UAE plans ban on negative economic reporting

The United Arab Emirates is considering legislation that would criminalize publication of anything that would "harm the economy." Already, the local press is pulling back from their coverage of the steep decline in Dubai property values and the rise in deportations, voluntary departure, and abandonment of unsaleable assets, such as cars.
Instead of moving toward greater transparency, the emirates seem to be moving in the other direction. A new draft media law would make it a crime to damage the country’s reputation or economy, punishable by fines of up to 1 million dirhams (about $272,000). Some say it is already having a chilling effect on reporting about the crisis.

Last month, local newspapers reported that Dubai was canceling 1,500 work visas every day, citing unnamed government officials. Asked about the number, Humaid bin Dimas, a spokesman for Dubai’s Labor Ministry, said he would not confirm or deny it and refused to comment further. Some say the true figure is much higher.

“At the moment there is a readiness to believe the worst,” said Simon Williams, HSBC bank’s chief economist in Dubai. “And the limits on data make it difficult to counter the rumors.”

Laid-Off Foreigners Flee as Dubai Spirals Down

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  1. It’s not surprise, that when an entire economy is based off speculation, that they would do everything to stop anything that effects negative speculation. Not saying its justified, thats just the way it is in this case.

  2. It’s not surprise, that when an entire economy is based off speculation, that they would do everything to stop anything that effects negative speculation. Not saying its justified, thats just the way it is in this case.

  3. It is already illegal here in Venezuela to say how much a dollar costs on black market, so even if this is scary, it is not surprising at all.

  4. This is very wrong, for all the obvious reasons.

    However, there is some merit to this idea. Think, for example, about the recent runs on Stanford’s banks. While there were troubles up top, those banks actually were just fine, and people’s money was safe in them. However, people ran on them anyway. Thus, it was a self fulfilling prophecy. By believing their money wasn’t safe, people made it unsafe.

  5. @Apreche

    While things like that are true, it also begs the question why did people feel there money was not safe there. Or more exactly, what caused them to doubt the things their government and other institutions had been telling them.

    That’s more the point. If your government is going to lie to you, then at some point there is no trust. And without trust the relationship will crumble. The government and it’s people should be a relationship, open and honest. Not what we have had going on in the US for the last 100 years or so. (Sure some terms are better than others, but lets be realistic about it).

    I agree with Fondi, welcome to America 1.X (where we only present the bad news after it happens and point fingers at everyone who did and didn’t do it, and call anyone who points it out ahead of time a liar, traitor, or just crazy).

  6. Of course they want to cover it up! This way you have no idea how bad things really are until you lose it all. It’s WAAAYYYY to late to blow sunshine up the ass of the American public, but they do try, everyday. What pill will it be for you today, red or blue?

  7. Capitalism? This is nothing to do with capitalism. You can still do business in Dubai, if you can find anyone to take your money.

    This is further evidence that capitalism doesn’t work on its own – it requires a liberal society. The moment freedom of speech and freedom to trade start to diverge, the money will flee.

    In theory, and in Dubai.

  8. *sigh*

    The legislation is question is a much-awaited (2 years in the making and more) update to the UAE’s 1980 media law. The old law is not helpful, the new one is causing some gnashing here, too.

    The new law has some major issues, mostly in the vast gaps in the legislation, which are apparently to be filled with the promulgation of ‘regulations’ that will clarify the law. One area of concern is that the new law apparently lacks any recognition of the ‘e’ word.

    The new law is NOT a reaction to the recent economic crisis, but a slightly clumsy attempt to hone the provisions of the old law, which carried prison terms for journalists and criminalised such heinous offences as criticising a brother state. It has been a long time in the making and is considered deeply flawed by many stakeholders. It has been put forward for entry on the statute books but has not passed into law yet.

    The linkage of this attempt to update legislation and the current economic crisis is commonplace and slightly irritating to those of us living, working and writing under the law. The law is a major issue without sensationalising it as some sort of knee jerk to the current economic conditions. There are not 3,000 abandoned luxury cars at Dubai airport, BTW.

    Now I’m not for a second saying that there aren’t problems here, economic and otherwise. For sure, reporting on the current state of the nation is minimal – but the obfuscation is systemic, not merely governmental. And it’s not about fear of retribution, it’s about lack of information, transparency and legal requirements on companies to make data, any data, available to media.

