Dubai Bankruptcy: Money Vs. Strategy

The recent financial crisis in Dubai is a perfect illustration of the illusion of control and how it generates the illusion of power. Sun Tzu wrote his book to dispel the notion that success arose from the amount of resources we control. Sun Tzu's strategy is about adapting to reality, not pretending we control it.

No matter how great our resources, we are always only a small part of the competitive environment (3.2.1 Environmental Dominance). Our success always come from leveraging our knowledge about the laws of nature (2.6 Knowledge Leverage). The more we fight nature, the more resources we waste. No matter how large, there is always a limit on our resources while governments are continually proving there is no limit on how much we can waste (3.1.1 Resource Limitations).

Because of its wealth and its ability to attract investment from the wealthy of the Middle East, Dubai thought that it could rewrite nature's laws of economics, creating its own form of Islamic finance. The result is no different than when the U.S. Congress thought they could rewrite the same laws to create "affordable housing." Neither we not governments nor people's belief in government changes nature or nature's laws. All we can do is grow the problem while delaying the pain.

Competitive Arenas: