Self-fulfilling prophecy and the economic crisisWritten by Dan Johnson | | email@example.com
A lot of people have asked me in recent weeks how the Dubai and United Arab Emirates (U.A.E.) economy is faring during this global economic downturn. Like every place else in the world, the economy is big news here every day. The scores of international television news channels are reporting the continuing impact of the credit crunch in Europe, Asia, Africa, America and the Middle East. The half-dozen major newspapers in the U.A.E. seem to report nearly every word about the economy from anyone who may have insight or influence. And readers here, like every other place in the world, are waiting to hear some positive news about the economy or to learn of an uptick in a market someplace, anyplace. So far, however, the economic news here in the U.A.E. has focused largely on the problematic impact the credit crunch is creating locally and internationally.
The numbers and myriad statistics tell the story, or at least part of it. Unemployment figures, projects discontinued, huge sales — “75-80% OFF”— on nearly everything in the malls and less traffic on the highways bear witness to the impact of the crisis. Here in the U.A.E., there are stories about the repatriation of foreign workers, companies cutting back on their promises to workers and the government working to enforce labor laws that are designed to protect workers. There is no question that the global economic downturn is having its impact in the oil-rich Middle East.
Although I don’t doubt the statistics and know the level of economic activity is less now than what it was when I arrived in Dubai in mid-October, I am struck daily by the scale of development and the amount of construction that is continuing. There are literally hundreds, if not thousands of construction projects in this small country, many of which are continuing. Some of the projects are so large that it is not uncommon to count 15 or 20 construction cranes at one site. The notion that construction has come to a halt in the U.A.E. is simply not true.
The level of continuing activity in construction here in Dubai was clearly evident when I was invited to join a photographer on a charter helicopter who was going to take aerial photographs of the Zayed University campus and surrounding area. The heliport is located in downtown Dubai, nestled among the scores of high-rise office and apartment buildings that have sprung up over the past 10 years less than a mile from the world’s tallest building, the Burg Dubai, currently nearing completion. As we lifted off and wove our way among the glass and steel towers of commerce stretching along the Gulf coast, I was reminded of the fact that little of this development even existed in the 1980s, or even 1990s.
As we banked and headed inland across the city following one of the main superhighways toward the university, scores of construction projects came into view. Flying just a few hundred feet above the buildings and new construction, I could see thousands of steel, glass and concrete workers busy applying their trade on scores of projects. Hundreds of trucks hauling tons of building materials were driving in and out of the dusty sites. The level of activity I saw made it difficult to grasp the gloomy statistics and stories documenting the slowdown.
Driving into Abu Dhabi every week, I pass scores of construction projects — both large and small — lining the highway. The amount of activity in the U.A.E. capital city is even greater than its sister city, Dubai. The number of construction projects, however, is only part of the story; the size, creative design and innovative architecture of the buildings are characteristics that are equally important contributions to the landscape and the economy. Driving through the nearby cultural center of Sharjah to visit a new high school of 1,200, students I passed mile after mile of new homes under construction and numerous large-scale building projects with workers pressing on to meet someone’s deadline.
I know the economic indicators are valid. I read the statistics every day, and they confirm the human impact of the economic downturn. I accept the fact that the economy of Dubai, Abu Dhabi and the U.A.E has been hit, and in some quarters, hit very hard. Yet when I see the amount of work still under way, count the construction cranes that are still onsite lifting materials to the construction workers on the countless skyscraper projects and read of new projects being started, I also sense that there is a vital core to this region’s economy that is persisting despite the downturn.
At the heart of this “vital core” is an undying spirit of optimism and belief that the future for Dubai, Abu Dhabi and the U.A.E. is bright. Clearly, there is less cash to be had and the hotels — at least for the present — are operating at a fraction of their peak seasons. However, many are using this downtime to prepare for what most believe will be a revival in the economy next year or very soon thereafter. One of the things I have come to admire about this region is the undying optimism of the leaders. While the economic facts speak for themselves, there are also those who look beyond the facts and see great promise and potential.
We know that there is such a thing as a “self-fulfilling prophecy.” A self-fulfilling prophecy is simply a statement that alters actions and therefore comes true because of the person’s actions. It is a possibility that is made into a probability by a person’s unconscious or conscious actions. Understanding positive attitudes and the self-fulfilling prophecy have been shown to be helpful in dealing with long-term mental disorders such as anxiety and even chronic pain. Perception of an illness can influence the illness.
Is it possible that the same applies to an economy? If we believe the economy is going to continue to be bad, does that influence our actions so that the economy does, in fact, continue to be bad? If, on the other hand, we believe the economy is going to improve, does that influence our actions in a way that leads the economy to improve?
One observer of the economy here in the Gulf region said recently, “optimism is a powerful weapon in our troubled times. But optimism alone cannot prevent the current economic crisis from taking an inexorable toll in lost livelihoods and shattered aspirations.” Having said that, the observer concluded that “Optimism is a good thing, in moderation.”
Optimism is a good thing. Being realistic is also a good thing. But I suspect there may be more to the self-fulfilling prophecy in economics than we know or are willing to admit.
Dan Johnson is provost and COO, Zayed University, U.A.E. and president emeritus, University of Toledo.