Wednesday, May 31, 2006

efil ruoy ecifircas t'noD

Zimbabwean's load lightened :: BBC

Zimbabwe is introducing a bank note worth 100,000 Zimbabwe dollars, to help consumers as inflation exceeds 1,000%.
The note will be worth about $1 at the official exchange rate, but only $0.30 on the informal market.

The 50,000 Zimbabwe dollar bill, introduced only four months ago, is not enough to buy a loaf of bread.
. . .
The issuing of bearer cheques began with a note worth 10,000 Zimbabwe dollars, to reduce the need to carry large bundles of paper money.
. . .
Zimbabwe is suffering from shortages of food, fuel and foreign currency. In April, inflation passed 1,000% per annum for the first time.

Via Greg Mankiw's Blog.

Living Abroad Get a Nasty Tax Surprise :: NYT

Several nasty tax surprises: higher marginal rates, and taxes on benefits such as employer-paid children's tuition. People respond to incentives. Fewer Americans will be working in the UAE in coming years, and those that do will be more likely to be living alone and leaving the family back home.

That's one way to reduce the influence of American culture in other parts of the world.

No comment

Quote: "Dubai could be an ideal location for a clean coal gasification plant, according to Mark Hart, president of Vancouver-based West Hawk Development Corp."

UAE must curb hot money flows into stocks: Official :: Reuters

UAE banks lent just under the equivalent of 150 per cent of the country's gross domestic product to investors looking to participate in two IPOs in March. Both were heavily oversubscribed.

While Saudi authorities tightened lending curbs last year, the United Arab Emirates relaxed its credit rules in March to ease the liquidity crunch created by the two IPOs which analysts blamed for the market slump.

Credit rating agencies are divided over the impact of the stock market slump on the Gulf banking system. Moody's Investors Service warned earlier this month that systemic risks were building in the banking system due to the stock market downturn, an explosion in credit and inflated real estate prices.

In a step forward towards the diversification of its investment portfolio, the Abu Dhabi Retirement Pensions and Benefits Fund (Fund), announced today its decision to invest in local listed shares in the UAE.
. . .
Commenting on this investment initiative, Mubarak Rashed Al Mansouri, the Fund's Director General said: 'This decision was taken in light of the recent broad decline in share prices in the UAE, as the current valuations represent a good entry point for long term investment by the Fund.'

Previously, due to the persistent rise in market valuations in 2004 as well as in 2005, local investments were allocated to founders' shares in Initial Public Offerings (IPO), and private placements that were deemed to be more attractive than listed shares.


Rethinking Marriage After 40 :: Newsweek

Amongst Emirati women there is a spinster problem. A large proportion are not married by age 25. Will they ever marry?

Twenty years ago Newsweek made an ominous claim: in the U.S. "a 40-year-old single woman was "more likely to be 'killed by a terrorist' than to ever marry."

Today Newsweek reports:
Twenty years later, the situation looks far brighter. Those odds-she'll-marry statistics turned out to be too pessimistic: today it appears that about 90 percent of baby-boomer men and women either have married or will marry, a ratio that's well in line with historical averages. And the days when half of all women would marry by 20, as they did in 1960, only look more anachronistic. At least 14 percent of women born between 1955 and 1964 married after the age of 30.
. . .
The research that led to the highly touted marriage predictions began at Harvard and Yale in the mid-1980s. Three researchers—Neil Bennett, David Bloom and Patricia Craig—began exploring why so many women weren't marrying in their 20s, as most Americans traditionally had. Would these women still marry someday, or not at all? To find an answer, they used "life table" techniques, applying data from past age cohorts to predict future behavior—the same method typically used to predict mortality rates. "It's the staple [tool] of demography," says Johns Hopkins sociologist Andrew Cherlin. "They were looking at 40-year-olds and making predictions for 20-year-olds."
. . .
Some demographers immediately doubted the dire odds. Within months Census researchers did their own study and concluded that a 40-year-old single woman really had a 17 to 23 percent probability of eventually marrying, not 2.6 percent. In retrospect, the demographers faced a huge challenge in getting these predictions right. That's because marital behavior was undergoing a profound shift. Before 1980, a woman who hadn't married by 30 probably never would. But times were changing. "[Women] weren't remaining unmarried because marriage was less appealing, but because it was becoming more appealing to wait," says Steven Martin, a University of Maryland sociologist.
. . .
Today a new generation of sociologists continues to tinker with the delayed-marriage puzzle. The latest research—a 2001 study by Princeton sociologists Joshua Goldstein and Catherine Kenney, and a 2004 paper by Maryland's Martin—concludes that roughly 90 percent of baby boomers will eventually marry. In a shift, however, the newer studies conclude that nowadays, a college degree makes a woman more likely to marry, not less. The Princeton paper suggests that for female college graduates born between 1960 and 1964, 97.4 percent will eventually marry.

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Tuesday, May 30, 2006

Economic nonsense

OPEC may override call for production cut :: Business Week:
Chavez played a key role in getting OPEC members to abide by production quotas that have helped reverse prices from roughly US$10 (euro8) a barrel when he took office in 1999, which subsequently quadrupled Venezuela's oil export revenues.
Chavez may well have been key in getting OPEC members to abide by quotas in 1999. Today, however, quotas are irrelevant as crude oil production and refining is running close to 100%. And that is because of the success of the liberalization of markets in India and China due to the defeat of Chavez-like thinking in those countries.

It's disturbing that the Business Week article does not cite the key role of the economic success of India and China in explaining the current high price of crude. Instead, the article cites SG Securities analyst Frederic Lassere in Paris:
Maintaining or boosting output does little to address the factors behind the current run-up, which include a lack of refining capacity, a larger global run on commodities, and geopolitical tensions, Lassere said.
No mention of India and China's surging demand for oil. (And, the run up of what? The lack of refining capacity would not explain a run up of crude prices.)

I wonder what Iran's Gulf neighbors think about this:
Kamal Daneshyar, chairman of the Iranian Parliament's Energy Committee, told Dow Jones Newswires on Monday that Tehran could retaliate for any sanctions by closing the Strait of Hormuz, a major oil shipping route, which he said could drive prices as high as US$250 (euro195) a barrel.

