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The quote is actually likely from a member of Dubai Royal Family. An interesting fact here is that the UAE will never become poor. The UAE has saved up over 1

The quote is actually likely from a member of Dubai Royal Family. An interesting fact here is that the UAE will never become poor. The UAE has saved up over 1.3 million USD dollars per citizen[a]. And this is just the government’s savings. Obviously, there’s immense private wealth on top of that as well. Even if with investment returns as low as 4% per year drawn out, that would translate to $52,000 per citizen. This is 52k of money that you could almost call free money. We’re not counting for the fact that at least half these citizens are not going to simply sit at home. They’re going to work, earn, start companies, etc. And the citizenry is very highly educated. And a lot of them actually have STEM degrees too (which correlates with higher earnings). So realistically, the per capita annual income could be in the over $100k per citizen range, even after the oil has run out. [a] The UAE has about 1 million citizens (most of the ~9 million who live in the UAE are not citizens), and the UAE’s sovereign wealth funds have total assets exceeding USD $1.3 trillion: https://en.m.wikipedia.org/wiki/List_of_countries_by_sovereign_wealth_funds https://en.m.wikipedia.org/wiki/List_of_countries_by_soverei...

dalbasal 6y ago
Idk if a monarchy where citizens are a small minority can be thought of this way. It's like saying a company has lots of money saved. Doesn't matter much if the operation aren't profitable. Economic activity ceasing is still what it is. ...in any case, gulf oil will likely be the last well abandoned. It's so cheap to produce that production can continue at very low oil prices. The last half of any adoption curve is long, and people will still consume some oil and gas for several more decades.
ehnto 6y ago
I wouldn't so boldly claim they won't go poor, you trust in good management and no internal misfortune or subterfuge. Though their savings buy them considerable time to figure out an economic path forward, the loss of their profit center will surely affect the weight of their currency and political influence. Oil won't go away of course, once the huge capital investment no longer makes sense it will become less abundant as fewer companies will be extracting and refining it. So they could see profits from oil as a niche resource in a post oil world.
- imtringued 6y ago
  If they are well prepared then they will actually do better after the oil is gone. The resource curse results in countries focusing on a few narrow industries. Resource extraction is easy but it only benefits those who are directly employed by it. Usually governments don't make it easy for other types of businesses to flourish because they can entirely support themselves on resource extraction.
  - frobisher 6y ago
    Indeed. That said, what will they diversify to? I wonder if it will be solar energy generation due to natural abundance. Barring that, it will have to be something like high tech, which itself will be dependent on importing talented labour. That will only happen with low tax rates, with Dubai acting as a hub for transient talent looking to save for a few years, then head off. Meanwhile, given the local Emirati will form a small fraction of the economy, they may effectively act as rent seekers on income and corporate tax from the rest of the economy. Will this be an ideal egalitarian society? Probably not, at least in terms of my values. But those seem like the underlying dynamics, for better or worse. Of course, if diversification isn't competitive relative to the rest of the world, things will go the other way.
    - arjun-menon 6y ago
      > I wonder if it will be solar energy generation due to natural abundance. Yup, it’s happening. Gigawatts of solar power is being constructed. The UAE is getting this solar energy at the cheapest price per watt worldwide as well: https://www.forbes.com/sites/dominicdudley/2020/04/28/abu-dhabi-cheapest-solar-power/?sh=47b22b634924 https://www.forbes.com/sites/dominicdudley/2020/04/28/abu-dh... > will be dependent on importing talented labour This is already happening at a massive scale. > That will only happen with low tax rate This is also already true. The personal income tax rate is 0%. Most types of companies don’t pay any taxes either. The only tax you directly incur is the VAT of 5%. > Will this be an ideal egalitarian society? In the future, it’ll probably transform more and more into a sort of hyper-capitalistic and highly-successful country like Switzerland.
sabalaba 6y ago
It’s not impossible (more like highly likely) for that trust to go the same way of the Nauru Phosphate Royalties Trust. Administrative burden and corruption. Mismanagement. Exponential growth can’t go on forever. It’s interesting that UAE is doing the same thing that Nauru did except on a larger scale with petrochemicals instead of phosphate. https://en.wikipedia.org/wiki/Nauru_Phosphate_Royalties_Trust?wprov=sfti1 https://en.wikipedia.org/wiki/Nauru_Phosphate_Royalties_Trus...
- fakedang 6y ago