    In other words, this is a hell of a lot more complicated than it looks and I do wonder at how so many people are willing to take a ‘bumper sticker’ view of what’s going on over here rather than take time out to get a more considered viewpoint.

    [endrant]

  9. #5 ARECHE:
    So you’d be cool with having all your investments in a failing bank provided the media didn’t report it?

  10. i wonder the if the U.S. will attempt to pass similar legislation.

    The right to instigate a bank run is a basic right of all individuals in the free market. Its one of the few nonviolent options left for individuals to speak truth to power.

  11. Gee, it’s not like the Federal Reserve stopped publishing M3 money supply data in March 2006 to hide massive inflation, that Richard Nixon separated out “core” inflation to set the CPI statistic artificially how, that Ronald Reagan defined military personnel as “employed” (instead of “outside the labor force”) to set the unemployment statistic artificially low, or that Lyndon Johnson created the “unified budget” which combined Social Security with other federal outlays to mask deficits.

    c.f. Numbers racket: Why the economy is worse than we know by Kevin P. Phillips (May 2008)

  12. I half wish something like this would happen in other countries. It has nothing to do with burying your head in the sand.

    People are getting laid off because people aren’t spending money because they’re afraid of getting laid off because some news report said people might get laid off.

    It’s all based on speculation until that speculation turns into a self-fulfilling prophecy.

  13. People are getting laid off because people aren’t spending money because they’re afraid of getting laid off because some news report said people might get laid off.

    Wrong. Reckless spending is what caused this economic calamity, not what will solve it. Spending for its own sake is called waste, and it’s destructive.

    Real wealth creation hinges on return on investment. That doesn’t translate into more or less spending, but spending on the “right” things.

    And what the “right” things are is a real-time distributed cognition problem that we use price signals to figure out. With distorted price signals, we make worse decisions — like if the fuel gauge in your vehicle said you have half a tank left but in reality you’re on empty, you won’t refuel in time and your car will stall out.

  14. then that means your economy is based on bullshit. Perhaps time to adjust to a standard of living economy that is based on living – as opposed to consuming. If everyone’s work depended on producing a good or service that was actually ESSENTIAL to life, no one would ever be out of work.

  15. Zuzu #16,

    In which prison does Kevin P. Phillips live today?

    Our government lies and we accuse it of doing so. In Dubai, under the aforementioned law, this accusation is illegal. In the US it is not.

    Do investors prefer one model to the other? I would suggest that the US model is preferred in hard times, when the difficult choices are being made, even if it’s just the least-bad option.

  16. Oh well we just won’t mention the abandoned cars, the suddenly empty job sites and the other general signs of the financial apocalypse…that’ll make it all better.

    Our media may ramp the panic up too high, but the opposite strategy is just as bizarre and ineffective.

  17. on a purely personal level I know that I for one would benefit emotionally from less negative reporting of the economic situation. I don’t want to put my head in the sand or pretend that it’s just gone away (well maybe for just a bit). But putting it into law? No way.

  18. #10, I hope the new law doesn’t extend to comments made on public blogs, or else maybe you’d better clarify that and tell us that no cars are rotting at Dubai airport.

    Updated or not, the law is an insult to journalism. If “reform” means the next jailed reporter will get a straight answer from the cops, then the coincidence of the “reform” and the current disaster is worth an extra laugh. Especially after that commercial (until recently in heavy rotation on CNN Int’l) by that banker advertising a rich man’s paradise and saying *tax-free* like a pickup line.

    If a US reporter wants to reconstruct the M3 money supply figure and it’s bad news, they won’t go to jail for it.

    But I hear that Dubai is leading the recovery already!

  19. That is so revanchist–Dubai ought to follow the US’ lead instead; co-opt the Press with junkets, flattery, and money.

  20. Markets are greatly affected by consumer psychology, so I can see why negative things could be damaging. But pretending a problem isn’t there won’t make it go away.

  21. Maybe they’ll also discourage any news reports suggesting that global warming may be partly or wholly a result of natural causes.

    That might receive more favorable coverage at BoingBoing.

