Monday, October 31, 2005

Has Baghdad Bob been located? Here?
The boobs of protectionism: Lou and Pat :: Cafe Hayek

Don Boudreaux rightly points out: Lou Dobbs and Patrick Buchanan
should not be permitted to get away with suggesting that protectionism would create domestic industries and jobs that produce worthwhile, cutting-edge goods and services. Instead, these protectionists should be forced to admit explicitly that the American industries they seek to reinvigorate are those that produce worthless baubles, trinkets, and T-shirts.
Current Labor Market Regulations for Women in Saudi Arabia: Beneficial or Detrimental? :: Arab News

Here's an advocate for women's rights to equal opportunity in the workplace who recognizes that sometimes rights hurt the ones they are intended to benefit:
One salient article in the new law caught my attention, both for its good intentions, as well as its miscalculated judgment; the one that imposes an obligation on employers to provide childcare to women once they have 50 women on their payroll. Now the intention behind such an article is fair and practical — for a well functioning child care market is indispensable if women are to combine work and family responsibilities — but unfortunately, the method by which the article is to be implemented is outdated and discriminative.

In practice, such a regulation only serves to raise the cost of women’s labor relative to that of men, and thereby is nothing more than disincentives to the private sector employer.

Allow me to explain. (
continue reading)
The author is Fatin Yousef Bundagji, director of The Women Empowerment & Research Department at The Jeddah Chamber of Commerce & Industry.

Bundagji recommends that government should mandate greater employee benefits for Saudi women and men.

I recommend equal benefits for Saudi women and men, but not a mandate of higher benefits. Benefit mandates lower wages; families are in a better position to decide how best to budget their income.

Further, I recommend the Saudis take a good look at the social restrictions on the kinds of jobs that women are allowed to take. Those restrictions are exceptionally narrow.

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7 Die in rush to receive zakat

Calling it like he sees it:
Ahmad Al-Harbi, a resident of Makkah, told Arab News that he had helped in taking the injured to hospitals. He said those who had died in the stampede were taken to Al-Noor Hospital in Makkah.

According to Al-Harbi, the crowd that gathered to receive the charity included Saudis as well as expatriates. He said that most of the injured were women and that this was the first time such a stampede had taken place during the distribution of zakat in the city. “More and more people rushed to the parking lot when they heard about the charity handouts,” Al-Harbi said while explaining the reason for the stampede.

He said he noticed that the crowd that gathered for the charity included even some wealthier people who owned luxury cars.
I guess need is relative. Top Entry Level Employers for 2005

Rental car companies figure prominently.

You live in an alternative reality if you think a college degree leads straight to a prestigious job - at least in the US. Not that you should stop at high school.

On the other hand, this income ranking is sobering.

Sunday, October 30, 2005

Dubai predator to offer £3bn for P&O :: The Times


P&O, Britain’s biggest ports and ferries group, is set to receive a £3 billion takeover approach from a Middle East rival as early as this week.

Dubai Ports World (DPW), which is owned by the Gulf state’s government, has hired Deutsche Bank to advise it on a bid. Banking sources in Dubai said this weekend that a preliminary meeting between the two sides was likely to take place within days. The Middle Eastern firm is understood to have contacted banks about financing a bid for the British ports operator.
. . .
P&O owns 27 container terminals and has logistics operations in 18 countries.

Its British container-terminal operations include sites at Southampton and Tilbury, and the company was granted planning consent earlier this year for a £1.5 billion development, the London Gateway port in Thurrock, Essex, which is eventually expected to account for as much as 10% of P&O’s total ports capacity.

P&O also owns port operations in Africa and Australia and has operations in India, the Philippines and Sri Lanka.


Palm development caused fish deaths, say Sharjah officials :: Gulf News

The (dead) fish war of words between Dubai and Sharjah saw an escalation today:

Dubai: Ongoing construction work on The Palm, Deira, is threatening an environmental disaster, top Sharjah officials told Gulf News yesterday.

Sharjah officials have said a study of the waters of Qanat Al Qasba has found no chemical or biological pollution and blamed the Palm projects for the dead fish (
pictured) that appeared recently near the entrance to the canal.

The ambitious project undertaken by Dubai-based developer Nakheel and its contractors was squarely blamed for the thousands of dead fish and dying marine life.
. . .
"The result of the enquiries revealed that through marine currents, the fish drifted from Dubai waters into Sharjah waters and subsequently into Qanat Al Qasba," the statement said.

Abdul Aziz Al Midfa, Director-General of Environment and Protected Areas Authority in Sharjah, told Gulf News yesterday that the environment authorities have done comprehensive tests and investigations on the dead fish and the quality of water in Sharjah.
. . .
Dubai Municipality officials, however, said there was no dead fish found in the waters around Deira palm area.
More on this story here, here, here, and here.

UPDATE, 31 October. The saga continues:

Commenting on the issue James Wilson, CEO of Nakheel and Dubai Waterfront Company, said: “In the creation of Nakheel’s waterfront developments, one of our primary goals is to ensure that construction not only has a minimal impact on the environment, but that it actually enhances the environment above the original, predevelopment status.
. . .
Engineer Yehia Ramadan Al Bulooshi, Head of the Environment Section of Sharjah Municipality strongly believes that the dead fish drifted from outside to the Qanat Al Qasba and Khalid Lagoon. “The examination samples taken from the water of Qanat Al Qasba and Khalid lagoon showed that the water is not threatening the marine environment and that there are no other factors that might have lead to the death of the fish. Tests shows that the all the fish floated into the lagoon and the canal belly up. . . ."
. . .
DUBAI — Speaking to Khaleej Times on condition of anonymity, a senior marine biologist, pointed out that the reports on the claims of Sharjah officials do not explain how exactly the fish died and how they ended up in the lagoon and canal. “There's more to these allegations than meets the eye,” he said, adding that the waters in the Khalid Lagoon and the Al Qasba Canal are already polluted with effluents from barges and boats and sewage, which is released into the water body.
Smoke cabbage leaves then eat them.

UPDATE: "“There has been no hike in the customs duty imposed on cigarettes, so this is about the company that owns the cigarette brand. In fact the customs duty cannot be hiked unilaterally by one particular local authority, as there is a regional understanding in this regard, and such decisions are taken on an GCC-wide level,” the source explained. According to the source currently an import duty of 100 per cent is imposed on cigarettes on a “pack” basis. “In some countries, the duty is calculated on the number of sticks, but in others, including the UAE, it is done on packs. So if a pack is worth Dh3 when it reaches the port here, it enters the market with a value of Dh6 after the imposition of the duty,” the source explained.""
Etisalat walks out, govt refers case to Privatisation Board :: Daily Times

ISLAMABAD: The government on Saturday referred the privatisation issue of the Pakistan Telecommunications Company Limited (PTCL) to the Privatisation Board and the Cabinet Committee on Privatisation for a final decision after the Privatisation Commission failed to resolve differences with Emirates Telecommunications Corporation (Etisalat), which did not meet the October 28 deadline of depositing about $2.59 billion for a 26 percent stake in PTCL.

Saturday, October 29, 2005

Salt Lake Tribune reports that the UAE Air Force delivered ballots to Baghdad.

Friday, October 28, 2005

Dubai leaves Mr. Lee Chang-kyu, CEO of the JoongAng Ilbo News Magazine, slackjawed:
"Rash" things that can't be explained by logic were happening all over the place, and were also all going according to plan, making my jaw drop. I nodded automatically at the comment that 10 percent of the world's cranes were in Dubai.
Your Misery is OUR Gain! - Over inflated Gas Prices mystery solved!! :: TruthBeFree - Collective Bellaciao

Regular readers will recognize the headline could hardly be mine. It is the headline Collective Bellaciao gives to a recent widely-published Associated Press article on oil company profits:
Exxon Mobil Corp. rewrote the corporate record books Thursday as the oil company’s third-quarter earnings soared to almost $10 billion and it became the first public company ever with quarterly sales topping $100 billion. Anglo-Dutch competitor Royal Dutch Shell PLC wasn’t far behind, posting a profit of $9 billion for the quarter.
. . .
To put its performance into perspective, Exxon’s revenue for the three-month period was greater than the annual gross domestic product of some of the largest oil-producing nations, including the United Arab Emirates and Kuwait -- even though it lost considerable production because of a string of hurricanes that battered the U.S. Gulf coast.
Eye-popping numbers, yes. But what's the story behind them?

