Tag Archives: Dubai

Value Systems Science to Dubai: You Can’t Skip a Stage

In an effort to restore its credibility in global capital markets, the government of Dubai recently issued a 58-page report detailing its austerity plans as it works its way towards responsible, long-term planning. The report is being touted by the media as “unusually transparent” compared to most reports coming out of the Middle East that are heavily influenced by officials trying to paint rosy images of their centrally-planned economies. In the report, the government acknowledges the cancellation of close to a thousand real estate projects valued at tens of billions of dollars. The lack of demand was sighted as the primary reason for the cancellations. This comes at a time when a possible deal is being worked out on the restructuring of debt for Dubai World, the largest sovereign wealth fund to ever default on payments to its creditors at the onset of the financial crisis.

There is a statement in the report that may not stand out to the average reader, but has significant Memetic implications as to where Dubai is in its cultural emergence. The statement says that the government had completed a major reassessment of the “economic development” element of the Dubai Strategic Plan for 2015 (DSP 2015) which resulted in the cancellation of these projects. When DSP2015 was made public it called for the systemic development of Dubai.  In addition to economic development, it called for social development, modernization of the security apparatus (police), development of the judiciary and public safety, and for excellence in government. The report emphasizes that the government will now be focusing on those other aspects of the plan that were ignored during the boom years. So, why is Dubai emphasizing these aspects of their cultural development now? The answer is simple: In their rush to look like the West, government leaders trampled over this very essential developmental stage called the ORDER value system (vMEME), what is known in Spiral Dynamics as the all-important BLUE stage.

Thirty years ago, Dubai, much like the rest of the Middle East was mostly centered in the TRIBAL-EGOCENTRIC vMEME. Historically, cultures lingered in these value systems for centuries before life conditions propelled them to seek higher levels of complexity. But, the Gulf region of the Middle East was different; enter the role of money.  Immense wealth that appeared suddenly was thought of as the needed catalyst to rapidly develop the culture and in a few short years have it have Memetic complexity that rivaled that of the West. So with a charismatic ruler like , Sheik Mohammad Bin Rashid Al Maktoum, who embodied the HEALTHY expression of the EGOCENTRIC vMEME at the helm, the Emirate embarked on one of the most ambitious development plans in modern human history. Like the rest of the Middle East, having Western corporations and personnel in charge of their huge projects was thought of as cultural emergence; if it looked like the West, it must act like the West.  This false belief made the ruler of Dubai fall into the “build it and they will come” illusion that was further reinforced by opportunistic global firms offering “the higher, the bigger the better” sales pitch that built this desert oasis overnight. With most of the focus being on the real estate sector, little attention was paid to who was buying up Dubai. At one point during the boom, as much as 85% of buyers were speculators with value systems that thrived on the smell of money, short-term EGOCENTRIC vMEME that loved instant gratification with no complexity for long-term thinking. There were no laws similar to those in the US or other advanced countries that limited investor purchases to 25% within a project. These Western designed types of restrictions come from a vMEME that’s heavily entrenched in the ORDER value system, on which the ENTERPRISE value system was built. Leaders of Dubai thought they can skip this stage altogether. After all, having a good Judiciary system doesn’t land you on the cover of Fortune Magazine or get you on 60 Minutes. Anyone who warned of the need for this type of order was quickly dismissed. Absence of order needed to meet the growing needs of this city state wasn’t just in the real estate sector, it was felt at systemic levels and the general rule became that anyone sounding the alarm over anything that came in the way of progress was silenced immediately.

