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Astral Codex Ten Podcast

Aug 3, 2022

Neom Neom Neom

Suppose you are an oil-rich country. You drill the oil and get very rich, for now. But someday you will run out of oil, or the world will switch to green sustainable energy, and then you will stop being very rich. Seems bad.

There are two main classes of solution to this problem. Norway’s solution is to invest the oil money into a sovereign wealth fund; after they run out of oil, they can stay rich off investment income. Dubai’s solution is to use the oil money to build a really impressive city, then hope that rich people (tourists, emigres, and multinational companies seeking regional hubs) will relocate there, and then they can tax those rich people.

The Norwegian solution has a lot to recommend it. It’s a lot more certain: getting steady returns on capital is a solved problem in a way that development economics isn’t. And it scales better: there are a pretty limited number of rich people willing to move to new desert cities, and multinational companies only need one regional hub per region. Still, for a certain type of oil sheikh, building the world’s biggest everything has a certain unquantifiable charm.