Short-run demand for petroleum is inelastic, meaning that a fall in supply translates into a percentage increase in price that is greater than the decrease in quantity consumed. As a result, negative supply shocks drive up revenues and can drive profit as well. What does this prove? That despite its size Exxon and its fellow producers were not exploiting market power - otherwise they would have done on their own what a string of hurricanes did instead.

The article continues:
Those results led Democrats in Congress to demand a new windfall profits tax. "Big oil behemoths are making out like bandits, while the average American family is getting killed by high gas prices, and soon-to-be record heating oil prices," Sen. Chuck Schumer, D-N.Y., said in a statement.
Right. Good plan. Very original. Tails you lose, heads I win.

Not all shocks are negative supply shocks. It is only because government has been able to maintain a reputation not to grab profits that oil producers invest in exploration and production.
Which brings up another contributing factor behind the high prices at the pump: Government environmental restrictions that have stopped investment in refining in the US dead in its tracks for decades.

It's no wonder that OPEC members are considering expanding their investment in refining in the rest of the world.

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EU-GCC trade talks conclude :: Daily Star

The official, who did not wish to be identified due to the sensitivity of the talks, said the EU was unhappy with the bilateral free-trade agreements that GCC member states were signing individually and not as a bloc with the United States.

The GCC states met one of the EU requirements when they launched a customs union in January 2003 but implementation has hit serious snags.
Read the whole thing. See also this Khaleej Times report.

Background: The EU & the Gulf Cooperation Council. (At this writing last updated March 2005.)
Developed world farm subsidies and making poverty history :: NYT

This is important. And shameful.


The developed world funnels nearly $1 billion a day in subsidies to its farmers, encouraging overproduction. That drives down prices and leaves farmers in poor nations unable to compete with subsidized products, even within their own countries. In recent years, American farmers have dumped cotton and other products on world markets at prices that do not begin to cover their cost of production. Europe's system is even worse; the United States' farm subsidies are only a third of Europe's.
. . .
The United States trade representative, Robert Portman, took a big step toward doing the right thing earlier this month when he proposed that the United States would slash allowable farm subsidies by 60 percent if Europe and Japan would cut their subsidies by 83 percent. . . .

Given all the noise the British prime minister, Tony Blair, and his European colleagues have made about the need to "make poverty history," you would think that the Europeans would jump at the American proposal. Think again. In Europe, farmers are apparently terrified of having to compete without the government around to hold their hands.

So the European Union has not only not made a meaningful counteroffer, but France - the worst of a bad lot - is also doing everything it can to get in the way of even the anemic talk of compromise from the European Union's trade chief, Peter Mandelson. "If you don't believe in trade, then why are you a member of the W.T.O.?" a frustrated Mr. Portman asked rhetorically. Funny, we were just wondering that ourselves.
. . .
The lawmakers in Congress who coddle rich American corporate farmers - often to the detriment of small family farmers - are not helping things. The Senate Agriculture Committee just voted to extend the subsidies paid to growers of cotton, rice and other commodities until 2011, subsidies that were supposed to expire in the 2007 farm bill. This political move is made worse by sneaking the subsidies into a budget bill rather than properly debating them as part of the farm bill.

The Bush administration has done a good job so far in opposing these myriad forms of agribusiness welfare. The United States trade negotiators say the Senate Agriculture Committee's move will make their job at the trade organization talks more difficult. It's hard to preach the free trade gospel abroad when lawmakers at home are busily taking care of their own special interests.

Thursday, October 27, 2005

Dubai's man-made islands 'a necessity' :: Al Mendar

Sultan bin Sulayem, chairman of Nakheel, says the projects will create a marine ecosystem from scratch. "The bottom of the sea in Dubai is like a desert. I used to scuba dive there and there's no real significant amounts of coral, few rocks. It's flat and sand, with no life basically and not a habitable area for fish," bin Sulayem said, speaking in his office at the top of a Dubai high-rise overlooking the sea. "Turtles only rested on remote islands, and we are planning to build an island for the natural habitat where turtles will return to the area," he added.

Bin Sulayem says the projects, which many Dubai residents say are too showy, are a necessity because the emirate has only a small stretch of coastline on the Gulf. "It will be 1,200 km (746 miles) (of beach when finished) as compared to the 60 km (37 miles) ... now," he said.
. . .
Nakheel disputes environmentalists' claims that building the islands has damaged the ecosystem, saying that most of the coral was already dead.The property developer, which is in partnership with the Trump Organization to build a $400 million luxury hotel on the man-made Palm Jumeirah island, says it will use revolutionary techniques to stimulate coral growth by placing electrically charged meshes underwater.

"I don't see any problem with this technology. We still have to wait and see when we start really doing it at a much, much larger scale, when I say a larger scale I mean a mega scale," said Imad Haffar, Nakheel's head of research and development.
UAE nationals brain drain, but with a flip side :: Khaleej Times

Quote, emphasis added:
Two out of three UAE nationals who leave the shores of the country are skilled workers, a sure indication of brain drain having taken roots in the UAE.

According to the [World Bank] report, the UAE ranks a high fourth in the list of nations losing out skilled workers to other countries, with 67 per cent of the UAE nationals seeking jobs in other countries falling under the educated category.

On the flip side, the UAE, however, fares better in retention of nationals, accounting for one of the lowest rates of migration across the globe.

In the rankings for the ratio of skilled migrants to overall migrants in the year 2000, Qatar and Kuwait are ahead of the UAE, occupying the second and third places respectively behind Taiwan. Saudi Arabia is in the seventh place and Oman ninth, meaning that the top 10 are made up of five GCC countries.
. . .
The findings are likely to create a sense of ambivalence for the UAE Government. On the one hand, the low rate of migration could be read as "all is well," and on the other, it could be a matter of concern that those who do leave overwhelmingly tend to be the most educated workers.

Since the report covers workers aged 25 and above, the migrants do not include the bulk of those who temporarily go abroad to school and university.

It is likely that one reason for the high percentage of skilled workers opting to stay out could be the potential mobility of educated UAE nationals who have internationally-recognised qualifications. The Government could also highlight the large influx of skilled labourers who move to the UAE as redressing the loss of homegrown educated people.

No one at the Ministry of Labour and Social Affairs could be reached for comment.
The UAE has enormous wealth and shares that wealth with citizens residing in the country. It's not surprising the UAE has one of the lowest rates of emigration.

The question is why would anyone leave? Part of the explanation surely is that rewards to UAE nationals in the UAE has little to do with merit. Moving to a country where rewards are more closely tied to educational achievement and work effort will be most likely be attractive to those with skills.

Where the brain drain is serious is in places like Iran.

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UAE poultry production :: Gulf News
Reliance on imported hatching eggs

Dr Hassanin, an expert in poultry diseases, said the ban affected production because locally-produced hatching eggs were not enough to meet domestic demand. "The UAE needs 60 million eggs to produce the chickens people eat. But our farm here produces only 20 million eggs," he said.

"The UAE's import ban on hatching eggs will cause a poultry shortage."

Chickens take 35 to 40 days to hatch and mature before being slaughtered and sold. Poultry farms then take 20 days to clean and disinfect the enclosure in preparation for the new batch of chickens.

"We foresee a shortage of chicken due to the ban on importing hatching eggs," Dr Hassanin warned.

He said some poultry farms have had to supplement their waning stock by importing eggs from unaffected countries, such as Germany. However, some farms will not be able to afford it. "If this ban continues for one or two months, some farms will need to get new eggs, but from where? Europe is too expensive," he said. He added that prices of fresh chicken might increase by up to Dh1 per kg if production costs increased.
Looking for the hand of Intelligent Design?
Consider a third alternative.

Intrepid economist Russell Roberts has the story.

He concludes with this quote:
"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."