The strategy of avoiding the ORDER vMEME was very short lived and came to a halt when global liquidity dried up and Dubai was left with thousands of unfinished projects and no money to complete them. The most iconic humiliation the Ruler of Dubai suffered was having to change the name the tallest building in the world from Burj Dubai to Burj Khalifah after Sheikh Khalifah the Ruler of Abu Dhabi put up the money to finish the Tower. Many other failures continued to expose the short sightedness of an experiment that put one value system before the other. The thinking that money alone can bring on human emergence was proven wrong. If anything, money showed the pathologies and greed that are inherent in human nature. Europeans who’ve been known to belong to the EGALITARIAN/HUMANITARIAN  value system, descended to their past imperial/colonialist selves very quickly and became the pillagers of wealth. Americans running some of the world largest sovereign funds for Dubai embarked on buying worthless companies that were teetering on bankruptcy and collected enormous fees on both ends of the transactions. This was Disney World for Western business people where they saddled every business entity with enormous debt, filling their pocket with outrageous compensation without any of their activity ever being scrutinized by a proficient ORDER system that understood the nature of what was being done.  When all the dust cleared, the Westerners went home and the government of Dubai was left with hundreds of billions in liabilities. The Ruler soon realized you can only imprison so many executives before the practice becomes a public relations disaster. Not building on a solid foundation of an ORDER vMEME  is an open invitation for people and entities with EXPLOITIVE value systems and a great degree of intelligence to manipulate the absence of complexity of a lower vMEME. Even with enormous wealth at your disposal, YOU CAN’T SKIP A STAGE! A very tough lesson indeed in the science of value systems.

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All the Shoots Are Brown

The newest buzz phrase on Wall Street is “Green Shoots”.  Green shoots here and green shoots there and all one has to do is wait a day and watch them turn brown never to see the light of day again. So, why has there been so many false signs of economic recovery? The short answer is because we’ve exhausted the heck out of our business models. And what models they’ve been. It seems  that in a systemic act of defiance the global economy looked at what a business sustainability models looked like, and went out and did exactly the opposite. This past decade will be remembered as the debt decade during which the Bigger is Better pathology combined with the lack of rules on debt repayment to cause the unprecedented collapse of capitalism in its current form. A bigger and better chrome-plated Hummer to replace your regular Hummer? No Problem. A bigger and better McMansion to replace your regular 5,000 square foot home? No Problem. A bigger credit card with a lower interest rate? No Problem. A bigger mortgage to refinance and buy the gold plated Hummer to replace the chrome one? No problem. You can’t pay for any of it now? NO PROBLEM! Honestly, how did we ever expect to sustain such vicious cycle of debt without any accountability what so ever.

In years past, such conspicuous consumption would have never been possible as the institutions that lend the money held the borrower responsible at one point.   But, this time around there was a completely new lending philosophy created by Wall Street that took from grandma, China and Dubai equally, and because no one was watching, it made outrageous promises on returns and took hefty fees for itself. This new model wasn’t concerned about paying grandma back because in a style 10 times more sophisticated than that of Madoff it used money from China to pay her off and with a straight face called the whole scheme “securitization”.

This went on for years. Meanwhile both consumers and producers got used to receiving “securitized” money without ever having to prove the need for it, which made them all lazy, fat, and complacent. Yes, subservient hosts to a killer parasite that infected almost all who used it.   So why are all the shoots brown? Two reasons:

1.       The green seen by analysts is fuzz growing on dying hosts, and like any parasite once the host is dead, the parasite turns brown the next day.

2.       The brain of this comatose patient who was created out of greed registers occasional electric activity and analysts exploit the heck out of it trying to convince us that he/she will walk again.

What Wall Street and the economists of today don’t understand is that in order for  “Green Shoots” to grow into sustainable plants, you have to take the time to plant and nurture the seeds first and not be the plant thief on the observation deck waiting to cut down the harvest that never came.

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The Memetic Meaning of Dubai’s Collapse

For over 1 ½ years I’ve been warning about the imminent collapse of Dubai’s real estate market and inevitably the bursting of the bubble of its Dubai World Sovereign Wealth Fund; the richest of its kind in the world. Close to ½ Trillion USD worth of real estate projects have been canceled since last fall’s Cityscape exhibit in Dubai. The world has never seen anything as blatantly speculative as this Exhibit in its claims to have the demands to build whole new cities. One’s better judgment is clouded by the impression that in the Middle East, oil money doesn’t follow the same metrics as hard-earned money of yester years…. And who are we, the Western World on steroid to give the Sheikh prudent advice on HOW to bring Western modernity (ORDER – ENTERPRISE value system)) that’s hundreds of years in the making to a primarily tribal place of existence (Heavy TRIBAL-FEUDAL vMEME).