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The Islamic nation is facing a host of daunting challenges :: Khaleej Times:
SHARJAH - The Islamic nation is facing a host of daunting challenges which have drastically affected its present and future, according to Dr Ismail Al Beshri, Chancellor of University of Sharjah (UoS).

"It is natural that education in general and universities in particular stand up to these sensitive challenges," he said at the opening of the 11th edition of the meeting of Executive Council of Islamic Universities Association which opened in Sharjah on Sunday.
. . .
'Further, we need to challenge the intellectual and cultural invasion that our country is facing from all corners," he noted.

I wonder if I'm in one of those corners.
Customer-based racial discrimination

Instance 1. "Maria is convinced the reason she is paid less is because the hotel management prefers white European staff to serve customers. She says it has often led to conflicts with her colleagues and rather than lose her job, she has stopped raising the issue."

Instance 2. "Almost all people interviewed by Gulf News said they had either seen friends and colleagues treated in a racist manner, or experienced it themselves. They also consistently mentioned five hotspots known for preferring a European clientele." (Numerous comments at Secret Dubai.)

Instance 3. "Are houseservants allowed to use the pools, personally I do not feel comfortable with this, if I go to the pool I like to be able to have a conversation and socialise with people I have something in common with." (Via Secret Dubai.)


Economists have ethics?:

Economists are probably also more open to immigration than the typical member of the public because of their ethics -- while economists may be known for assuming self-interested behavior wherever they look, economists in their work tend not to distinguish between us and them. We look instead for policies that at least in principle make everyone better off. Policies that make us better off at the price of making them even worse off are for politicians, not economists.

Immigration makes immigrants much better off. In the normal debate this fact is not considered to be of great importance -- who cares about them? But economists tend not to count some people as worth more than others, especially not if the difference is something so random as where a person was born.

Speaking of self-interested economists, consider this:
What is in my self-interest? Providing arguments and evidence about the truth. People read this blog and buy my books because they find the discussion of economic issues cogent or at least thought-provoking. My self-interest and relentless pursuit of the truth are not conflicting goals; they are two sides of the same coin.

Or maybe it's just in my interest to have you believe that.
Greg Mankiw's Blog: "at times writing this blog feels like being hooked on crack."

Monday, May 29, 2006

VoIP on hold in UAE :: Khaleej Times
Let's not do the du

With the Telecommunications Regulatory Authority (TRA) yesterday ruling out any immediate policy decision on allowing the low-cost Voice over Internet Protocol or VoIP services, Etisalat's move to make yet another headstart over its new rival du appears derailed.
. . .
Etisalat, on an aggressive mode following the entry of UAE's second telecom operator du, has been launching several new products and services in a row to reinforce its leadership. It was hoping to steal a march by grabbing the first opportunity to launch VoIP before du, which is yet to streamline its services.

"Now, both players will get a level-playing field as TRA will take more time to finalise its VoIP policy," one industry analyst said.
. . .
VoIP, which is currently available in certain free zone areas of Dubai, allows the user to make telephone calls using a computer network, over a data network like the Internet.
. . .
Etisalat, which has been the monopoly telecom operator until the entry of du, used to block web sites offering cheap international calls through voice over Internet protocol technology.
As the BBC was just observing:
Perhaps one of the biggest annoyances for the mostly expatriate population in the Emirates is the inaccessibility of internet telephony sites like This is widely seen as economic censorship; the state wanting to ensure continuing large profits through migrant workers making international telephone calls.


Refining capacity :: AP
New refining capacity of at least 6.5 million barrels per day over the next decade could shave two or three dollars from the price of a barrel of crude oil. Americans might see a 5-10 cent reduction in the price of a gallon of gasoline, Rathvon said. But most new refineries are being built outside the United States - mainly due to opposition to refinery construction by local communities near proposed sites.
A simple question: How does the new refining capacity compare with existing capacity? The article does not say. It should if we are to have some idea of how significant an increase in capacity is planned.

Here is what the US Energy Information Agency says about oil refining:
Broadly speaking, refining developed in consuming areas, because it was cheaper to move crude oil than to move product. Furthermore, the proximity to consuming markets made it easier to respond to weather-induced spikes in demand or to gauge seasonal shifts. Thus, while the Mideast is the largest producing region, the bulk of refining takes place in the United States, Europe or Asia.
. . .
U.S. refining capacity, as measured by daily processing capacity of crude oil distillation units alone, has appeared relatively stable in recent years, at about 16 million barrels per day of operable capacity.
. . .
The largest concentration of refining capacity is in North America (in fact, the United States), accounting for about one-quarter of the crude oil distillation capacity worldwide, as shown in the graph, and as discussed more fully below.
. . .
In general, refining has been significantly less profitable than other industry segments during the 1990's.

Gulf states: educational reform's real goals :: Arab Reform Bulletin

Ebtisam Al Kitbi (UAE University) writes:
Among the most important changes in the Gulf is increasing reliance on the English language at the university level, despite the fact that English language instruction in elementary and secondary public schools in the region remains weak. The decision to change the language of instruction in the social sciences and humanities to English, although many students lack the required proficiency, has profound implications for education.

It is difficult for students to engage enthusiastically in the detailed discussion required to understand the sophisticated concepts, theories, and debates in the humanities and social sciences when it is clear to them that their English language skills are not up to the task.
. . .
The increasing reliance on English is an example of the sort of proposed changes in educational systems that serve foreign interests more than they serve the societies of the Gulf. The insistence of foreign powers on a change in the educational philosophy in the Arab Gulf region comes within the context of the control and suppression of university youth so that their world view in the future will be compatible with and serve the interests of those powers. . . . Altering the role of higher education neutralizes university students and prevents them from being an effective force for change.
I'm skeptical that English was made the language of learning in universities so as to control and suppress university students. Or that this format of instruction is imposed or insisted upon by foreigners. Very skeptical.

I do believe, however, that it is appropriate to question whether the language of instruction ought to be English. Part of the answer would have to consider what are the barriers to providing a quality university education in Arabic.

Although students have limited options to pursue university level education in Arabic they do have the choice of different university formats including the American style of university education. Many students opt for this format. Why? And why do employers find graduates from American-style universities attractive? (Given that the American style of university education is thriving in the Gulf also leads me to wonder if the paucity of Arab-language universities is a matter of student/parent preference rather a format that is imposed by providers (let alone imposed by foreign powers).)