Friedrich A. Hayek, in The Fatal Conceit
Read the whole thing.
Workers win fair wages as Bush backs off Davis-Bacon suspension :: AFL-CIO

I'm bummed:

Oct. 26—In response to working families and their unions, as well as community and religious groups and some members of Congress, President George W. Bush on Oct. 26 rescinded his executive order that allowed contractors to pay substandard wages to construction workers rebuilding Gulf Coast areas devastated by Hurricanes Katrina and Rita. The order, which suspended the federal Davis-Bacon Act, now will expire Nov. 8.

More here, via Instapundit.

I retract my praise.

While union progressives rejoice non-working families will find it that much more difficult to find work.

Wednesday, October 26, 2005

The secret history of the minimum wage :: Marginal Revolution

Lost jobs due to minimum wage? It's not a flaw, it's a feature!

Alex Tabarrok at Marginal Revolution tells us:
Progressives, including Richard Ely, Louis Brandeis, Felix Frankfurter, the Webbs in England etc., were interested not in protecting women but in protecting men and the race. Their goal was to get women back into the home, where they belonged, instead of abandoning their eugenic duties and competing with men for work.

Unlike today's progressives, the originals understood that minimum wages for women would put women out of work - that was the point and the more unemployment of women the better!
This sort of irony has me rubbing my economist hands together Mr. Burns like. Excellent!

Mahalanobis had a post in a similar vein last year. He quotes from a Journal of Economic Perspectives "Recommendations for further reading":
What distinguished supporters of minimum wages from their marginalist opponents was how they regarded minimum-wage-induced job loss. Whereas the marginalists saw disemployment as the principal cost of binding minima, indeed as the reason to oppose minimum-wage legislation, minimum-wage advocates regarded minimum-wage-induced disemployment as a social benefit—a eugenic virtue of legal minimum wages. Sidney and Beatrice Webb ([1897] 1920, 785) state it plainly: “With regard to certain sections of the population [“unemployables”], this unemployment is not a mark of social disease, but actually of social health.” [<> “Of all ways of dealing with these unfortunate parasites,” Sidney Webb (1912, 992) argues, “the most ruinous to the community is to allow them unrestrainedly to compete as wage earners.”]
Both links via this Mahalanobis post on Wal Mart's pro minimum wage stance. In addition to scoring progressive points by supporting a higher minimum wage, it would have the (surely unintended) consequence of driving some of its remaining competitors out of business. (Remember Pennington!)

Meanwhile, Wal Mart is also working on scoring points with progressives by going green - less green house gases and more renewable energy. Part the plan is to use plastics derived from corn instead of from petrochemicals. Only trouble is, gee whiz, corn is fertilizer intensive, and fertilizer comes from .... petrochemicals.


10,000 Afghan workers to be sent abroad :: International News Network

KABUL: The government has decided to find 10,000 workers overseas jobs to control unemployment as well as earn foreign exchange for the country.

A senior official of the Labour and Social Works Ministry Abdul Karim Hamid told Pajhwok Afghan News the workers would be sent to the United Arab Emirates (UAE), Kuwait and Australia.
This story has an odd ring to it, as if the Afghani government is forcing 10,000 workers to go abroad. Probably it's more like the reverse: 10,000 Afghanis are being allowed to leave so they can take up work abroad and send money home to their families.


Islam 'will never support terror or violence' :: Gulf News

Dubai: The Islamic Personality of the year 2005 said Islam has never and will never be a religion of terror or violence because it preserves the individual's human rights and dignity.

"The message of Islam and Muslims is modesty, fairness, security, stability, sympathy, harmony and kindness," said Dr Shaikh Abdul Rahman Al Sudais, the veteran Quran reader and imam of the Holy Mosque in Makkah.
Charles Moore mentions Al Sudais in his opinion piece "Where is the Gandhi of Islam?" written July 9, 2005 for The Telegraph.
Reforming the education system :: Emirates Memoirs

We are graduating Memorizational Giants and Creative Midgets. No amount of excuses, apologism or half hearted efforts will change things. It is time for action to be taken.

Our Soviet-Like Education system is damaging the capability of our young people to think. Memorization should not be equal to education. By memorizing you are not encouraging people to think. You are turning them into useless dependents and parasites which will continue to feed off the Innvoations of others. The effects are horrendous. In my Engineering School, the guys tackle complex engineering problems with a database of memorized facts. Upon the changing of one small detail in the Question, their effort collapses. Widespread copying of answers goes on, because people have not been taught to think. And the teachers blame the students calling them stupid and lazy Emaratis when they cannot grasp the big picture of the situation.
Read the whole thing. Better, read the whole thing and then check out the other thoughtful posts at Emirates Memoirs. You may learn something.


Drain on Syrian finances :: Gulf News
Shoots self in foot

I love these sorts of stories. No doubt the neo-cons in the White House to blame somehow. Perhaps they're helping facilitate this cross border trade: Quote,

Damascus: Syria is struggling to ease chronic petrol and diesel shortages caused by rampant smuggling to neighbouring countries amid soaring world oil prices.

Smugglers have been cashing in on the wide disparity between state-subsidised fuel in oil-producing Syria and high prices in its oil-importing neighbours; Turkey, Lebanon and Jordan.

"There is a huge price differential so we are finding weak souls [nee,
arbitrageurs] anxious to smuggle and rob public funds and ordinary people," Oil Minister Ebrahim Haddad was recently quoted as saying in the local state press.
. . .
Figures released by the oil ministry show an 8 per cent rise in diesel supplied to petrol stations by the end of July.

Gasoline consumption rose 14 per cent by July this year compared to the same period of the previous year, they showed.

Energy officials say plans to reduce gasoline and diesel imports require extra refining capacity, now around 250,000 bpd, and increased natural gas production.

Towards a thriving black market

Local papers in Syria carry comments from frustrated locals complaining about shortages that have driven them to hoarding and fed a thriving black market.

They report the ingenuity of smugglers along the border with Lebanon, citing one racket that used a three km pipe from a hilltop to send diesel to the other side of the border.

"The problem is being exacerbated by petrol station owners who are smuggling diesel at night to commission agents and smugglers," said Mohammad Omran, a businessmen from the northern coastal town of Tartous said.

Tuesday, October 25, 2005

Kashmir :: Strategy Page

Strategy Page calls the US response to the quake victims in Pakistan "vigorous." Perhaps, but let's have more, please.


Why feminists should support sweatshops :: New Economist

One of my preferred humanbrowsers comes up with another gem.

UPDATE: For an opposing view see Madeleine Bunting's recent column in The Guardian. Link via Secret Dubai's posting at UAE Community Blog.
Work, work, work
October 25, 2005

India move to protect its workers abroad (Khaleej Times): "this is a move to safeguard the rights of Indian labourers abroad, especially in the Gulf region including UAE, where labourers are now frequently protesting against their employers. “Delhi is keen on solving the issues of Indian workers, and that is the reason we have decided to implement a new rule in which the companies have to obtain clearance with the Indian missions in their country when they hire unskilled labourers, skilled labourers, and semi-skilled labourers.”"

New rule may allow lending of workers (KT): "The system will help to a great extent in making use of the surplus labourers, who remain without work for a long time, informed circles in the labour market affirmed. The system is also advantageous to both parties, since the borrowing company will meet its needs in a very short time-span and with reduced fees, while the lending company will not bear the responsibility and expenses of labourers, who have no work to attend to. Thus, the system is a compromise between sponsorship transfer and the obtaining of labourers from abroad."

Concern on growing joblessness in Fujairah (KT): " The general view was that one of the main causes for the unemployment was the inability of some regions, particularly the eastern coast, to attract investment in industry and other employment-generating projects. "We are aware that unemployment rate is going up, with 3200 nationals jobless, 70 per cent of them females. They have not been able to find jobs near their residences as imposed by our customs and traditions. This necessitates immediate intervention of officials to tackle the problem".... "

Gulf News has several articles today on immigration and visas including,

Most women in UAE are well-respected at workplace (GN): Based on an online survey so the scientific validity is questionable.