  I've worked with the UAE's SWF, and imo, they'll never collapse. Corruption is nonexistent nearly in the investment authorities, since they are highly regulated and treated essentially as defacto Western companies listed in the NYSE or something. If they collapse, we would have far bigger problems by that time, since they're invested heavily into the modern global economy. This is not oil wealth, but actual invested wealth.
  - cik 6y ago
    I came to share exactly this. The UAE is the most forward thinking, of any of the Gulf states. Economic planning literally spans 100 years and multiple scenarios. They're using oil wealth to actively invest in finance, tourism, technology, high-yield agri-tech, and medical research. They also have the most vibrant (by far) tech scene of the Arab world, and are working only to hyper-accelerate that.
    - Thlom 6y ago
      If they are so rich and forward thinking, why do they use slave labor?
      - Nowado 6y ago
        ... why not?
      - wongarsu 6y ago
        Being rich and forward thinking is independent of morals
dcolkitt 6y ago
I mostly agree with this post, but have to point out that the UAE is not a unitary polity. It's a loose confederacy of seven related Sheikdoms, with a wide range of policy and level of development. Almost all of that wealth is concentrated in the sovereign wealth fund of the emirate of Abu Dhabi, because Abu Dhabi has by far the largest oil reserves. Next is Dubai, which has much less accumulated in its sovereign wealth fund, because it's nearly run out of oil. However it's done a lot to diversity its economy into finance, services, and tourism. But as for the other five emirates, the picture is much more bleak. Nor is it like the US, where finances or taxation are co-mingled on the federal level to any serious degree. If California generates a lot of wealth relative to Alabama, you'd expect a lot to be redistributed. But Abu Dhabi will not be sending any of its enormous wealth holdings to Sharjah by any means.
- arjun-menon 6y ago
  You’re partly right, but there are actually a fairly significant amount of lateral transfers to other emirates (through the federal budget, which is mostly funded by Abu Dhabi). Things like the electricity and water system are run federally (by FEWA - the Federal Water & Electricity Authority) in 4 northern-most emirates. Many other benefit systems are also mostly funded by Abu Dhabi, and primarily for the benefit of the citizens of other emirates — one example might being the Sheikh Zayed Housing Programme. Abu Dhabi actually does help the nationals in all the emirates.
  - dcolkitt 6y ago
    Thanks for pointing this out! I wasn't aware of that.
fakedang 6y ago
Rashid bin Saeed al Maktoum actually, his son. And yeah, member of the Dubai royal family.
mariuolo 6y ago
> the UAE will never become poor But their land might become uninhabitable in a few decades.
- WanderPanda 6y ago
  It is already almost uninhabitable and has been for a long time. Nevertheless ~10M people live there. Technology is solving this, either the root cause or the symptoms
  - Red_Leaves_Flyy 6y ago
    Air conditioning the outside is almost assuredly not sustainable.
    - arjun-menon 6y ago
      Not sure what you mean “the outside”. Only indoors are air-conditioned (using electricity). And in the UAE, right now, electricity generation is slowly being switched over solar energy (away from natural gas), which is clean / renewable / sustainable. (https://www.greentechmedia.com/articles/read/worlds-largest-solar-project-will-also-be-worlds-cheapest https://www.greentechmedia.com/articles/read/worlds-largest-...)
      - Red_Leaves_Flyy 6y ago
        It was Qatar that I was thinking of. https://www.washingtonpost.com/graphics/2019/world/climate-environment/climate-change-qatar-air-conditioning-outdoors/ https://www.washingtonpost.com/graphics/2019/world/climate-e...
- jnxx 6y ago
  They do have in fact one neighbor, Iran, in which in some places temperatures rise above 50°C, with high humidity, which is close to uninhabitable. And this is due to climate change, so it is going to get worse. I think it is possible this has ripple effects.
znpy 6y ago
> Even if with investment returns as low as 4% That line of reasoning always make me smile. That's like assuming that once you get a certain threshold of wealth, you can automatically assume you'll be fine forever. And by the way, that "as low as 4%"... Most people throw percentages all around the table, easy like that... Seems funny. Call me stupid, but the idea of a whole country being able to piggyback off all other countries seems unlikely to say the least.
- arjun-menon 6y ago
  Do you realize most 401(k) and IRA accounts in the US are all invested securities (like equities and bonds)? Similarly, most wealthy people invest their money in general? Also, I didn’t pull the 4% out of a hat. It’s actually the “Safe Withdrawal Rate[a]” recommended by Mr. Money Mustache. See his blog posts on it: https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/ https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-nee... Also, see: https://www.mrmoneymustache.com/2018/11/29/how-to-retire-forever-on-a-fixed-chunk-of-money/ https://www.mrmoneymustache.com/2018/11/29/how-to-retire-for... [a] Bogleheads article on Safe withdrawal rates: https://www.bogleheads.org/wiki/Safe_withdrawal_rates https://www.bogleheads.org/wiki/Safe_withdrawal_rates