I believe that the American-style education is one of many styles that work. I do not claim the American system is superior. However, I do believe that any education system is transformative, that is it changes the person's attitudes, beliefs and world view; it does not merely transfer knowledge or build skills. Cultural DNA is transmitted. I often wonder if the Gulf States are aware that the education systems they allow to operate within their borders are likely to change native culture in unexpected if not undesirable ways.

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Sunday, May 28, 2006

What I'm reading today - May 27, 2006

Saudi Arabia's Mass Weddings Leading to Unhappy Endings :: Asharq Al-Awsat - Maybe. But there's numeracy issues in this report. You report that "thirty-nine percent of couples who tie the knot in mass weddings in Saudi Arabia later divorce" (and you later quote an official as saying it is 39% in the first year of marriage amongst those married in mass weddings in Jeddah last year). But you give no percent for couples who did not marry in mass weddings. So what can we conclude about mass weddings? Later you state that 1,052,000 women of marriagable age are single. But you do not put that number in perspective. For example, as a percentage how does this compare to the amount in recent decades?

Mid-day break for workers during summer indispensable :: S.S. Lootah Contracting Company press release - "The announcement came during S.S. Lootah Contracting HSE policy review meeting held in Dubai last week. Health and safety policy refinement, unconventional operational methods and behavioral based safety management were among the issues discussed during the meeting. 'It is challenging to achieve safety excellence in the construction industry'. Lootah noted. 'We are communicating and implementing HSE principles at all operational levels, but our values that promote respect, care and appreciation for all workers is the key in achieving our goals' he added. . . . The discussion concluded that it is becoming increasingly important to have one official body overseeing health and safety policy making and implementation in the construction industry."

Note that Lootah would like its standards imposed on the rest of the construction industry. It is probable that this means that Lootah is not being compensated by its customers for its higher safety standards. When we blame construction companies for treatment of workers let's remember that it is the customers of the construction companies who are not willing to pay for improved safety. Nor, evidently, are the workers, otherwise a construction company could cut labor costs by exchanging better safety for lower wages. Workers who complain about working in deadly heat are asking to change the terms under which they were hired. Are they willing to take a wage cut in return for not having to work in the hottest hours of the day? Reader, if you object please note that I am also willing to accept the possibility that the construction company is the one that is changing the terms and did not provide workers with full information about working conditions before they were hired.

Getting rid of old cars in Dubai will help the economy? :: Gulf News - Actually, thereare simply not that many old cars on the roads in Dubai. But there are a lot of old trucks. I wonder who owns all those old trucks and why they are still allowed to ply the highways? My guess is that they are the major source of pollution in the vehicle fleet. Besides that, these older trucks are slow and unsafe, contributing to traffic jams and hazardous conditions for others. So, yes, tightening up on the regulation of old cars and trucks would be a net benefit for society.

But reasoning like this is simply a display of economic ignorance on a grand scale: "Ayir N., 36, a manager from India, said preventing very old cars from plying the roads 'is an excellent idea that will push up the economy by allowing more sales of new cars.' . . . Reem Hashim, 29, a flight attendant from Syria, said removing vehicles over 15 years old is a great move. 'It will help decrease the pollution and will refresh the economy by allowing people to buy new cars,' she said." While we at it let's destroy some of the older housing in Dubai to "allow" Ayir and Reem to rent new apartments.

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Canadians fearful of U.S. water grab :: Las Vegas Sun
Next Big Idea for Dubai?
In 1964, a politically well-connected California engineering firm, the Ralph M. Parsons Co., now Parsons Corp., proposed a huge water distribution system that would tie the Great Lakes to Canada's Pacific Coast, with pipelines extending to Texas, Southern California and Southern Nevada. The North American Water and Power Alliance was never built, but it would have connected Canadian water supplies to 33 U.S. states and even Mexico.
. . .
Jim Deacon, a UNLV professor emeritus of environmental studies, says the biggest problem with bringing water from Canada is that there are alternatives that would be far cheaper: "Nothing is impossible, but it just sounds like such an expensive proposal compared to other options that are available. There are a lot of options there that are likely to be more practical, more technologically feasible and cheaper than going to Canada."

The cost of desalting ocean water has dropped below $900 for an acre-foot of water, or about 326,000 gallons, and continues to fall, Deacon says. The cost for pumping water to Las Vegas from Lake Mead is now about $250 an acre-foot. While there are no estimates for the cost of bringing water to Las Vegas from Canada, Deacon expects that would be higher .

Despite the doubters, the specter of water exports is likely to continue to scare our neighbors.
Economics suggests that the water would not be sold at the pumping cost, but at something closer to the next highest-cost alternative source for additional water supplies.

If the neighbors to the North are the ones who selling the water, why should they be scared? The answer is that those that are scared sense that they will not be consulted if and when Canada decides to sell vast quantities of water to the US.

Caution to those in the UAE who might want to apply this idea for importing water, say, from Russia: remember that the water can be turned off at the source.

Friday, May 26, 2006

One labor market for all :: Khaleej Times

I am pleased to see that the kinds of changes to UAE labor law that I have advocated are getting a public airing by a Ministry of Labour official. The Khaleej Times report suggests to me that the benefits of unifying the government rules for local and foreign labor are well understood.

Humaid al Dimas, Assistant Secretary at the ministry:
“There should not be two types of labour markets; one for nationals that is governed by certain terms and attitudes, and another for expatriates. Countries should unify all terms and merge the two types into one labour market that is open for all, and its terms are complied with and accepted by both nationals and expatriates. Such equality will help safeguard the welfare of all — nationals, expatriates, and employers, and subsequently a healthy labour market will be open for all,” he argued.

“Usually, sponsors prefer the foreign labour force since they cannot switch jobs without their consent and accordingly employers can dictate their conditions, work environment, and contract terms on them without having any fear that those workers may leave,” he said.
The Khaleej Times report continues:
Actually, the ministry noted such an attitude of some employers when has imposed on companies beginning of last January the employment of nationals in PRO profession.
In many cases, the fears of employers that a national can turn down the job at anytime were expressed. As well, in some cases those fears were proved very right, he observed.