UPDATE 26 Oct: Dr. Ali Abdulla Al Ka'abi, Minister of Labour and Social Affairs says, "We will rearrange and clean up the ministry from inside. We have already started by issuing new rules for organising the labour market, and now it is time to work on our workplace ethics" . . . "Each department is isolating itself, and that will stop. We want the ministry's accomplishments to be a trademark in the country. The ministry also needed to foster an organisational culture based on transparency, accountability and the rule of law."


Rosa Parks, civil rights heroine, is dead :: Detroit Free Press

She refused to give up her seat and she changed a country.

Rosa Parks received her civil rights training from Virginia Durr. My mother did babysitting for the Durrs uring the New Deal period when the Durrs lived on Seminary Hill in Alexandria, Virginia.

Clifford and Virginia Durr had a positive influence on many people.
Ben Bernanke, economist :: Marginal Revolution
Greenspan's replacement

Anyone who replaces Alan Greenspan will be known as Greenspan's replacement no matter who they are.

Tyler Cowen of Marginal Revolution provides a nice, quick tour of Bernanke's contributions to economics.

It looks like Bush has made a very sensible choice. Russell Roberts had some fun with this angle.
UPDATE: Great roundup of opinion on Bernanke at Glittering Eye. Thanks to Economist Laberinto for the link.

ANOTHER update: See also the roundup at New Economist.

Monday, October 24, 2005

Iraq achieves the highest oil revenues in September :: Al Mendhar

It didn't hurt of course that oil prices are high, but increasing production and export is part of the increase. Al Mendhar also reports that the Assem Jihad, Iraqi oil minister, also stated "The delay of international grants, especially the American, that are designated for rehabilitating the oil sector, has contributed in the delay of rehabilitation."

Meanwhile, Saudi Arabia's oil revenues this year are projected to hit $163 billion, the highest in 22 years.

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Restrictive labor law: the employer's perspective :: KT

The Khaleej Times today has an article today based upon an interview with Karel Zeman, CEO of the Dubai-based employment web site ‘’. Zeman presents some of the downsides to the restrictions on labor mobility in the UAE from the perspective of the employer.
Zeman notes that employees in America or Europe know that “they can be easily replaced,” and therefore, are forced to become competitive. He complains that UAE laws prevent such an environment.
Read the whole thing.
Corn farmers fret over fertilizer costs :: Yahoo! News

Higher oil prices have meant higher fertilizer prices - chemical fertilizers are derived from oil. This article provides a nice example of how the higher cost of fertilizer influences farmer's decisions to substitute between production fertilizer-intensive crops like corn into less fertilizer-intensive crops.

The Oil Drum in Philly points out the irony of using plastics derived from corn in place of plastics derived from petroleum.


Sunday, October 23, 2005


It's not a good day when you're about to open a new exchange that claims it will set the regional standard for tough regulation and The Economist writes of the chairman and the CEO, "Their explanations appear plausible, but the incident is embarrassing."

UPDATE: Be sure to look at the first comment on this post where the commenter has kindly provided the most recent Dow Jones report on the DIFX governance issues. International standards are very demanding.
Freehold law 'need of the hour' :: Gulf News
Buyer beware

Dubai : Absence of freehold law and formal regulations are likely to discourage buyers of freehold properties in the coming days, following a dispute between Emaar Properties and some customers living in Dubai Marina.

A dispute over service charges is forcing potential buyers to reconsider their decision or wait until the laws are in place. Most developers do not declare service charges at the time of sale, but fix them later at a higher-than-expected price, to the dismay of the homeowners.

"This is happening due to the absence of transparent legislation and lack of regulation in the market," said an eminent lawyer, requesting anonymity.

"Further delay in issuing property laws to regulate the growing freehold market will create more confusion and uncertainty among new investors; also it will allow certain developers to take the customers for a ride.

"This is a wake-up call to homeowners and a lesson for new investors to force the developers to mention this in the contract."
I agree that there is ambiguity surrounding freeholds. With ambiguity comes a responsibility for buyers to look for hidden costs that have not been spelled out by the seller.

It sounds as if contracts did state that service charges would apply for services for the upkeep of common property, but did not spell out the level of those charges. And it was left open how those charges would be set - and, equally important, how it would be determined that promised services were delivered. These are issues that are difficult to deal with in any legal setting.

Would a freehold law be a sufficient remedy? Law is not a magic wand. Isn't a well-developed independent judiciary as important? A freehold law might have some benefit in simplifying enforcement by bringing standardization to contracts. But it would not itself develop a judiciary that could enforce contracts, and it would not necessarily address the question of enforcement when there is substantial government ownership in companies such as Emaar.

Emaar is a large company with many properties. It has an interest in maintaining a reputation for honest dealing. (And Dubai's reputation is linked to Emaar's.) Thus, it is not necessarily the case that there is a need for a law or for a judiciary. Rather what is necessary is that Emaar can build and maintain that reputation. To do so it needs to demonstrate that it is carrying out the spirit of the contracts it enters into. And it needs to monitor the claims and promises of its sales agents.

Emaar may be doing all those things. It also has an interest in making contracts straightforward to external interpretation. Otherwise, it risks losing its reputation when buyers' complaints about high service charges have more to do with every buyer's preference for a low price than with a failure on Emaar's part.

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Saturday, October 22, 2005

Developed country ex pats and their employers :: Telegraph

The findings showed that managers willing to go abroad were motivated by developing new skills and leadership qualities. Companies on the other hand placed heavy emphasis on assembling a financial package that made up for the loss of income from a wife or partner but children's education ranked as a more important factor for the expatriate.

Companies, the research report points out, "may be financially compensating where it may be unnecessary to do so. Understanding the personal issues and motivations that are unique to each family and directing measured support towards them should be a more effective approach." Employers also attach more importance to distance from home but expatriates are more focused on how they will adapt culturally.

The differences assume a new dimension when the expatriate returns home. Only 20pc of the companies surveyed acknowledged they handle re-integration well, while 75 per cent of expatriates thought it went badly. Lines of responsibility for returning managers are blurred and most are left to handle reintegration themselves. One in 10 suffered a demotion and only a third won promotion after returning. Only 27 per cent were guaranteed posts back home.

With 75 per cent of companies believing the turnover of ex-overseas managers is no higher than the average for all staff, the researchers question whether employers are "in denial" on the levels of disenchanted expatriates struggling in a new job on their return. "This may reflect both a lack of information on turnover figures for internationally mobile staff and a degree of denial about the impact of international assignment policies," the report said.
More details of the study can be found here.
Who said beachfront property is inseriously inelastic supply?
Got the free zone blues :: Gulf News

Gulf News received many calls from companies in other free zones as well saying they are nervous about what they see as a precedent.

Similar customs memos were posted on the notice boards of their free zone offices, the companies said.

"We came here because of the free zone incentives offered. We are now unsure whether these incentives can be revoked at any time overriding the free zone charter," said an executive of a company in the Sharjah free zone, who did not wish to be named.

"We are not in the scrap trade but today it is an export tax on metal scrap tomorrow it may be on something else. This is worrying," he said.
Sharjah Consultative Council :: Khaleej Times

The Council has constituted several special panels called as the legislative, legal, appeals, proposals and complaint, financial, economic and industrial, education and youth besides information, security, municipalities and public utilities.

The call to imbibe the principle of ‘Shura’ (consultation) was given at the second session of the Council’s meeting on the fourth legislative chapter, the draft of which has been sent by the committee formed to reply to the inaugural speech delivered by Dr Shaikh Sultan. The session was held at the Council’s premises in the Government House.

The draft reply which was read out by the rapporteur of the Committee Khalifa bin Hwaidin, praised the achievements of Dr Shaikh Sultan which had reflected in the well-being of the citizens and the progress of the country. It also appreciated the government’s effort in developing the country and raising it to a position of high esteem.

