Can Booming Dubai Remind America How To Grow Again?

If you despair for America, visit Dubai. If you fear our nation’s best days are behind us, visit Dubai. If you believe American entrepreneurship is being crushed by incompetent bureaucrats, crony capitalists, rabid regulators, and a growing dependent class, visit Dubai. If you worry that Detroit represents our future, that “equality” will triumph over excellence, and that redistributionist democracy has entered a death spiral, visit Dubai.

Visit Dubai to convince yourself that if an isolated, backward-looking culture in one of the most troubled regions of the world can shake off the fetters of stagnation and build a prosperous modern city where 25 years ago there was only desert, then surely America can regain much of what it has lost.

True, the United Arab Emirates, created in 1971, didn’t have to deal with millions of citizens on the dole or face a looming tsunami of soon-to-be retirees queuing up for more. It hadn’t piled up $14 trillion in government debt and trillions more in unfunded liabilities. And Dubai’s enlightened monarch didn’t have to pander to an electorate clamoring for free stuff and demagogues pitting the “have-nots” against the “haves.”

When Dubai began its journey into modernity it had nothing like the resources America has today, save a brief and modest oil windfall and a poorly run aluminum smelter. It had no broad reservoirs of human capital, no history of entrepreneurship or technological prowess, no world class universities, no abundance of natural resources, no rich farmland, and no modern transportation infrastructure. It didn’t even have water. All it had was visionary leadership possessed by an unshakeable will to avoid the sorry fate of its neighbors by adopting an economic system we seem all too willing to abandon: capitalism.

The recipe for success is not complex: rule of law, free trade, low taxes, business-friendly regulations, free movement of people and capital, no tolerance for corruption, physical safety, and security of property. That’s it. By creating an environment of economic freedom, complemented by selective investment in infrastructure – a magnificent port facility in Dubai’s case – capital and talent poured in from every corner of the world.

I had the pleasure of interviewing two participants in Dubai’s rise to prominence this week for RealClear Radio Hour—a finance professional whose career has crossed paths with Dubai’s best and brightest and an engineer turned entrepreneur who launched a successful warehouse logistics business. The former came to Dubai as a young Palestinian refugee, the latter a Lebanese immigrant. Their personal stories dovetail almost perfectly, tracing the arc of Dubai’s growth from a barren patch of sand to one of the world’s most spectacular skylines. (Listen live Saturday at 10am ET here or get the podcast Monday here.)

Critics argue that while Dubai enjoys more economic freedom than the U.S., its citizens don’t enjoy our political freedoms. This is true, although it hasn’t stopped millions of immigrants from all social strata from flocking there. The unskilled and the poor aren’t showered with benefits. Instead of paying a significant portion of their income in taxes to support transfer payments to the poor, middle class Dubai families hire them—directly as cooks, maids, and drivers and indirectly by paying for the services that are part of Dubai’s productive economy. And anyone, at any time, can start a business far more easily than they can just about anywhere else.

Examples are everywhere. I went into a barber shop and got a trim from a young Sri Lankan immigrant who told me, in perfect English, how he came to Dubai 12 years ago penniless and now owns four barbershops. “Life is so much easier here,” he said. To open a barber shop, all he had to do was pick up a pair of clippers. He was able to marry, start a family, and amass significant personal savings, thanks to the fact that he pays no personal or corporate income taxes. As for the lack of Western style democracy, he is unconcerned. In a region where political disagreements often lead to violence, it seems a small price to pay for the stability, safety, and economic freedom offered by this modern oasis of commerce.

We could learn much from Dubai—or more accurately, re-learn the kind of economic freedoms that enabled hordes of hard working immigrants to turn a vast wilderness into the greatest nation on Earth.