The situation prompted the ministry to tie up the practices of nationals PROs with conditions similar to that stated in the labour law and governs expatriate labour force. The Ministry decided to make these nationals to sign a labour contract and subject them to the labour law terms which states the need to give a three-month notice before leaving the job in case of a limited contract and one-month notice in case of unlimited contract, he said.

“National PROs will not be able to walk off the time they want,” he stressed adding, “The welfare of employers should be maintained and this will help to encouraging them to give jobs to nationals.”

Regarding if the ministry will take a similar move to that of Bahrain, Bin Dimas noted that the status of the Labour market in the UAE differs than that of Bahrain. In the UAE if this was allowed, a big mess will happen in the labour market.
I'd like more clarification on what that "big mess" would be.
It is also significant that it is recognized that some regulations of the government can be abused by employers:
However, the UAE Labour Ministry does not allow and does not accept if rules and laws, which aim to control the relationship between employers and workers, to be misused and played as 'swords on worker’s necks. [missing close quote?]

Recognising such practices of some employers the ministry has introduced a number of decisions during the last few years that all of them are in line with the ministry’s attitude to lift any probable exploitation and provide justice to workers, he said.

The Minister Dr Ali Abdullah Al Kaabi, has introduced a number of decisions that all fall in maintaining and safeguarding the welfare of expatriate workers by taking away some powers, which when were misused, affected the welfare of workers, he said.
See also this article about "absconding workers" for more on the thinking of Humaid al Dimas.


Wednesday, May 24, 2006

Dumbest thing I heard today on National Public Radio

Workers in the US today are worse off than their parents because average wages are not growing as fast anymore.

Hello! I enjoy getting a raise, but I wouldn't trade my level of (real!) income for my dad's back in his day.

Sunday, May 21, 2006

Besix workers turn violent, beat up their colleagues :: Khaleej Times

Rashid Bakheet, Member of the Permanent Committee of Labour Affairs, told your favourite No. 1 newspaper, Khaleej Times, yesterday that the committee checked all the documents of the company and visited the labour camp. The company is paying on time and the accommodation is good. The committee is satisfied with the company and it is a well- run company,” he said. “The workers’ demand of an increase in their salary to Dh1,000 and provision of Dh300 for food allowance is not an acceptable demand. They should abide by the labour contract they signed,” he added.
An easy solution for the firm would be to call in replacement workers. The trouble is the UAE labor rules do not allow firms to go onto the local market to hire workers - all ex pat workers in the UAE (over 98% of the private sector workforce) are essentially locked into employment with the employer - that is, they can't change jobs readily.

I've been arguing for a relaxation of the rules that limit or make it costly for firms to hire workers on the local market. I have in mind giving workers greater freedom to change jobs.

It's not what I had in mind, but the recent proposed plan for Worker Cities, where there would be large labor renting companies, would also make it easier for a firm to swap out its workers if it wished. It's not immediately obvious that workers such as those striking at Besix would be better off under the Worker Cities plan.

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Saturday, May 20, 2006


The Emirates Economist will be inactive for the next several days. Please pay a visit to the fine local and regional bloggers over in my blog roll.

UPDATE: Inactive except when I'm at a wireless hotspot at Heathrow........
Worker City :: Gulf News

Read the whole thing.

The UAE government's proposal is to centralize the labor recruitment process. The concept deserves a careful analysis by The Emirates Economist. But today is not that day.

Another thing to ponder is the meaning of this:
"The issue for us is to communicate to the ILO that we have temporary workers, not immigrant labour."

- Labour Minister Dr Ali Bin Abdullah Al Ka'abi
Again, my thoughts on this will have to come at a later time.

UPDATE: Ministry seeks Dh120m to beef up labour inspections

Thursday, May 18, 2006

Greg Mankiw unleashed

Greg Mankiw - formerly chair of Bush's Council of Economic Advisors - is providing up lots of fresh and simple posts. At the end of the day, economics isn't so complicated and it does have a lot to say. A sampler of recent posts:

> The Morality of the Global Economy. Where Mankiw proves he still holds the early work of Paul Krugman in high regard. Also makes me wonder what Mankiw would have to say about the demands the US is making regarding labor rights in its trade talks with the UAE.

> The Internet and its effect on the hothouse advantage of elite universities. The analysis raises the question: Does the internet make it easier to attract faculty to new universities in remote locations. Like here in the UAE? What would the development of higher education in the GCC look like today if not for the internet? It's made it easier to get an American education without going to the US, and that's a good thing. I wonder if it also made countries less anxious about the human-to-human disintermediation effects of 9/11. And is that a good thing?

> Gas prices and funkiness in the rental car market. We saw the same thing in the rental market here in the UAE when gas prices were allowed to rise by 33% last year. It ain't funky, it's basic economics.

> Economics. It is a science. This post drew more than the usual number of comments.

> The French. What more can we say? Is hypocrite a French word? It ought to be.
Oswald and the past and future of American Liberalism :: Commentary Magazine

It is one of the ironies of the era that many young people who in 1963 reacted with profound grief to Kennedy’s death would, just a few years later, come to champion a version of the left-wing doctrines that had motivated his assassin.

-James Piereson
Don't forget who really leads Iran :: Middle East Times

Ayatollah Ali Khamenei, who has the final say on all matters of state, ruled that "the top clergy's opinion should be respected and this issue be reconsidered", government spokesman Gholam Hossein Elham told reporters.

"The president said he would act as the supreme leader said," Elham added.


Wednesday, May 17, 2006

UAE ponders currency revaluation :: Middle East Times

Proponents of such a move say that currency revaluation would be sensible, especially at a time when officials are preoccupied with inflation and the means to curb it. They argue that if the Emirati dirham were to be appreciated against the dollar, imports would become cheaper and exports, primarily oil, would become more expensive.

"In the context of the current economic conditions in the region and the weak long term outlook of the dollar, it makes sense for many of these countries to revalue their currencies against the dollar," the Khaleej Times daily quoted the treasury head of a foreign bank in Dubai as saying.