Friday, October 21, 2005

Nigeriens kept poor by Niger government :: Cafe Hayek

NYT columnist Nicholas Kristof may be locked in TimesSelectDelete prison, but he manages to get this word out through Cafe Hayek. The people of Niger are poor for reasons like this:
local regulations stipulate that companies must give all employees six weeks and two days of paid vacation a year. Not surprisingly, there are almost no employers in Niger.
As Cafe Hayek says, "No amount of aid, mosquito nets, op-eds by Sachs, or serenading of Bono and Paul McCartney will do Nigeriens any good until commerce is allowed to flourish there."
Wayward wallet worth the wait :: Pittsburgh Post-Gazette

Nice story by Moustafa Ayad who writes for the local news desk in Pittsburgh, Pennsylvania.

The U.S., a nation of immigrants.
Sea of petro-dollars looking for a home :: Reuters

apart from buying real estate and telecom assets, the Gulf's petrodollars are still chasing few assets in the Arab world and this makes it hard to attract new investment.

"There is a lack of depth in the region's financial markets. Investors have very few stocks to choose from," said Steve Brice, senior Middle East economist at Standard Chartered bank in Dubai. "The debt markets are also underdeveloped... The Middle East region ranks pretty poorly in terms of business environment."

EFG-Hermes' Genena agreed, but saw the silver lining. "This imbalance of supply and demand could trigger investment and stimulate development in equity markets. It is not negative all the time," he said.
Egypt's bourse is one of the most active outside the Gulf. A new foreign exchange interbank market launched in 2004 also made it easier for offshore money to come in and out of the country.

But analysts say more direct investment in the Arab world from the Gulf and elsewhere will depend on faster privatisation schemes and more initial public offerings on stock markets. "There is plenty of cash from the Gulf to be invested in the Arab world," said Gregory Kronsten, emerging analyst at WestLB in London. "But the question is what to do with it."
How can I bring you
To the sea of madness
I love you so much
It's gonna bring me sadness
I've never seen you
Through these eyes before
Now I don't believe it
I think I'll take it
Or leave it.
-Neil Young
Arabian Gulf braces for migrating birds :: Salt Lake Tribune

DUBAI, United Arab Emirates - As migrating waterfowl begin winging their way toward the warmth of the Middle East, this Persian Gulf nation - with a coastline and wetlands that host millions of wintering birds - is bracing for the arrival of ducks and geese carrying the dreaded bird flu virus.

''We can't sleep, I'm telling you,'' Majid Al Mansouri, who heads the country's bird flu campaign, said Thursday.
. . .
The Emirates government has enlisted a special weapon: the legions of bird watchers on the lookout for the 300 species and 2 million migrating birds that spend time in the region.

''We're keeping an eye on the birds coming in so we can report on any that are sick and dying,'' said Peter Hellyer, a bird enthusiast with the Emirates Bird Records Committee.

Government inspectors have fanned out to check poultry farms, halt sale of live chickens and force people who own a few chickens or ducks to slaughter and eat them now or hand them over for destruction.
. . .
In the Emirates, there is already cause for concern. Earlier this week, five rare Socotra Cormorants were found dead on the coast of the northern Ras al-Khaimah emirate. And Thursday the corpse of a honey buzzard turned up in Abu Dhabi. All appeared to have died of natural causes, Al Mansouri and Hellyer said.
. . .
Al Mansouri's Environmental Agency of Abu Dhabi has identified about a dozen potential hotspots in the Emirates where people, migratory birds and domestic birds, such as chickens, live in close contact.
Refinery bid by Abu Dhabi :: Taiwan News Online

The investment would be Abu Dhabi's first in Asia's sixth- largest economy and help Taiwan secure additional crude oil supplies. The island's oil imports climbed 13 percent last year to 369 million barrels, 3.8 percent of that from the U.A.E. The bid is a test of Taiwan's determination to privatize Chinese Petroleum, whose union argues that selling a stake to the emirate would be illegal.

The Taiwan government, which owns 100 percent of Chinese Petroleum, plans to reduce its stake to less than 50 percent by auctioning shares, according to the Council for Economic Planning and Development, Taiwan's top economic planner. There's no timetable for the sales, according to the council. Taiwan law on privatizations states the government "should" invite public bids from potential investors.

The refiner's union opposes the government plan on the grounds the island needs a state-run oil company to stabilize fuel prices and guard energy supply, and because of concern over employees' job security, said Chuang Chueh-an, chairman of the Taiwan Petroleum Workers' Union. "From a legal perspective, it's impossible" to sell a stake to Abu Dhabi without holding an auction, Chuang, said in a telephone interview yesterday.

Thursday, October 20, 2005

Insiders' money flees Iran :: discarded lies

How much of this Geostrategy-direct report is true? Dunno.


National female labour: Participation and policy implications :: Khaleej Times

Today's Khaleej Times includes an extensive article on UAE females in the labor force. The article is based upon a new study from the National Bank of Dubai. NBD appears to have had good access to data.

Read the whole thing.

Some extracts from the KT article:

According to a recent study by the National Bank of Dubai, the UAE's national labour force has been growing at an annual average of five per cent over the past decade and it is more likely to continue growing at the same pace over the medium-term. This is justified by the fact that more than 40 per cent of the local population is still below the age of 15 in 2003, and the percentage reaches almost 45 per cent for national females.
. . .
In 1995, the UAE's population was estimated at 2.4 million, of which 24.4 per cent were nationals. The high growth rates of foreign labour inflows into the country have reduced that percentage to 19.5 per cent in 2003.

Due to the unique nature of UAE's labour policies, two-thirds of the population were males in 1995 and increased slightly to 68 per cent in 2003.

For the national segment of the population, the split between the two sexes is almost 50:50 over the last decade. At the labour force level, these percentages change dramatically. For the UAE, women constituted 11.7 per cent of the country's labour force in 1995 and rose to 14.7 per cent in 2003. For nationals, the share of female labour increased from 13 per cent to 25 per cent over the same period.
. . .
Females formed only 15.2 per cent of the country's workforce in 2004. At the emirate level, there was remarkable difference of females presence in local labour markets.

While female labour constituted only 10.5 per cent in Abu Dhabi, it reached 29.5 per cent in Ajman and around 17 per cent in both Dubai and Sharjah. However, 36.1 per cent of the 401,000 female employees in the UAE were absorbed by Dubai's labour market. The shares of others stood at 27.6 per cent for Abu Dhabi, 16.2 per cent for Sharjah, and 10.9 per cent for Ajman.

National females represented 14.2 per cent of the total female employment in 2004. However, their presence in the country's total female workforce showed remarkable disparity among various emirates. While national females occupied 27.3 per cent of the total employed females in Fujairah, this percentage dropped to 4.5 per cent in Ajman. Emirates with high national presence among female workers include Abu Dhabi (23.4 per cent) and Ras Al Khaimah (21.1 per cent).
. . .
The female adult illiteracy rate in UAE during 2001-04 was 19.3 per cent (compared with 24.4 per cent for males) and the female youth illiteracy rate is five per cent (11.8 per cent for males). In terms of qualifications, the number of national female graduates from higher education institutions is almost double the number of male graduates.

National females constituted 71.2 per cent of national higher education graduates in the academic year 2002-03 and 68.6 per cent in 2003-04. Due to limited opportunities after secondary education (where other choices for males could be the armed forces, the police, studying abroad, etc.), females consider a university degree as the best option to enter the job market.

UPDATE. USA Today reports:
As women march forward, more boys seem to be falling by the wayside, McCorkell says. Not only do national statistics forecast a continued decline in the percentage of males on college campuses, but the drops are seen in all races, income groups and fields of study, says policy analyst Thomas Mortenson, publisher of the influential Postsecondary Education Opportunity newsletter in Oskaloosa, Iowa. Since 1995, he has been tracking — and sounding the alarm about — the dwindling presence of men in colleges.
. . .
But even as evidence of a problem — a crisis, some say — mounts, "there's a complacency about this topic," McCorkell says.

There has been no outcry, for example, on the scale of a highly publicized 1992 report by the American Association of University Women, How Schools Short-Change Girls, which compiled reams of research on gender inequities.
. . .
meaningful change must take place well before the college years, says Gurian, who acknowledges a personal interest in the subject: He has two daughters. "We all know a boy that's struggling," he says. "If we create a generation of men who aren't getting an education, that's bad for women."
Iran 'slaps ban on South Korean imports' :: Gulf News

Iran appears to have imposed a ban on South Korean imports in retaliation for Seoul backing a UN nuclear agency resolution.

