single best term to identify this economic crunch that the whole world is talking about. Does it in fact have a single, recognized term or phrase? Perhaps that is something history will have to decide.
Dubai, of course, is not unaffected, and in fact some will say that it has been greatly damaged. I sort of dispute that. While some aspects of the economy have been badly hit, namely real estate, tourism and to some extent the retail sector, the economy is in large measure still intact and life and all the associated activity goes on.
The fact is that Dubai has been on a continuous diversification drive for the past two or three decades. Instead of relying one thing, say trade or oil, Dubai has for years taken pains to expand its scope of activities. One can start with the 1970's, when the ruler of the day, Sheikh Rashid I believe, had the vision to build a big new shipping port. Until that time the bustling port along the waterway that cuts through the center of old Dubai, the Creek, was perhaps enough for Dubai of the time to rest on its laurels. But the new port created a whole new dimension in trade and economic activity.
That it seems was just a beginning. The massive Jebel Ali freeport (tax free--or low tax, less bureaucracy--trade zone) was soon to follow, along with a number of other freezones each catering to a different sort of economic activity. In the late 90s Emirates Airlines began to emerge as a super carrier and at the same time Dubai began to fashion itself as a retail or shopping hub, both of which led naturally to the next big thing, tourism.
Right on the heels of Dubai's emergence as a major tourism destination came a nascent property market which within a matter of 3, 4 or 5 years came to eclipse even the great enterprises that had preceded it. Dubai's economy, even with the so-called credit crunch, economic meltdown or whatever it might be called, is still highly diversified and highly active. The fact that Dubai appears to be in trouble is perhaps more a testament to its successes than its failures.
The very fact that it somehow emerged as a banking and financial hub and a center for stock and commodities exchange, in addition to having its trade, retail, property and construction industries all affected simultaneously by what has happened in the world is evidence of the massive breadth of the economic activity that has taken place here in recent years. Even in the midst of this turmoil, I would dare to say that Dubai is once again, quietly while nonetheless steadily, making progress at developing one of the most modern urban infrastructure networks in the world.
While people continue to harp about the crises, Dubai's ultra-modern 76-kilometer metro system is fast coming online. Expansive highways with countless bridges, flyovers and tunnels continue to get built. The city is also making steady progress on its waterways expansion, such that within a few years time the city should have in place an extremely multi-faceted and efficient transport network. When the world finally begins to emerge from its economic slumber, it will find a Dubai already poised to race ahead again with yet new economic forays, made possible this time by an amazing civil transport systems.
Dubai, of course, is not unaffected, and in fact some will say that it has been greatly damaged. I sort of dispute that. While some aspects of the economy have been badly hit, namely real estate, tourism and to some extent the retail sector, the economy is in large measure still intact and life and all the associated activity goes on.
The fact is that Dubai has been on a continuous diversification drive for the past two or three decades. Instead of relying one thing, say trade or oil, Dubai has for years taken pains to expand its scope of activities. One can start with the 1970's, when the ruler of the day, Sheikh Rashid I believe, had the vision to build a big new shipping port. Until that time the bustling port along the waterway that cuts through the center of old Dubai, the Creek, was perhaps enough for Dubai of the time to rest on its laurels. But the new port created a whole new dimension in trade and economic activity.
That it seems was just a beginning. The massive Jebel Ali freeport (tax free--or low tax, less bureaucracy--trade zone) was soon to follow, along with a number of other freezones each catering to a different sort of economic activity. In the late 90s Emirates Airlines began to emerge as a super carrier and at the same time Dubai began to fashion itself as a retail or shopping hub, both of which led naturally to the next big thing, tourism.
Right on the heels of Dubai's emergence as a major tourism destination came a nascent property market which within a matter of 3, 4 or 5 years came to eclipse even the great enterprises that had preceded it. Dubai's economy, even with the so-called credit crunch, economic meltdown or whatever it might be called, is still highly diversified and highly active. The fact that Dubai appears to be in trouble is perhaps more a testament to its successes than its failures.
The very fact that it somehow emerged as a banking and financial hub and a center for stock and commodities exchange, in addition to having its trade, retail, property and construction industries all affected simultaneously by what has happened in the world is evidence of the massive breadth of the economic activity that has taken place here in recent years. Even in the midst of this turmoil, I would dare to say that Dubai is once again, quietly while nonetheless steadily, making progress at developing one of the most modern urban infrastructure networks in the world.
While people continue to harp about the crises, Dubai's ultra-modern 76-kilometer metro system is fast coming online. Expansive highways with countless bridges, flyovers and tunnels continue to get built. The city is also making steady progress on its waterways expansion, such that within a few years time the city should have in place an extremely multi-faceted and efficient transport network. When the world finally begins to emerge from its economic slumber, it will find a Dubai already poised to race ahead again with yet new economic forays, made possible this time by an amazing civil transport systems.
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