"Something between a two to five percent revaluation would be appropriate especially now when there are strong inflows on both the current and capital accounts," agrees Hani Genena, a Cairo-based economist with the brokerage firm EFG-Hermes.


Quote of the day

From Agoraphilia (the numbers are U.S.):
Even looking at the poorest fifth of the population, the fraction of income required to buy gasoline is still lower than it was in the early '80s. . . . How is it possible that the same qualitative pattern holds for both rich and poor, given the rising disparity in income? . . . The gap has grown because the rich have gotten a lot richer, while the poor have gotten a little richer.
I blame George Bush.

I just wonder what the Emirates will be like when gas prices exceed historic highs. It's hard to imagine a more rapid pace of construction. Maybe at a new high in gas prices more of that oil cash will flow to better government schools. There's room for improvement there.

It would be even more interesting for the money to be turned back to Emiratis on a per capita basis, no strings attached. Would families elect to spend the money on better education? Better housing? Invest it? Economists would like to see.

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Tuesday, May 16, 2006

Central Bank urged to curb offer of easy personal loans :: Gulf News
The Central Bank should curb the phenomenon of easy personal loans offered by banks in the emirate, the National Consultative Council said yesterday.
The Central Bank will be like the man pushing on a string until the Rulers' Courts stop paying off the bad debts nationals have with banks. The National Consultative Council might want to ask that that practice halt. Otherwise banks have every incentive to loan to a national regardless of his or her credit worthiness.

Speaking of credit worthiness, that's pretty difficult to check - there are no credit bureaus in the UAE where borrowers credit histories are kept. There's not been a demand for a credit bureau and there won't be as long as the personal debts of nationals, or certain nationals, are always taken care of by someone. If you want to curb spendthrift borrowing you have to shift the obligation to repay onto - novel idea coming - the borrower and - novel idea coming - leave it up to the lender to collect from the borrower and from someone else. Otherwise the bank and the borrower have no reason to care.

The National Consultative Council
also suggested the Central Bank should hold a bank responsible for a default because of bad assessment when offering the loan, and the transfer of a person's salary to banks to repay a loan should not be made mandatory.

They also called for a new regulation to control personal loans by fixing a ceiling for the interest rate charged for transactions between banks, and cancelling the provision of a cheque as a guarantee in offering a loan.

According to Abu Dhabi Police General Headquarters, 1,748 UAE nationals were reported defaulters from 1999 to 2004 with a total Dh2.727 billion in credits. Regarding bounced cheques, the council was told 35,418 cases involving Dh1.14 billion, had been registered with Abu Dhabi Police between 2002 to 2004.
But an interest ceiling on loans only encourages borrowers to borrow more. Is that what you want?

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Doing the labor limbo in Dubai - the long national nightmare continues
The labourers were working for a UAE national who runs a construction company. They were dismissed in 2004.
. . . .
The workers, left penniless, unemployed and without their passports, are from India and Bangladesh.

"The sponsor did not pay any of the labourers' earnings, end-of-service benefits, return tickets, compensation for unlawful dismissals and many other dues," the labourers' legal consultant, Karunagappaly Shamsudeen of Al Kabban Advocates and Legal Consultants, told Gulf News yesterday.

"He left the claimants penniless, homeless and unemployed and he is still retaining their passports without any legal grounds," he added.


Quote of the day

I was surprised, I said during our interview, that someone whose entire life constituted a triumph over adversity would join the campaign to insure against précarité. . . . Royal countered my observation with a familiar refrain: "The problem is that everybody isn't subject to insecurity. Do you see businessmen being fired for incompetence? The young see politicians, who also have a stable and secure job, being civil servants, lecturing others on insecurity. So the young graduate will say, 'In the name of what am I going to sign an insecure contract?' "

Then the conversation took an odd turn. Royal asked me, with the air of someone pulling out a trump card, "Are you in an insecure situation?" Actually, I explained, as a contract writer for this magazine, I have little security.

Royal wasn't going to be put off the scent that easily. "Yes, but how many years does your contract last?"

"I sign a new one every year."

Now she was frankly incredulous. "You could be fired every year?" For all her own experience, Royal apparently viewed précarité as a kind of socioeconomic stigma rather than the price you might choose to pay for freedom.

- James Traub, writing in NYT Magazine

Thanks to Dynamist for the link to Traub in her post, The French Disease; read the whole thing.

Some firms sell job security voluntarily, because that's what workers want. I don't buy it. Try précarité; you just might find you get what you want. Unless you're really into stultification.

But if you try sometimes
you just might find
You just might find
You get what you need

Monday, May 15, 2006

Facial Profiling :: Farkonomics

Today we resume the irregular farkonomics feature at The Emirates Economist. Our subject, racial profiling.

From yesterday's The Sunday Times of London:

Cameras set racial poser on car crime
Dipesh Gadher, Transport Correspondent

BRITAIN’S most senior policeman Sir Ian Blair is facing a race relations dilemma after the release of figures that reveal almost half the number of people arrested in relation to car crime in London are black.

Blair, the Metropolitan police commissioner, has signed off a report by his force’s traffic unit which shows that black people account for 46% of all arrests generated by new automatic numberplate recognition (ANPR) cameras.

Dear Reader, one of my blogging secrets is that I am regular reader of Fark. Sometimes credited, sometimes not, Fark is often my source for stuff that interests me and shows up on this blog.

Fark works like this. A reader submits a news article for listing in Fark, giving it an amusing headline. Next, moderators at Fark decide whether to accept the submission - to post the link and headline. Once an item is posted anyone can also comment on it. Comments are also moderated. Fark steers me to interesting articles I would often otherwise miss, and it attracts commenters who add value to the media's product. Probably Fark attracts folks that have similar tastes to mine which is why it works for me and might not work for you. But if you are a regular reader of this blog that says something about your tastes.

In the case before us, the media's product is the Times article quoted above. One might expect such an article to attract comments by farkers that are ignorant or racist. Not so. At least under the Fark system comments are witty, ironic, and intelligent - all of which will mean that those ready to be offended will be, but avoiding offense often leads to avoiding the question.

The comments on the Times article certainly add value to the article. Here is a great comment written by Godwin which he opens with a quote from the article:
The report tacitly appears to address concerns among ethnic minority communities who believe they are unfairly targeted by the police through stop and search powers. Black people are up to six times more likely to be stopped than whites.