Tehran said last month it could use trade to punish countries that voted for an International Atomic Energy Agency (IAEA) resolution that would send Tehran's nuclear programmes to the UN Security Council for possible sanctions.
. . .
Iran is usually one of the top five oil suppliers to South Korea, which is the world's fourth biggest crude buyer.
. . .
South Korean exports to Iran were worth a staggering $2.1 billion last year, according to data released in Tehran from Kotra.
I wonder if there's any connection between Iran's sanctions on South Korea all these stories about warm relations between the UAE and South Korea here, here, here, here, here, here, here, here, and here.


Running on Empty :: The Honolulu Advertiser
Oh those wascally unintended consequences


Several tow truck companies said yesterday the number of "out-of-fuel" roadside service calls have doubled — or more — since Hawai'i's first-in-the-nation gas cap law took effect on Sept. 1.

It's an unintended consequence of the state setting gas prices each week and announcing the new rate five days before it takes effect. Last Wednesday, the state announced that wholesale gas prices would drop 44 cents on Monday, encouraging drivers to run on fumes until the new price kicked in.

One driver clogged up rush-hour traffic Monday night on H-2's Ka Uka Boulevard off-ramp while trying to get to the pumps at the Waipio Costco, according to Oscar Vera, the owner of Pacific Towing.

This is also amusing.

Oil producers increasing stake in refining :: China Post

The Persian Gulf emirate's International Petroleum Investment Co., the second-largest shareholder in Vienna-based oil refiner OMV AG, is seeking as much as a US$5 billion stake in Taiwan's Chinese Petroleum Corp. and pressing for OMV to make acquisitions in Greece and Turkey, Mohammed Al Khaily, the company's managing director, said in an interview.

The Organization of Petroleum Exporting Countries, including Abu Dhabi and the rest of the United Arab Emirates, is considering plans to build at least 10 new refineries, seeking to relieve strains on existing plants to meet fuel demand. U.S. Federal Reserve Chairman Alan Greenspan yesterday said world refinery capacity is "worrisome."
. . .
The OPEC refineries, if built, would increase global processing capacity by 2.4 million barrels a day, or 2.8 percent, by 2011. World crude oil prices have doubled in the last two years.
. . .
oil executives and OPEC officials said a lack of refining investment is keeping prices high. U.S. gasoline prices at the pump in the first three weeks of September reached a record US$3 a gallon, on average.

IPIC's portfolio of shareholdings, worth as much as US$8 billion, include 9.5 percent of Compania Espanola de Petroleos SA, Spain's second biggest oil company, a stake worth 1.12 billion euros (US$1.33 billion) on Oct. 18. The emirate company's 18 percent stake in OMV, Central Europe's biggest oil company, was worth 2.3 billion euros on Oct. 18.

"This is a good time to be in the refinery business as margins are high and will remain high for the next three to four years," Khaily, 39, said in Abu Dhabi, the largest member of the United Arab Emirates federation, on Oct. 17.

No new refineries have been built in the U.S. in 29 years, the world's largest market for motor fuels, while the expansion of existing facilities there has failed to keep pace with rising demand. Europe's last new refinery was in 1989.
See also this Seoul Times interview with Suhhail Faris Al Mazroui chairman of Aabar Petroleum Investment Company.

Here are some questions to ponder (no, I don't have the answers.):

1. If others are not investing in refinery expansion the question is why not? Do these reasons not also apply to oil producers?

2. Investing in oil refining will tie the fortunes of the OPEC economies even further to the oil sector. It is often said that the economies of the OPEC producers are not sufficiently diversified. Is that a legitimate concern?


Wednesday, October 19, 2005

The swarm - Glenn Reynolds -
A one man swarm

October 15 - Finishes final chapter of his new book

October 17 - Takes afternoon off to take pictures, stokes the fires of the Porkbusters.

October 18 - WSJ op-ed on the Miers nomination for Supreme Court

October 19 - Techcentral column about eBay, Glenn article on blogger swarms
Volcker asks U.S., allies to link U.N. budget to reform - The Washington Times

Former Federal Reserve Chairman Paul A. Volcker told a Senate Foreign Relations Committee hearing that he opposed a unilateral U.S. withholding of U.N. dues, but that a "de facto alliance" of nations demanding reform could cut through the world body's "culture of inaction." The message, he said, should be: "Look, if the organization isn't ready to reform itself, that has budgetary implications."
. . .
Mr. Volcker's investigators have faulted the design of the oil-for-food program, the way contractors were hired to run it, the absence of clear financial and managerial controls during its seven-year history, and conflicts of interest and outright corruption by senior U.N. officials charged with administering the program. "As things stand, the U.N. has simply lost the credibility and the confidence in its administrative capacities necessary for it to meet large challenges that seem sure to arise in the future," Mr. Volcker said.
. . .
Mr. Volcker said his investigators estimate that Iraq earned about $12.8 billion in illicit payments under the oil-for-food program: $10.2 billion in smuggled oil sales to Jordan, Turkey and Syria, and $2.6 billion from bribes, kickbacks and other related scams. The overall figure is about $2.8 billion higher than a widely cited Government Accountability Office estimate given to Congress last year.

Mr. Volcker took issue with those who say the program was still a "success" for the United Nations because it averted a humanitarian crisis in Iraq, preserved international sanctions against Baghdad, and helped prevent Saddam from acquiring nuclear and other weapons of mass destruction.

Mr. Volcker said any achievements had come at a huge cost to the reputation of the United Nations. "Spreading reports of maladministration, ethical lapses and growing corruption reaching even into the U.N. itself have eroded confidence in U.N. competence and have heavily damaged its credibility," Mr. Volcker said.
Takreer to increase refining capacity 60% :: Khaleej Times

The Abu Dhabi Oil Refining Company (Takreer) plans to build an oil refinery in Fujairah with an investment of $4 billion. The refinery, designed to process high-grade petrol, diesel and related products, will have a capacity of 300,000 barrels per day (bpd), a Takreer official confirmed to Khaleej Times yesterday.

'Takreer chose Fujairah for its convenient location and also because it wanted a major refinery far away from Abu Dhabi, primarily as a safety back-up that might eventually even replace the existing refineries in the future,' the official said. Takreer, a sister company of Adnoc, has not yet appointed a project management consultancy (PMC) provider. The company, however, is expected to invite US companies Bechtel, Kellog Brown & Root (KBR), Fluor Corporation and Foster Wheeler among others. . . .
This Seoul Times article does a nice job of outlining the current tightness in oil refining capacity.


The desert shall bloom :: Financial Times
Trading hubs in bud

if the government has its way, the Gulf emirate will soon become a global floriculture logistics hub - potentially threatening Dutch pre-eminence.

At the end of this month the Dubai Flower Centre (DFC) opens its doors and by early next year hopes to be attracting international shippers and wholesalers.

By routing their goods through tax-free Dubai - whether South African proteas, Kenyan green beans, Malaysian bouquet foliage or Sri Lankan orchids - shippers would be able to cut time and money off the chain linking 15 producing nations to Asian and Middle Eastern consumers.
. . .
Where once an east African rose would have travelled north to Amsterdam to be auctioned, packaged and flown on to a Tokyo florist, in theory it will soon be able to arrive faster and fresher by heading directly eastwards. Until operational, however, DFC officials are refusing to estimate potential cost or time savings.
. . .
Ian Strachan of Zurich-based ADI Consulting, the company contracted to manage the DFC, says east Asian flower shippers "want to shorten delivery times from African producers, but can't do that without the ability to sustain the cool chain".
. . .
"I think if the Dubai centre is successful as a handling depot, then it will be a big blow to the Netherlands," [Quint Wilken, managing director in the Netherlands for the Cool Chain Group] said. "If it also becomes an auction house, then that will be a disaster for people here."