Well, the place is collapsing and the Sheikh’s government is scrambling to find and prosecute the people responsible. Apparently, Western businessmen cannot leave the Emirate permanently if they owe money (Dubai’s own interpretation on Islamic Banking). So Dubai’s airport garage fills up every day with hi end automobiles whose owners show their parking receipt and round trip ticket to the policeman at the gate, and leave with millions in debt never to return.

Here’s where Economics Meets Memetics; below is an analysis I made to the Spiral Dynamics Integral community in a heated debate about Dubai’s transformation in July 2008. There’s some reference to the color-coded value systems that are the hallmark of the Spiral Dynamics theory. Wherer appropriate, the descriptive theme of each value system is summed in one word. For a detailed description of the emerging science of value systems, please refer to earlier posts pertaining to the Spiral Dynamics theory and its use and applications

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July 2008

[SD-Integral] RE: Dubai transformation

Here’s my abbreviated Memetic perspective on Dubai:

Dubai is a rare experiment indeed in that it will force all the Spiral wizards to rethink the traditional evolutionary path of a culture. After all, the very idea of taking a nomadic (BEIGE-PURPLE) culture, put it in a time machine, and have it looking ORANGE in one decade is a mad scientist’s dream come true.

Traditional movement up the spiral took hundreds if not thousands of years, and only along the true and tried road did it pick up complexity. Absent BLUE, western ORANGE has downshifted to RED in Dubai. It is this downshift to RED that’s making it OK to condone slavery-like practices and destroy the environment and be clever enough (ORANGE cover/paint) to call it all by different names.

The lip service that developers and the Dubai government are paying to Green Building practices is a tiny drop of GREEN (EGALITARIAN vMEME)in a sea of RED (FEUDAL vMEME) that only waves a banner to those looking at the surface. The LEED certifications and sustainable design of individual buildings will have no effect on the environment unless “sustainable practices” are imbedded in a sustainable urban design scheme (YELLOW: SYSTEMIC vMEME)) that integrates cutting edge urban western design concepts such as the “New Urbanism”, “Design with Nature”, “Neighborhood Continuity” and many other concepts working in an “Integral Design” fashion to assure sustainability.  Massive solar farms in a massive desert called the “Empty Quarter” will be good example of the “Design with Nature” concept.

As far as the foreign labor issue, the question is not whether Dubai is providing better wages for laborers, it’s clear that it is. The real question is as people from a higher level of complexity who are building this city-state, do we have any responsibility to pass on the essential elements of healthy BLUE (ORDER vMEME)and ORANGE (ENTERPRISE vMEME) that has symbolized western human struggles and triumphs for the last 1,000 years, or continue our exploitation and let them deal with the collapse when the other shoe drops (The rest of the Middle East is watching and waiting, to say “I told you so”)

Many Westerners who do business with Dubai are not privy to any of the social ills that must be addressed because they do business in an ORANGE bubble. Even the article about sustainability by Ghanem Nuseibeh barely touches on the “cultural” aspects of what ails Dubai. It is very clear to me that Dubai’s RED/Orange considers any BLUE a nuisance, and will continue to do so as long as financial opportunities remain insatiable. The collapse of the Dubai real estate market is inevitable, and this will be the wake-up call that ORANGE needs. When the Sheikh orders a builder to “add another 15 stories” to a structure under construction, who do the owners sue when the supports cave in on the inhabitants of the building? With all the expatriates buying over-inflated real estate, who will they sue when the market collapses? Which institutions, in what court system, and which historic legal precedent will be used for them to make their cases? Can they obtain legal judgments against developers, banks, regulators, the sheikh?  Would their legal visa status be rescinded if developments go bankrupt, and if so what happens to their ownership rights?

In brief, this brave experiment is reluctantly allowing BLUE in through the back door, and only when this RED/Orange, through necessity, has to downshift to deal with its own damage control would BLUE truly surface. If its introduced swiftly and prudently it won’t take the rest of the Middle East down with it and we can all point at it and say it’s in a slightly better place than it was before the start of this experiment.  And we’ll all be glad for it as the rest of the Middle East learns what not to do in its movement away from tribal PURPLE/RED.

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