Let's assume the cameras are truly non-partial. According to the article, 45.6% of crimes caught through the camera system are perpetrated by blacks, while 36% come from white backgrounds. According to the most recent census, 11% of London is black and 71% is white. The relative crime rate between black and white Britons (again, assuming the cameras are impartial) is then given by the ratio of the percentage of crimes perpetrated by blacks times the percentage of whites to the percentage of crimes perpetrated by whites times the percentage of blacks (the math's pretty easy, work it out yourself).

If you plug in these numbers, then black Britons are 9 times more likely to commit a crime than white Britons. Meanwhile, blacks are "up to" only six times more likely to be stopped by police. Therefore, British cops are more likely to pull over a white suspect than a black suspect when the relative crime rates between the two groups are normlized out. QED

The flaw in this analysis is that the cameras are concentrated in Southwark and Lewisham. If you plug in the numbers for Southwark, blacks appear to be only 5 times more likely to commit a crime. If you plug in the numbers for Lewisham, blacks appear to be only 4 times more likely. Therefore the rate of blacks being stopped by British police is closer to what it should be considering relative crime rates (keeping in mind that the figure was "up to" six times).

That was pretty pointless, but hey, I was curious.
(All formating is Godwin's.)

The Times headline refers to a "racial poser." A poser is a baffling question or problem. I like the word and how it has been used by the Times writer. In the article the writer goes on to talk about feelings that exist, feelings that could be legitimate as long as we remain in a state of bafflement. And fail to present some facts. But there's not much in the way of making sense of those facts.

If analysis like Godwin's was in the article itself, then you'd have some powerful journalism. Sometimes we have to do the analysis for ourselves, as Godwin did. Sometimes we can find the answer at places like Fark, or even at a humble blog. The article is now much more useful. Once Godwin's analysis is out there others may find a flaw in his reasoning, but at least now we are reasoning about what the numbers mean and not expressing how we feel.

Bloggers may often work in their flannels, but that is immaterial. What matters is that the good ones are not merely cutting pasting and ranting. They are taking the mainstream media's product and adding value. You are the beneficiary.

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Dollar slide fuelling UAE inflation :: Reuters - "The US currency’s slide against the euro was a key factor in Kuwait’s decision to revalue its dollar-pegged dinar by 1 percent last week and markets have been speculating that other Gulf Arab central banks would soon follow suit. . . . The Saudi and Qatari central banks have sought to quash market speculation that they would follow Kuwait’s move. The UAE central bank has declined comment, but most analysts think a dirham revaluation is unlikely in the short-term."

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Saturday, May 13, 2006

WILLisms: "When property is outlawed, only outlaws will have property. . . . When "reducing inequality" becomes the primary goal and function of a government, economic disaster is on its way. Guaranteed. . . . There are economic lessons from history, including contemporary history, that left-wingers-- almost unanimously-- do not seem to grasp. Or even care to attempt to grasp. Tax relief, property rights, GDP growth, and economic freedom mean nothing to these socialists, if the menace of "inequality" persists. America is the greatest nation on the planet because we have been one of the freest countries (politically, culturally, spiritually, economically) on the planet for such a consistent and enduring time."

Not to put too fine a point on it.

Via TigerHawk.
GM doesn't make 'em like this anymore. And we'd likely not know that except for the unintended consequences of the economic boycott of Cuba.

Why would a young American take a job in India? To buy experience of course.

What is it with cats and computers?

Usually these kinds of mistakes send the caller to a sex hotline. I wonder if they get compensated too? Favorite line: "it wasn't clear what the other $10 was for."


Friday, May 12, 2006

A crime against humanity

The UAE government makes it quite difficult for foreign workers to leave one employer in the UAE and seek alternative employment with another. This contractual constraint imposed by the government creates an environment where bad employers can (1) abuse their workers, and (2) spoil the reputation of employers as a whole, damaging the majority of firms who keep their commitments to their workers.

For low-wage workers especially the least-cost method of enforcing the contract you have with your employer is to have the option of leaving the employer and taking up work with another. Saying that workers have access to the courts is a vacuous assertion for a worker whose employer will not give him time off from work, who does not have the resources for something as minor as transport to the court, and who lacks the education to understand his or her rights and make arrangements to have his or her case heard.

My recommendation continues to be: give the workers and firms the right to enter into contracts where the worker can change jobs and the firm can replace workers by hiring them from other firms. If that recommendation is stillborn, then the UAE - if it wants to disarm critics who make the case that the UAE is complicit in the abuse of workers - must devote the resources to ensure employers keep their promises.

What does that mean? I think it means a government official has to be present with low-wage workers and witness whether they get paid, whether they are working beyond agreed upon hours, and whether the working conditions and employer-provided living conditions and transport to work are mutually agreed to. That's a lot of resources devoted to monitoring. It would be enormously costly. Allowing workers to change jobs is the low-cost alternative to costly government enforcement of contracts.

Here's the latest report of an employer failing to honor his or her commitments. It's representative of so many such reports. As usual, it is a clear cut story; failure to pay for several months and workers having no real alternative except to continue to work for that employer:
Sharjah: About 120 contracting labourers stopped work on Thursday in a demand for unpaid salaries, police sources told Gulf News.

The Asian labourers who work for Swaidan and Al Nile Contracting Company in Sharjah took to the streets at about 10am. The workers said that they have not been paid for four months and are owed between Dh400 to Dh600. The only solution for them was to stop work because they need the money to send to their families back home.
. . .
Police said they contacted the manager of the company, Mohammad Sulai-man, asking him to solve the problem immediately. The workers left after an assurance from police that they would be paid. The case will be referred tomorrow to the labour department.
Revealed preference suggests the UAE does not find the host of employer breach-of-contract cases embarrassing. Otherwise the problem would be solved by now. It is revealing, I think, what things some would find embarrassing that others do not.

Questions the article fails to address:

>>Will the firm be fined? Is the fine substantial enough to be salient?

>>Will the UAE make sure that this firm's behavior is made know to the villages where it is likely draw to workers in the future?

>>Will the workers be made whole? Paying them back wages is sufficient to make them whole -- what about the loans they probably had to take at terms that are typically much much worse than you and I can obtain.