The DFC has shelved plans for an auction house in the first phase, but has not ruled it out at a later stage.
. . .
"I expect some exporters will be interested, once they see how Dubai develops as a hub," [Felix Schrandt, chief executive of the Flower Council of Holland] said. "It took the Netherlands half a century to build its horticulture export industry though, so I don't believe that can be copied overnight."
As the article illustrates, the logistics and the market-making sides of trading hubs are mutually reinforcing. Holland of course is a major flower (think tulips) exporter and the flower market grew up around the export hub. There is a long history here. The existence of this well-established market made Amsterdam attractive as a hub for trade in other flowers not grown in Amsterdam, but in far-flung parts of the world. Buyers and sellers are both interested in getting the best price so they come to the market. And a hub where a variety of flowers come together facilitates the logistics of repackaging shipments from farm through to retailers.

What Dubai is trading on is that there are costs of shipping to the hub and then back out to retailers. Savings on these costs raise the possibility that another hub could be economically successful in the long term. Perhaps Dubai can successfully reverse the order of development of Holland's hub. Success, I think, will be judged in terms of whether the Dubai becomes a center not only a point in the cool chain, but also develops into a flower auction center.

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Plan to set up fund to help unpaid workers :: Gulf News

A colleague sent along this link with the comment "how about this for moral hazard"?

The image of the UAE has been tarnished by employers who have failed to pay wages for employees for months at a time. My recommended solution has been to give the employees more leverage by giving them the right to change jobs. Among the virtues of allowing labor mobility is that the incentive to collect remains with the workers.

Dubai wants to preserve the buzz it has developed and is concerned with the problem of employers failing to pay. Dubai's proposed solution is to create a fund to help workers when their employer fails to pay. The downside of such a plan is that it undercuts the incentives of potential employees to choose reputable employers. And it encourages employers to gamble on riskier ventures without fear that this would mean they would have to pay workers more to participate in these ventures - the workers would calculate that if the firm fails they will still get paid for services performed; the firm will calculate that if the venture succeeds it will not have to share its gain with the fund.

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Tuesday, October 18, 2005

Corruption Perceptions Index 2005 :: Transparency International

Best: Iceland (score of 9.7)

Tied at #158 for last place: Bangladesh and Chad (score of 1.7)

Best Arab country: Oman tied with Israel at #28 (score of 6.3)

UAE: #30 (score of 6.2)

USA: #17 (score of 7.6)

Iran: #88 (score of 2.9)

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Cement prices up 7% :: Khaleej Times

Cement. A mundane product. But in the context of the building boom in the UAE it's quite important.

Cement is heavy, hence the recent increase in fuel prices in the country have pushed up the cement producers' cost of transporting the product within the country. Customers tend to understand these price increases.

When increases in price are driven by an increases in demand, customers often complain these price increases are not justified. What they have in mind is that if the cement producers expanded and invested in new plant and equipment it should be possible to produce to satisfy the growth in demand with little or no increase in price. What is omitted from this thinking is that cement producers are aware that the construction is cyclical. They do not want to be left holding a lot of excess capacity when demand recedes. Implicitly builders are demanding that cement producers share in the risk that the boom will go bust.

The article mentions that last year the government placed a price ceiling on cement. The result was a shortage; no surprise there. What is not clear is whether the price ceiling is still in place and these announced increases in price represent an adjustment in the ceiling due to the recent increase in the price of fuel.

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Taxis seized for running illegal inter-emirate service :: Gulf News

People are often surprised that there are UAE nationals who drive taxis.

Several of the emirates have created monopolies for national drivers. For example, the only taxis that can pick up from Sharjah Airport are national drivers. The government sets a flat fare for these drivers. The drivers cannot hire someone in their place.

Today's Gulf News has another example:
Ras Al Khaimah: Police patrols have seized three city taxis for illegally offering passengers trips to other emirates. The seized taxis will be impounded for a week and fines will be imposed on the drivers, a senior police officer at the Ras Al Khaimah Traffic and Licensing Department said yesterday.

He said the taxis were caught on Al Jazera Al Hamara Highway while taking passengers to Dubai during iftar. The drivers were trying to exploit fewer police patrols on the road during that time, he said. The officer said only national drivers from the emirate's Taxi Stand were authorised to take passengers to other emirates.

Taxi drivers from the stand have been complaining against the city taxis and several private cars running illegal services to Dubai, Sharjah, Ajman and Umm Al Quwain for cheaper rates. The Ras Al Khaimah municipality has fixed the fare at Dh20 per passenger at the Taxi Stand. The officer said passengers are attracted to the illegal city taxis and private cars that offer cheaper fares for the same trips.


Monday, October 17, 2005

Emirates Economist :: paradoxic dymunds

Quote: "The Emirates Economist. This place is like the Idiots Guide to the Daily Newspaper or eNotes on today's bizz. Simple and to the point."

Thank you, paradoxic dymunds.
Tanmia calls for employing more nationals in construction sector :: WAM

Quote, emphasis added:
Tanmia today cited a study indicating that UAE nationals are at present under represented in the construction sector. The study recommended that Government intervention is needed to bolster UAE National employment in the construction sector and that such intervention is justified by the large number of opportunities available in desk-bound occupations in the sector.

The recommendations suggest that the following points need to be considered: There is a need to introduce policies to encourage the sector to reduce working hours, however this should be done in consultation with the sector and such measures should not interfere unfairly with business operations.

Secondly, the employability of UAE Nationals, particularly new entrants to the labour market, could be increased by the introduction of in-company training schemes to help them gain work experience. Such schemes could be coordinated by Tanmia.

Thirdly, existing policies that allow desk-bound occupations to be filled by expatriates when there is a surplus of qualified UAE National labour should be reviewed.

Finally, existing policies should be supported by legislative measures imposing an employment quota system on desk-bound occupations generally.
. . .
the sector employs nearly 17,000 workers in desk-bound occupations. These occupations include managers, engineers who perform desk-bound jobs, accountants, assistant accountants, secretaries, receptionists, material-recording and transport clerks, public relations clerks, personnel and human resource clerks and other office clerks.

The data revealed that non-Nationals dominate the construction sector. In 2004, employment in the construction sector included approximately 17,000 desk-bound positions, of which 68.5 percent were clerical positions. The surveyed companies reported 5,740 desk-bound positions. UAE Nationals accounted for only 3.2 percent of employment in these occupations and nearly 91 percent of these were males. Within this group, over 74 percent held managerial positions.
. . .
The survey data on salaries and working conditions showed that the salaries offered for desk-bound jobs in the construction sector are low (the average monthly salary for a manager was Dhs. 10,266 and for a general clerk, Dhs 2,653). The average work week was 51.8 hours which is considerably longer than that in other economic sectors where the average work week ranges from 40 to 48 hours. Also 78.6 percent of the surveyed companies reported that they operate a split shift.
Men go forth and multiply, women go forth and add :: Library of Economics and Liberty

Thanks to Cafe Hayek for the pointer to this 2002 paper "Why Economists Should Study Biology" by Don Cox of Boston College, and an old grad school chum.

Sunday, October 16, 2005

Earlier today I posted links to newspaper coverage of the last night's majlis in Dubai on the subject of unemployment amongst UAE nationals. Here's a bit of analysis, set up first with some quotes.

From the Gulf News:
Lieutenant General Dahi said the number of unemployed nationals increased from 8,000 in 1995 to 24,000 in 1999 to 30,000 in 2003, and 35,000 in 2005. He said the number of nationals who enter the job market varies between 1,500 to 2000 unemployed nationals every year.

Emiratisation in the federal government is 54 per cent, and in the local government it is 15 per cent, while the percentage of nationals in the private sector is currently one per cent only.
From the Khaleej Times:
Endorsing the sentiments expressed by the top police official, Khaled Al-Qassim, Deputy Director General for Planning Affairs in Dubai Economic Department, pointed out that the Ministry of Labour was engrossed in aspects other than the unemployment dilemma, such as visas and labour issues, which are within the jurisdiction of other establishments like the naturalisation and residency administration.

He stressed the importance of establishing a ministry for workforce to look after the affairs of the nationals and to set forth strategic plans for the labourers as adopted in the developed countries. Such plans, he noted, determine the number of foreign workers needed in the labour market according to the required specializations. In the light of these statistics, the emigration ministries issue visas for the required number of labourers, he added.
. . .
Dr. Najeeb Abdullah Al-Shamsy, Director General of the economic department in RAK, affirmed that unemployment is an international phenomenon and the developed countries are keen to keep it within its normal limits.

