[sabalaba]

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_Trus...

[fakedang]

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]

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]

If they are so rich and forward thinking, why do they use slave labor?

[wongarsu]

Being rich and forward thinking is independent of morals

[fakedang]

First of all, it's not slave labour that's employed in the construction industry or any of the other sectors. I think I can speak for this considering my relatives worked those "slave" jobs as you put it.

The UAE had long been forced by the British and the Americans to abolish slavery before they gained their independence. This, unlike Saudi Arabia, where it was legal long after the 1970s.

About the "slave" jobs, most of them are basically menial jobs with really shit pay and a combined bunk accommodation. But it's far better than what we get back in India or Pakistan or Bangladesh, which is usually the unemployment line. A number of people have improved their station and are part of the local business community from those levels.

[scottmcf]

Don't they often take their passports and prevent them from leaving?

[arjun-menon]

Who do you mean by “they”? Unscrupulous private companies with criminal managers that break the law?

A company taking a person’s passport is explicitly illegal in the UAE: https://dubaihow.com/holding-passport-employee-uae/

It carries a criminal prison sentence and a fine. And there’s a big push by the UAE government to go after, and prosecute employers who break this law.

I don’t know why people in Western countries, always without fail, mention this whenever the UAE comes up.

Imagine every time the US was mentioned, a person always pointed out how some private companies in the US treated their employees poorly and abusively (which I’m sure happens). It would be absurd.

[fakedang]

What you're referring to happens in Saudi Arabia and Qatar (and used to happen until the mid 2000s in the UAE, when a Federal decree was passed which stated the criminal sentence explicitly). Saudi Arabia and Qatar haven't abolished the practice.

[znpy]

They get rich because they can exploit slavery, they are forward in a different direction than most people refer to when saying "forward".

[Nowado]

... why not?

[ben_w]

> imo, they'll never collapse

Things can change surprisingly fast. My grandmother was born close to the peak of the British Empire, within a few years (plus or minus) of Irish independence; by the time my older brother was born the Empire was reduced to about 5 million people outside the UK, and by the time I was born the UK had humiliated itself by managing to lose a naval dispute with Iceland despite the entire population of Iceland country being approximately the same as the number of personnel in the UK armed forces.

[fakedang]

Again, read my last line. The SWF is responsible for all the subsidies in the UAE, and if they collapse, it would mean we have far bigger problems. The SWF invests in all major indices across all major markets, and even in multiple private equity firms (including my old firm, which was one of the biggest in the world). The collapse of $1.1T worth of investments would be the signal of a global collapse. Imagine if Blackrock or Vanguard declared themselves bankrupt one fine morning - that's what you're implying.

Also Norway would collapse too, since both the Norwegian and Abu Dhabi SWF have very similar investment profiles.

Last time I checked, the British Empire hadn't invested a dime into either the US or Chinese stock markets. Or even had a sovereign wealth fund for that matter.

[ben_w]

I read you last line, but “if it collapses we have bigger things to worry about” was essentially the same argument my father used when he advised me to invest in Lloyds bank — those shares lost 95% of their value since I bought them precisely because “something bigger to worry about” did in fact happen.

Now I’m a software dev not an economist, so perhaps you know better, but I have been told that WW2 essentially bankrupted the British Empire, which was 36.54% of global GDP in 1913.

I am happy to assume the SWF is invested wisely, but even if the manager’s kids and grandkids continue to invest wisely and learn the explicit lessons of the mistakes of others without ever falling into the mindset that they’re “too big [for anyone else to allow them to] fail” and therefore take risks that make failure more likely, black swan events are an ever-present risk. Indeed, one reason I referenced British Empire is the phrase “the empire on which the sun never sets” — it set on the British, and one day it will set on all the nations that now exist, including UAE.

[fakedang]

You're willfully ignoring statements. Your father asked you to invest in one company's single security. The UAE, Singaporean and Norwegian wealth funds are invested in everything from real estate to stocks to bonds to private equity. If those funds were to fail, the cause of that would be because the underlying securities failed, which would imply a collapse of the global financial system.

As for the managers' capabilities, it's not some dude sitting in an office managing a trillion dollars - it's a team of highly brilliant investors who either invest directly or outsource the investing to multiple megafund investor firms across multiple risk profiles such as Blackrock or Blackstone or Vanguard or Citadel, all of whom hire really talented folks (unlike the typical investment banking industry). Nowhere near your dad advising you to invest in LBG.

Also the term "The Sun never sets on the British empire" implied geographical dominance across the world, not immortal dominance. Before you guys, it was the Spanish claiming that.

[ben_w]

> You're willfully ignoring statements.

There is no need for that kind of language.

I give the example of my father’s advice because, to repeat myself for emphasis, the global financial system did in fact go very very badly wrong (and not for the first time).

The fact that his argument was also your argument is the segue, not the point.

> it's not some dude sitting in an office managing a trillion dollars - it's a team of highly brilliant investors who either invest directly or outsource the investing to multiple megafund investor firms across multiple risk profiles

I did not wish to imply that it was merely “some dude”, and I am disappointed that you chose to interpret my words as such. After all, I would not imply that you think that Lloyds bank lost so much market cap because “some dude” was planning their business strategy.

I wish to imply that (1) things change, and (2) that a current state of competent management is not something that can be assured forever.

This implication was illustrated with one of many historical examples of nations and empires thought indefatigable at their peak which are now no more.

I also illustrated it with the example of the global financial crisis which led to Lloyds losing so much value. I believe that was caused by teams of highly brilliant investors applying a Nobel-prize winning formula.

> Also the term "The Sun never sets on the British empire" implied geographical dominance across the world, not immortal dominance. Before you guys, it was the Spanish claiming that.

I was already aware both that it was previously used by the Spanish and that one usage was geographical, however it was also used by British people in the sense of never ending dominance - https://access-socialstudies.cappelendamm.no/c316302/tekstop...

[ikerdanzel]

You making an assumption UAE will never dip their hand into their golden goose. Money come and go. Just go ask Rothschild and Rockefeller when they had wealth beyond imagination back then. I wouldn't put too much faith in SWF. Nokia gone. Lehman gone. They take along a lot of billionaire money too. So SWF will have to be incredibily lucky like Buffet to keep their wealth. Let just say in 50 years, it will be very different than what you praised about SWF today.

[fakedang]

Fun fact, the Rothschild and Rockefeller wealth still exists, although it's heavily fragmented. For the Rockefellers, the US government explicitly stepped in and split their golden goose (Standard Oil - > Exxon + Chevron + Texaco). The Rothschild money permeates Europe throughout. The split is because that's what happens when you get a family spanning more than thousands of members. And each of their branches are massively wealthy.

You mention the UAE dipping into its SWF, except it already does that. The SWF accumulates the oil wealth from exports, which is reinvested into various investments around the world. A fraction (about 50B USD) of the annual returns from that wealth is what is used to run the UAE and all of its welfare programmes, its military, etc. Unlike the Saudis, UAE and Qatar both benefit from really small local populations - there are about 300k Qatari citizens and 1M Emirati citizens worldwide.

And Buffett is not lucky. He made a lot of successful bets everywhere year - I recommend reading his investor letters if you can, where he explains his rationale behind every investment decision, including the ones that turned out to be duds.

Just as you say that SWFs won't exist in 50 years, there are banks in Switzerland that have existed for hundreds of years. Oxford and Cambridge are just as prestigious today as they were 800 years ago. Once a culture is established and buttressed, it will be hard to shake it off.