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Thursday, May 11, 2006

Econbrowser :: Congressionally mandated gas shortages

One of the common complaints I hear from noneconomists is, why should the price of gasoline go up as soon as there is any news of a disruption in oil flowing from somewhere like Nigeria, when the gasoline in the pipeline and the station's tanks have already been bought and paid for by the company at a lower price?

Why, indeed? The answer is [click here to continue reading]
Professor Hamilton has helpfully provided photographic evidence of the resulting phenomenon.

We can be sure of one thing. There is no shortage of hot air on Capitol Hill.
UAE Central Bank and Euphemism City
Grin and don't bear it

Gulfnews: UAE queries banks' equity exposure :: "The Central Bank said in the letter that the information was intended to prepare for the implementation of Basel II risk management requirements and to allow banks to make better decisions on lending. . . . The UAE Central Bank has asked banks to report the level of their exposure to tumbling stock markets, bankers said yesterday. Institutions have lent heavily to finance investment in stocks, which have lost much of their gains from an oil-driven surge last year. Dubai's bourse is down 53 per cent this year and Abu Dhabi's market is has fallen 35 per cent."

No worries. The banks, I suspect, believe that if they get into difficulty there will be a bailout. As long as they get the upside and someone else takes the downside - the Rulers' Court? - they are being allowed to take risk without consequences.

Sunday, May 07, 2006

MoE move to stop transfer of teachers to non-teaching jobs :: Khaleej Times

Despite a desperate need for female teachers, at least three female science and language teachers have been forced out of their jobs and transferred to non-teaching positions on the orders of MoE undersecretary Dr. Jamal Al Mohiri, and his deputy, Mohammed bin Hindi, it was claimed yesterday.

The teachers, all highly qualified, were instead given secretarial or administrative positions. Ministry sources have told the Khaleej Times that all the demotions were done without valid reasons and against the wishes of the school boards involved.

The article does not provide any motivation for the transfers. If there was no valid reason, what were the invalid reasons? Did the teachers seek the transfers? If so, that signals that the problem may be that teaching is not sufficiently rewarding. The money used to create the nonteaching posts could have been used instead to improve the salaries and work environment of teachers in order to retain good teachers and to attract more devoted teachers into the profession.

UPDATE: Note that teacher retention is also a problem in the US. No doubt many of the reasons the UAE is not holding on to good teachers are the same as in the US. And no doubt part of that reason is men and women different. Women bear children. Thus women choose professions where leaving the profession and returning does not have severe consequences (you can return easily even after several years away - your skills and experience are still valued). Teaching is one of those professions. Women are also most likely to be the partner in marriage who specializes in staying at home. These supply side issues are ones that schools do not control.


Friday, May 05, 2006

Minister for Overseas Indian Affairs: "Most of the unskilled workers come to Dubai through illegal means" :: Khaleej Times

Most? Probably he is including lies by recruiting agents and charges to workers that law says must be paid by the agent/employer:
The minister revealed that the government will make amendments to the country’s Immigration Act in an effort to punish and imprison the unscrupulous recruiting agents. The new law will ensure jail sentences for recruiters who cheat workers.

“Most of the unskilled workers come to Dubai through illegal means. Despite paying huge amounts as high as Rs100,000, to get their visas, they end up earning as low as Dh450 a month,” he said, blaming recruiting agents for promising the workers a better pay and glorious future.

"Most of the workers only manage to earn just half of what they are promised. All Indian embassies and consulates in the region will regularly report to the government about the plight of Indian workers, especially those who have become victims of exploitation by unscrupulous recruiting agents," he said, expressing his satisfaction on the good work by the Indian missions in the UAE.
Both India and the UAE bear responsibility for regulating recruiting agents.

And let's not forget to consider that the recruiting agents are agents - who are the principals? Are they a representative of a UAE-based employer or of the workers that firm is hiring? Both. But the point is that the employer is not absolved of responsibility for the behavior of the agent. It is the responsibility of the UAE to hold those employers for the deeds of their agents.


Emirates Industrial Area :: Trade Arabia

Tameer Holding, one of the Gulf's leading property development firms, has announced the completion of its Dh30 billion ($8.17 billion) Emirates Industrial Area.
The project is based in the Emirate of Umm Al Quwain and is set to accommodate half a million residents.

Considered as one of the most ambitious and unique projects of its kind, the Emirates Industrial Area is a town-sized development that focuses exclusively on industrial interests.

The plan of the area incorporates commercial, industrial and residential activities, featuring labour camps, shops and large-scale storage facilities.
The population of the UAE is less than 5 million. Half a million living in one real estate development -- that's a big development. The population of the Emirate of Umm Al Quwain is 35,157.

Here's some more information about the Emirate of Umm Al Quwain. Including this fact: "The total area of the emirate is equivalent to one per cent of the country's total area."

So, 10 percent of the UAE's population will reside in one percent of its area?

Tuesday, May 02, 2006

Plans to reduce Cairo's overendowment of prayer calls

Mubarak's agenda:

The cacophony of the call to prayer, one of the five required daily of orthodox Sunni Muslims, is about to end, if the government of President Hosni Mubarak succeeds in an ambitious electronic project unveiled Sunday. Declaring the different voices, starting times and volumes an unattractive "randomness," the Ministry of Religious Endowments signed a contract with a state firm to centralize the call to prayer by transmitting the voice of a single muezzin simultaneously to all the city's mosques.
One imam's opposing view:

Ragab Zaqi, a blind imam at a mosque on the east bank of the Nile, is having none of it. He acknowledged, as the government has claimed, that there is no doctrinal prohibition against the simultaneous muezzin idea. But in his view, it runs counter to the spirit of Islam. "Islam urges people to compete to give the call to prayer. This seals the door for many," he said in an interview. ... Zaqi said he suspects the plan foreshadows possible deeper interference in religious affairs, such as handing out identical sermons. "If we are silent on this, more may come," he said.
There's a hidden irony. The ummah, the idea of the single religious community that is also the state, is a highly valued aspect of Islam. Restoration of the ummah, or Caliphate, is a goal of many and some, like the Islamic republics, claim to be pursuing that ideal. Islamic republics, I note, do not foster a competition of views.