He said that a minimum salary ceiling [floor?] for nationals in the private sector must be determined, as there are more than 5000 jobless nationals in RAS [RAK?], though they are university graduates. This necessitates carrying out various projects in the northern emirates and the distant areas to encompass the large number of graduates, he added.
Actually, a minimum salary for nationals, above what the private sector currently offers, would discourage the private sector from employing nationals. I sense that what Dr. Al-Shamsy could have in mind is that nationals are reluctant to accept the salaries that are currently offered in the private sector, and more would be more likely to accept private sector employment if salaries were higher.

But because this minimum salary would make nationals less attractive to the private sector, this will only increase unemployment amongst nationals. This is where Mr. Al-Qassim's suggestion of limiting the number of foreigners workers in each specialization would come into play. If these limits were sufficiently tight, then the private sector would be willing offer positions to nationals at at least the minimum salary. At the same time, however, firms would reduce total employment. Production would fall and the price of nonimported goods would rise - an undesired effect.

The government should think about policy changes that would bring down the wage demands of unemployed nationals. In particular, it should consider reform of social assistance. At present the amount of social assistance you receive declines as your earned income increases. If the amount assistance was independent of income, then unemployed nationals would accept work at lower salaries.

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October 15: One small step for Iraq

Blog byte of the day from the blog Or Does It Explode?:

Three years ago on October 15, Iraqis went to the polls for a tense election showdown between Saddam Hussein and himself. The razor-thin margin of victory was a mere .01%... under 100%.
. . .
Three years later, October 15 sees another election. This time, thanks to a relative lack of terror attacks, we get to see civil society in action on a national scale. The results of the constitutional referendum are not guaranteed - and so individual Iraqis seem to understand that their vote makes a difference in determining the outcome. And even if the constitution indeed passes, various interests groups will be able to continue to shape its form through parliamentary debate and negotiation.
Emirates in job axe climbdown :: ITP Business


“Given the scale, it is inevitable that there will be some differences in cultural outlook and in attitude. Many of our cabin crew are working in their first overseas employment ever and we appreciate that some may have difficulties in adjusting to a new and working environment,” said an airline spokesperson.

“Emirates prides itself on taking customer feedback seriously. The letters to our in-flight staff were written in order to re-focus and re-engage our crew on key areas which our customers say are important,” the spokesperson added.
I think the "and" in the second sentence quoted is inadvertent.
Phil Miller of Market Power has been on a roll of late. I recommend his recent posts on Canadian medicine (doctors are in short supply), Wal-Mart medicine (innovation in health care delivery), economists in major league baseball (thinking like an economist is valuable).


EMIRATIZATION AND UNEMPLOYMENT amongst UAE nationals was the topic of a Ramadan majlis hosted by Lieutenant General Dahi Khalfan Tamim, Dubai Police chief and chairman of the Juvenile Welfare Association. Gulf News and Khaleej Times covered the event.


Saturday, October 15, 2005

Hawala system and the quake :: Khaleej Times

DUBAI — The sudden demand for relief goods being purchased here by payment in cash for the earthquake victims in Pakistan has created a shortage of dirham in the currency market, causing operational problems for the hawala dealers who transfer money to Pakistan, specially to the remote areas through non-banking channels.

Foreign exchange dealers and remittance houses told Khaleej Times yesterday that due to shortage of dirhams, remitting money through hawala had become not much attractive than transferring funds through official banking channels.

The hawala rate yesterday was Pak Rs16.25 per dirham for remote areas of Pakistan and 16.40 for the cities, not much higher than the rate of Rs16.22 for one dirham if a person is willing to remit the money through official channels.

The UAE Exchange Centre LLC, one of the leading foreign exchange and funds transfer /remittances companies, has set up free remittance facility for Pakistanis sending money by using Express Money Product to Pakistan.

According to Sudhir Kumar Shetty, chief operating officer, global operations and general manager of UAE Exchange said: “We are witnessing a growth of 40 per cent for the last few days in the remittance facility to Pakistan. All transactions can be done through express money transactions to Muslim Commercial banks for easy and fast transactions."


Friday, October 14, 2005

Iranian parliament considers two-tier fuel prices :: Iran Daily

The government fears raising the price of gasoline and diesel for fear of the political unrest it will create. Current prices are absurdly low:
Hadi Haqshenas, a member of the Majlis Plan, Budget and Audit Commission, told ISNA that the government has submitted a bill to the Parliament seeking to withdraw close to three billion dollars from the Foreign Exchange Reserve Fund for gasoline imports, stressing that had officials made macroeconomic decisions without taking political issues into consideration, the country would not have faced such dilemmas today.
The two-tier system being considered
stipulates that gasoline must be sold at international rates once consumption goes beyond a certain level.
It's not clear whether that's an individual's consumption or the country's consumption. If it's the country's that will create interesting incentives for individuals.


Economic Corruption? :: Iran Daily

Iran defines capital flight as "economic corruption."

Perhaps Iran would be in a stronger geo-political position if it figured out that it was shooting itself in the foot with misguided economic policies and government corruption and mismanagement that cause capital flight.

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The Davis-Bacon Act is something off topic for the Emirates, but of interest to students of labor economics and domestic U.S. politics - of which I am one.

Davis-Bacon requires construction projects funded with federal dollars must pay "prevailing wages" regardless of whether the construction firm employees unionized workers or not. Bush suspended the law in the areas affected by hurricane Katrina. Bush Senior had suspended Davis-Bacon indefinitely following Hurricane Andrew, but the Clinton lifted that suspension.

Mickey Kaus of Slate has been having some fun with this topic here, here, and here. Especially nice is the way he has marshalled comments from folks with direct knowledge of the application of Davis-Bacon.

Democrats oppose the suspension. The irony is that effects of the act in New Orleans would be the same as those intended by Davis and Bacon back in 1927 whose motives were racial. The effect of the act is to discourage contractors from employing workers with low skills. In the case of New Orleans, the application of the act would favor out-of-state skilled labor to the detriment of less skilled local labor. Perhaps Democrats simply do not understand this simple economic result as well as Rep. Bacon did.


Thursday, October 13, 2005

Dubai: "Zany" :: LA Times (reg. req.)

In what is becoming a trend, another major US newspaper tells its version of the story of Dubai. Some quotes:

The zany, ambitious sky. There is a vague consensus here that great cities arrange themselves around ambitious architecture, and Dubai is determined to outdo them all. You feel it when you drive down the highway, eyes assaulted by a string of quixotic slogans: "The earth has a new center." "History rising." "Impossible is nothing."
. . .
Today's freewheeling Dubai is a bewildering stew of nationalities, a place where natives make up less than 20% of the population of about a million. It's also a place where politics is seldom spoken of — people are much too busy amassing cash and spending it as flamboyantly as possible.
. . .
On a recent morning, as Dubai simmers in triple-digit heat, a developer named David Richmond lingers on the details of a massive fish tank planned for Dubai Mall.

"It will be the biggest piece of acrylic ever created," he says soberly, pointing out the front panel of glass that will, theoretically, protect shoppers from being walloped by a deluge studded with exotic fish. "It's going to take a year's supply of the world's acrylic to make the one sheet of glass."
. . .
Hotel wizard Sol Kerzner is building his take on the lost city of Atlantis at the top of the fronds. And in the waters just off the man-made coast, the world's most treasured scuba diving sites will be re-created: the Maldives, the Barrier Reef, the Caymans, the Red Sea.

Another of the palm-shaped islands will be flanked by houses rising from the sea on stilts. Seen from overhead, the homes will be positioned to spell out a poem written by the crown prince: "Heed the wisdom of the wise: It takes a man of vision to write on water. Not everyone who rides a horse is a jockey. Great men rise to great challenges."
Hmmm. Did the reporter get all the facts straight? Murky, like the stirred up waters of the Gulf offshore of Dubai. Some of this is new to me. At least one of the projects was floated, but (I thought) had sunk.