dalbasal 6y ago

Idk if a monarchy where citizens are a small minority can be thought of this way. It's like saying a company has lots of money saved. Doesn't matter much if the operation aren't profitable. Economic activity ceasing is still what it is. ...in any case, gulf oil will likely be the last well abandoned. It's so cheap to produce that production can continue at very low oil prices. The last half of any adoption curve is long, and people will still consume some oil and gas for several more decades.

ehnto 6y ago

I wouldn't so boldly claim they won't go poor, you trust in good management and no internal misfortune or subterfuge. Though their savings buy them considerable time to figure out an economic path forward, the loss of their profit center will surely affect the weight of their currency and political influence. Oil won't go away of course, once the huge capital investment no longer makes sense it will become less abundant as fewer companies will be extracting and refining it. So they could see profits from oil as a niche resource in a post oil world.

imtringued 6y ago
If they are well prepared then they will actually do better after the oil is gone. The resource curse results in countries focusing on a few narrow industries. Resource extraction is easy but it only benefits those who are directly employed by it. Usually governments don't make it easy for other types of businesses to flourish because they can entirely support themselves on resource extraction.
- frobisher 6y ago
  Indeed. That said, what will they diversify to? I wonder if it will be solar energy generation due to natural abundance. Barring that, it will have to be something like high tech, which itself will be dependent on importing talented labour. That will only happen with low tax rates, with Dubai acting as a hub for transient talent looking to save for a few years, then head off. Meanwhile, given the local Emirati will form a small fraction of the economy, they may effectively act as rent seekers on income and corporate tax from the rest of the economy. Will this be an ideal egalitarian society? Probably not, at least in terms of my values. But those seem like the underlying dynamics, for better or worse. Of course, if diversification isn't competitive relative to the rest of the world, things will go the other way.
  - arjun-menon 6y ago
    > I wonder if it will be solar energy generation due to natural abundance. Yup, it’s happening. Gigawatts of solar power is being constructed. The UAE is getting this solar energy at the cheapest price per watt worldwide as well: https://www.forbes.com/sites/dominicdudley/2020/04/28/abu-dhabi-cheapest-solar-power/?sh=47b22b634924 https://www.forbes.com/sites/dominicdudley/2020/04/28/abu-dh... > will be dependent on importing talented labour This is already happening at a massive scale. > That will only happen with low tax rate This is also already true. The personal income tax rate is 0%. Most types of companies don’t pay any taxes either. The only tax you directly incur is the VAT of 5%. > Will this be an ideal egalitarian society? In the future, it’ll probably transform more and more into a sort of hyper-capitalistic and highly-successful country like Switzerland.

sabalaba 6y ago

It’s not impossible (more like highly likely) for that trust to go the same way of the Nauru Phosphate Royalties Trust. Administrative burden and corruption. Mismanagement. Exponential growth can’t go on forever. It’s interesting that UAE is doing the same thing that Nauru did except on a larger scale with petrochemicals instead of phosphate. https://en.wikipedia.org/wiki/Nauru_Phosphate_Royalties_Trust?wprov=sfti1 https://en.wikipedia.org/wiki/Nauru_Phosphate_Royalties_Trus...