  22. Emerald sunglasses? That and heartfelt repetitions of a fact. That the chocolate ration has been raised to 20 grams from the 30 grams it was last week.

  23. Dubai looks like a big, expensive, empty playground. What’s the point of building the world’s sparkliest, most expensive Las Vegas/Disneyland/Garden Of Earthly Delights when only a limited few people can afford to live that way, and their servants aren’t paid enough to live there?

    It feels like a misallocation of resources. It looks like flexing nuts. I feel bad thinking this way, especially since I have a good friend from there, and she and her English husband had been considering moving back there to be close to her family…

  24. Re: #16 zuzu Numbers racket: Why the economy is worse than we know by Kevin P. Phillips (May 2008)

    John Williams, the economist referenced in the Harper’s article to which zuzu linked has a website, shadowstats.com which has “Charts of Historical Alternate Data for the U.S. GDP, CPI, M3 & Employment” calculated using the older, less inaccurate methods. The “Primers on Government Economic Reports (What you’ve suspected but were afraid to ask.)” are quite educational as well.

    The rate of M3 (most broadly defined measure of money) growth peaked at an annualized rate of 17% about a year ago, but has since fallen to about 12%. Over the same period M1 (cash, bank accounts and similar) growth has gone from 0% to 15%.

    Inflation-adjusted GDP (1990 methodology) has been shrinking every quarter but one of the past eight years, currently the shrinkage rate is about -4%. Using 1980 methods the GDP shrinkage would be 4 to 5% worse.

    Unemployment / underemployment measured broadly is now at 14-18%.

    Inflation measured using 1980 methodology peaked in mid-2008 at 13% but has since fallen to 8%. 1990 methodology reckons inflation 4 to 5% lower.

  25. on a purely personal level I know that I for one would benefit emotionally from less negative reporting of the economic situation. I don’t want to put my head in the sand or pretend that it’s just gone away (well maybe for just a bit). But putting it into law? No way.

    I don’t think rosy reporting and forced optimism in the media would have any benefit. Media in the USSR reported record production figures and only positive economic news for decades and still the whole system was rotten.

  26. Easy fix : rename the censorship legislation “Moderation Policy”. There’s a fourteen page screed at the top right of this page that is a good template for the legislation.

    Problem solved.

  27. Well it looks as if the Asian stock markets have treated the “Dubai bailout” I linked to above as “good news”, since the Markets have gained (so far). But look at the last line in the article I linked to.
    Really though, one man’s “good news” is often another man’s disaster, particularly in the financial/business world: buy low sell high, sure, but that implies the other fellow sold low, and is buying high.
    Just as a slump in share prices is good news: for those who sold short.

  28. One of the biggest hits the stock market took in recent years was in response to 9/11. It would be interesting to see how media outlets would have reacted to that event if similar laws had been on the books. “Manhattan Experiences Urban Renewal” perhaps?

  29. @ Charles Platt #28:

    Maybe they’ll also discourage any news reports suggesting that global warming may be partly or wholly a result of natural causes.

    That might receive more favorable coverage at BoingBoing.

    Uh oh, somebody’s still bitter!

  30. In the company where I work I am prohibited to relay any information to the outside world that could reflect badly on the perception of our business. I imagine most of you who read this have similar curtailments in your workplaces. I typically spend most of my waking hours in this place and I ask myself: do I live in a democracy?

  31. To even remotely compare the iron grip that extremist States have over their media/people and whatever legislation may exist in the USA, UK et to discourage speculation through the news is evading the issue.

    The question is, China notwithstanding, there’s no capitalism without democracy and freedom of speech.

    Also, any law to curtail the flow of news tends to have the opposite effect, as business more than anything else lives on gossip and rumor, and, as censorship usually gives more credence to the most apocalyptic rumors in circulation, the prophecy often fulfills itself.

  32. Real wealth creation hinges on return on investment. That doesn’t translate into more or less spending, but spending on the “right” things.

    Here’s an analogy I just thought of: Remember the “too many notes” scene in Amadeus?

    Emperor Joseph II: Your work is ingenious. It’s quality work. And there are simply too many notes, that’s all. Just cut a few and it will be perfect.
    Mozart: Which few did you have in mind, Majesty?

    Consider “amount of spending” as “quantity of notes”.

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