My personal preference: Randomness is attractive and spiritually uplifting. The multitude of voices is, too. What is not attractive is the use of amplifiers or other means of force. Nor is it attractive for the government to require that there be one state-provided voice.

Competition of voices: good. Competition of volume: bad.

Want to increase the number of faithful? There's an ongoing debate whether a Catholic (catholic?) or sectarian approach works best. Which is best? One universal voice, or a Babel of voices?
Sharjah billboard:

"Are your employees leaving for better pay?"

Perhaps it's easier to change jobs than I thought.

Monday, May 01, 2006

The voices of UAE citizens find outlet at the Washington Post:
A backlash over the pace and direction of change is simmering among the city-state's citizens, who make up just one in five of its 1 million residents. Some of them ruefully note that speaking Arabic is not enough to survive in a nominally Arab city.

"Some people feel they are losing control of the city itself, of the society," said Mohammed al-Roken, a lawyer and human rights activist who was barred from teaching at a university and banned from writing a column after airing complaints.
. . .
Roken, 43, with thick glasses and a salt-and-pepper beard, shies from labels. His promotion of human rights and civil society might make him a liberal in a Western context. In the Arab world, his defense of tradition and morals mirrors the themes of political Islam. Taken together, he is a gadfly, which has repeatedly landed him in trouble.

Three times in three years, government security services canceled his lectures, usually with a phone call to the organizer. One talk was on the U.S. invasion of Iraq, another on the importance of holding popular elections for the first time in the country.

In 2000, he was banned from writing his column in the Gulf newspaper. In 2002, he was forbidden to teach at the university. Two years later, with 21 others, he submitted an application for a human rights group.

"They just took it and put it in the drawer," he said.

Roken's focus is his society and what it is no longer. The city's gritty beginnings have become part of the legend of the Dubai model. Its museum celebrates records that as recently as 1908 summed up Dubai's wealth in a few typewritten lines, including 4,000 date trees, 1,650 camels, 45 horses, 380 donkeys, 430 cattle and 960 goats. Pearl diving and fishing were mainstays until a generation ago. The Indian rupee served as the currency until 1966.

The itinerant city Roken sees today is unrecognizable, not even Arab. All that remains of the neighborhood of his youth is the mosque. When he goes to a mall, he estimates that 99 percent of the patrons are foreigners, and he rarely hears Arabic. Despite religious prohibitions, drinking is unabashed, and he fears public wine-tasting parties are on the way. The beaches of his youth were either taken over by hotels and their occasionally topless sunbathers or frequented by Westerners whose dress he deems inappropriate. He grimaces at women jogging in the streets, sometimes with their dogs, considered unclean under Islamic law. The celebration of Islamic holidays and the country's national day on Dec. 2 pale before the more commercialized commemoration of Christmas.

To maintain his identity as an Arab and Muslim, he has retreated farther from the city -- first from the central neighborhood of Deira, then a few miles away to an area near the airport, a few more miles away to Merdif and now even farther to Mizhar.

"Internal exile," he said.

Arguments for democratic reform in the Arab world are often offered as an antidote to the region's stagnation and repression. Roken argues for democratic reform, but on different grounds. Only with more say by citizens like him can the process of Dubai's globalization be stanched. His democratic vision is not of a different society, but of a society he once had.

"The brakes are accountability, sharing in the decision-making," he said. "These things will work as brakes on the train's speed. If citizens had a say, I don't think the city would have turned into this."

Government surveys reflect the unease among native Emiratis, even though officials are unsure how to respond. Roken said the society's traditional deference to the leadership of the ruling family remains intact. People prefer retreating to fighting.

"Until now, there is no violence, thank God," he said. He spoke slowly, knitting his brow, and he chose his words carefully. "The people are very accepting, understanding and tolerant. But who knows what will happen if it crosses red lines?"

"I don't think it's too late," he added. "But in five years time? If it's not dealt with?" He shook his head and left the question unanswered.
Make that voice, not voices. Representative? Who knows. These sorts of views don't show up in the English language press here.


The Economies of the Middle East :: Buzzle

Saudi Arabia managed to produce a budget surplus only once since 1982. Per capita income in the kingdom plunged from $26,000 in 1981 to $7000 today. Higher oil prices may well continue throughout 2003, further masking the calamitous state of the region's economies. But this would amount to merely postponing the inevitable.

Arab countries are not integrated into the world economy. It is possibly the only part of the globe, bar Africa, to have entirely missed the trains of globalization and technological progress. Charlene Barshefsky was United States Trade Representative from 1997 to 2001. In a recent column published by the New York Times, she noted that: "Muslim countries in the region trade less with one another than do African countries, and much less than do Asian, Latin American or European countries. This reflects both high trade barriers ... and the deep isolation Iran, Iraq and Libya have brought on themselves through violence and support for terrorist groups ... The Middle East still depends on oil. Today, the United States imports slightly more than $5 billion worth of manufactured goods and farm products from the 22 members of the Arab League, Afghanistan and Iran combined - or about half our value-added imports from Hong Kong alone."

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Annual rate of growth in the expat labor force in the UAE: 17 percent

Gulf News:
The number of expatriate workers in the UAE was 2,738,000 in 2005. The number is a 17 per cent increase over 2004.
That's a big number. It tells you that the Ministry of Labour does not make it difficult for a firm to bring in expat workers.

Demand for labor in the UAE has increased. But the UAE is a small player in the worldwide labor market. So an increase in demand translates into an increase in employment with little if any upward pressure on wages. (Exceptions to the rule would include narrow job categories such as experienced construction managers.)

Translation: The UAE faces a highly elastic, if not perfectly elastic supply of labor from abroad. There is a vast army of workers who would be glad to come to the UAE at terms that represent an improvement over salary and working conditions in their home country.

Thus, if wages and working conditions are to improve in the UAE the laws of economics tell us it will be because wages and working conditions improve in the countries where the UAE recruits labor. This is happening in places like India where economic liberalization has triggered a growing economy. But it is not in other countries. The UAE has other countries to turn to for cheap labor.

Ironically, the Indian miracle has also contributed to the growth in the world demand for oil that has resulted in the increase in the UAE's oil revenues.

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