Earthquake Economics

– February 21, 2018 Reading Time: 5 minutes

My experience with an earthquake last week deeply affected me in ways I could not have anticipated. Life was going along normally in a 16-story hotel in Acapulco. Then the room began to move. I thought I was imagining things. Then the windows began to shake and make noise, which was proof to me that something was happening. The rumbling and shaking got worse, and then it was clear: I’m experiencing an earthquake.

My first impression can be summed up as a profound sense of the loss of control. There was nothing I could do either way. I could put on my shoes and run out of the building, but everything was happening so fast. There was no chance of making it to the stairs and out of the building in time. I could only stand there waiting to see how bad it would get. It turned out only to last about 10 seconds, and absolutely nothing and no one was harmed, but at any point in the middle of it, I had no way of knowing.

I imagined the entire building collapsing into rubble. I would be crushed by crashing concrete, glass, and steel. I would end up as refuse along with everything else in the building, a mass of rubble on the ground as dust filled the air. I could do nothing to change it. No choices I made in that instant could protect me. I could duck and cover but my demise would nonetheless be guaranteed.

A few minutes later, Google had all the information I needed about what just happened. “The February 16, 2018, M 7.2 earthquake in Oaxaca, Mexico, occurred as a result of shallow thrust faulting on or near the plate boundary between the Cocos and North America plates. In the region of this earthquake, the Cocos plate moves approximately northeastward at a rate of 60 mm/yr.”

It might have been vastly worse. The same entry reports that a magnitude 8.2 earthquake hit last September 8, and “caused at least 78 fatalities and 250 injuries in Oaxaca, and a further 16 deaths in Chiapas.”

So it is all about the magnitude that determines damage and death? Not so much. “Eleven days later [last year], a M 7.1 earthquake struck closer to Mexico City, 230 km northeast of today’s earthquake, resulting in over 300 fatalities and significant damage in Mexico City and the surrounding region.”

What this means is that the earthquake I experienced might have been vastly worse and more deadly but for the crucial factor: the building I was in (and all the others in the area) have been made to withstand earthquakes. It’s all about physics. These buildings bend and adapt to dramatic shifts under the earth. It’s not always the case. If the construction is not earthquake resistant, the building comes down hard.

We too often take this for granted. It was for the justified fear of natural disasters that buildings in cities did not become skyscrapers until the late 19th century. The crucial invention here was the commercial viability of steel.

The Council on Tall Buildings and Urban Habitat explains that the first all-steel building was the Rand McNally building in Chicago, built in 1889 and taken down in 1911. The success of this building inspired many more. Steel is ideal because it is lighter weight and more adaptable than iron or concrete. It changed the way we live, the shape of cities, and the look of civilization itself. The iron age became the steel age, and then the physicists and seismologists got into the action and created glorious structures that molded themselves.

Here is a fascinating video on the physics of withstanding earthquakes and how engineers have mastered the art. This is why the building I was in did not fall down.

A few weeks ago I was in New York and looking across the skyline from a very tall building. I was looking down on what was once the tallest building in New York: St. Paul’s Chapel of Trinity Wall Street. Churches throughout Europe similarly strived to be the tallest as a way of showing the centrality of faith in the building of civilization. That symbolism came to an end during the Gilded Age in the US, and it spread throughout the world, with the skyscraper standing as a marvelous tribute to human achievement.

The history of the earliest skyscrapers is marvelous to contemplate. Many technologies besides steel had to come online. We needed indoor plumbing. We needed electricity as the source of lighting (no way could the new buildings function with gas lighting). We needed a new modern sophistication over physics. And we need seismology to protect against the earth shifting beneath our feet. All these came together at that crucial moment in history to change the way we live and work. Today we think nothing of them.

But how is it that they all came together and why did it all happen in the 1880s? Here we need to reflect on economic institutions. It came at the end of what has been called the age of laissez-faire, a period that extended from the end of Napoleonic Wars through World War I. There was no income tax. There were no passports. Property was protected against invasion by the state. Capital accumulation led to the complexification of the division of labor and structure of production. Money was sound and stable, rooted and conventional in gold. This inspired entrepreneurial risk taking to serve a hungry consuming public. Progress was the rage.

With all of this, humankind took major steps toward overcoming the exigencies of life itself. Crucially, all of this happened before the state grew to anything like its current level of intervention in the economic life of the citizenry. This was before income taxes, interventions in labor, zoning regulations, the draft, inflation, and all the rest of the problems that came later, introducing what we might call artificial uncertainty. The state had begun the great experiment in power, presuming to have more intelligence and wherewithal than entrepreneurs and society.

Let us not forget the contribution of free economies to making life safer. It wasn’t the regulations that made the difference. It was the innovations in the context of free enterprise.

I never stop thinking about this reality, and as the 10-second earthquake hit, I found myself immediately reflecting on the relationship between economics, freedom, modernity, and the history of the great discovery of liberalism. My mind raced back to a time at the earliest years of the birth of modernity and the very notion of progress itself. The last black death in Europe was over. The Medicis were banking. Prosperity was growing.

The only piece of music I know from the period that relates to natural disasters is the “Missa Et ecce terrae motus” (Earthquake Mass for 12 voices) by Antoine Brumel (1460-1512). I recalled that it was remarkable. I always imagined that the composer had three tasks: characterize the terror of the moving earth, mourn the dead, and celebrate the living. As soon as the earth stopped moving, I jumped to my computer and played the entire piece from beginning to end.

Here is this glorious piece. May we never have to hear it in its true historical context.