fakedang 6y ago
I've worked with the UAE's SWF, and imo, they'll never collapse. Corruption is nonexistent nearly in the investment authorities, since they are highly regulated and treated essentially as defacto Western companies listed in the NYSE or something. If they collapse, we would have far bigger problems by that time, since they're invested heavily into the modern global economy. This is not oil wealth, but actual invested wealth.
- cik 6y ago
  I came to share exactly this. The UAE is the most forward thinking, of any of the Gulf states. Economic planning literally spans 100 years and multiple scenarios. They're using oil wealth to actively invest in finance, tourism, technology, high-yield agri-tech, and medical research. They also have the most vibrant (by far) tech scene of the Arab world, and are working only to hyper-accelerate that.
  - Thlom 6y ago
    If they are so rich and forward thinking, why do they use slave labor?
    - Nowado 6y ago
      ... why not?
    - wongarsu 6y ago
      Being rich and forward thinking is independent of morals

dcolkitt 6y ago

I mostly agree with this post, but have to point out that the UAE is not a unitary polity. It's a loose confederacy of seven related Sheikdoms, with a wide range of policy and level of development. Almost all of that wealth is concentrated in the sovereign wealth fund of the emirate of Abu Dhabi, because Abu Dhabi has by far the largest oil reserves. Next is Dubai, which has much less accumulated in its sovereign wealth fund, because it's nearly run out of oil. However it's done a lot to diversity its economy into finance, services, and tourism. But as for the other five emirates, the picture is much more bleak. Nor is it like the US, where finances or taxation are co-mingled on the federal level to any serious degree. If California generates a lot of wealth relative to Alabama, you'd expect a lot to be redistributed. But Abu Dhabi will not be sending any of its enormous wealth holdings to Sharjah by any means.

arjun-menon 6y ago
You’re partly right, but there are actually a fairly significant amount of lateral transfers to other emirates (through the federal budget, which is mostly funded by Abu Dhabi). Things like the electricity and water system are run federally (by FEWA - the Federal Water & Electricity Authority) in 4 northern-most emirates. Many other benefit systems are also mostly funded by Abu Dhabi, and primarily for the benefit of the citizens of other emirates — one example might being the Sheikh Zayed Housing Programme. Abu Dhabi actually does help the nationals in all the emirates.
- dcolkitt 6y ago
  Thanks for pointing this out! I wasn't aware of that.

fakedang 6y ago

Rashid bin Saeed al Maktoum actually, his son. And yeah, member of the Dubai royal family.

mariuolo 6y ago

> the UAE will never become poor But their land might become uninhabitable in a few decades.

WanderPanda 6y ago
It is already almost uninhabitable and has been for a long time. Nevertheless ~10M people live there. Technology is solving this, either the root cause or the symptoms
- Red_Leaves_Flyy 6y ago
  Air conditioning the outside is almost assuredly not sustainable.
  - arjun-menon 6y ago
    Not sure what you mean “the outside”. Only indoors are air-conditioned (using electricity). And in the UAE, right now, electricity generation is slowly being switched over solar energy (away from natural gas), which is clean / renewable / sustainable. (https://www.greentechmedia.com/articles/read/worlds-largest-solar-project-will-also-be-worlds-cheapest https://www.greentechmedia.com/articles/read/worlds-largest-...)
    - Red_Leaves_Flyy 6y ago
      It was Qatar that I was thinking of. https://www.washingtonpost.com/graphics/2019/world/climate-environment/climate-change-qatar-air-conditioning-outdoors/ https://www.washingtonpost.com/graphics/2019/world/climate-e...
jnxx 6y ago
They do have in fact one neighbor, Iran, in which in some places temperatures rise above 50°C, with high humidity, which is close to uninhabitable. And this is due to climate change, so it is going to get worse. I think it is possible this has ripple effects.

znpy 6y ago

> Even if with investment returns as low as 4% That line of reasoning always make me smile. That's like assuming that once you get a certain threshold of wealth, you can automatically assume you'll be fine forever. And by the way, that "as low as 4%"... Most people throw percentages all around the table, easy like that... Seems funny. Call me stupid, but the idea of a whole country being able to piggyback off all other countries seems unlikely to say the least.

arjun-menon 6y ago
Do you realize most 401(k) and IRA accounts in the US are all invested securities (like equities and bonds)? Similarly, most wealthy people invest their money in general? Also, I didn’t pull the 4% out of a hat. It’s actually the “Safe Withdrawal Rate[a]” recommended by Mr. Money Mustache. See his blog posts on it: https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/ https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-nee... Also, see: https://www.mrmoneymustache.com/2018/11/29/how-to-retire-forever-on-a-fixed-chunk-of-money/ https://www.mrmoneymustache.com/2018/11/29/how-to-retire-for... [a] Bogleheads article on Safe withdrawal rates: https://www.bogleheads.org/wiki/Safe_withdrawal_rates https://www.bogleheads.org/wiki/Safe_withdrawal_rates