Friday, February 10, 2012

FRIDAY MORNING RAMBLE: The bewigged edition

WinstonParliament is back in session, so by Mark Twain’s standards neither life, liberty nor proper should be safe. But apart from questions about Maori Party integrity and Winston Peter’s wig, it’s been a quiet political week.
Thanks goodness.

On with the show…

  • Steven Joyce talks unusual sense for a politician. He says “Each time we say ‘you can’t’ it carries a cost.” And so it does.  But what’s with the “we,” minister?
    ‘We’ Are a Little Confused - P O L I C Y   M A T T E R S
  • “You’ve heard that America is enjoying a “jobs-led recovery”? Don’t be so sure.
      No Evidence of a Jobs Recovery
    - O B J E C T I V I S T  I N D I V I D U A L I S T
  • And you thought Bill Clinton was the president who couldn’t keep it in his trousers…
    The Truth About President Kennedy – S C O T T  H O L L E R A N ’ S   B L O G
  • How to choose from a bad bunch.
    Ayn Rand on Selecting a Presidential Candidate? – Burgess Laughlin, M A K I N G  P R O G R E S S

“Central bankers are the arsonists of [the present economic] 
crisis who now pose as fire fighters quickly labelling
further monetary debasement ‘stimulus’.”
            - Detlev Schlicter, “There will be no end to ‘quantitative easing’

“What is the difference between animal spirits and the confidence
fairy? Why do Keynesians embrace one but not the other?”
            - Russ Roberts

  • The Europeans have a plan, and like all political plans…
    Why Europe’s Plan to End the Debt Crisis Can’t and Won’t Work -  D A I L Y  R E C K O N I N G
  • Dept. of Yikes: "In effect the EFSF is being used to recapitalize the ECB."
    http://soberlook.com/2012/02/efsf-used-to-recapitalize-ecb-on-greek.html
  • Do government-engineered "soft landings" ever work out as planned?
    Are "Soft Landings" really softer? – Darius Cooper,  P R A C T I C E   G O O D   T H E O R Y
  • Alleged economists suggest printing more to devalue your currency is a good thing and not a disaster. That the job in times of economic disaster is to “boost demand.” The biggest disaster is the economic theory on which such “thinking” is based.
    Will Currency Devaluation Fix the Eurozone? – Frank Shostak, M I S E S  D A I L Y
  • You know about gold and how it can protect you when the times become those about which historians like to write.  And how bonds can provide a return when they aren’t. But where do gold bonds fit in?
    Gold Bonds – Keith Weiner,   K E I T H   W E I N E R ‘ S   P O S T E R O U S
  • What politicians, economists and environmentalists need to learn from the billion-dollar collapse of Obama’s “green jobs” flagship, but won’t.
    Lessons From Solyndra – Robert Murphy,  E C O N L I B

“There are few branches of learning as devoid of history’s
light as economics. Economists are rarely informed by it.”

            - Jonathan R. T. Hughes’s in his book
The Government Habit,
quoted by Don Boudreaux

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[Thanks and hat tips to Geek Press, Marginal Revolution, Watts Up With That, Rational Jenn, Cafe Hayek, The Playful Spirit]

Earthquake engineering is not an exact science

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AFTER THE REPORT ON the collapse of the CTV building, everyone now wants to hang the builder and designers.

“Someone is incompetent!” Is the cry. “Someone must be to blame!” “There's criminal negligence going on there somewhere…."

No. Not necessarily. None of that follows necessarily from the report.

It seems on the face of it that people are not so much blaming people for not being competent, but for not being omniscient.

Because I think the problem is not one of negligence but one of the nature of knowledge.

COMPARING THE POOR STATE of Christchurch’s heritage buildings after the earthquake with most of its modern buildings is enough to tell you that earthquake engineering has improved rapidly over the last century. That knowledge has increased and will continue to increase.

It is a heroic tale. From a position of almost complete ignorance one-hundred years ago, engineers acquired increasing understanding and ingenuity in protecting buildings and the people in them--with new and revolutionary systems introduced in recent decades such as K-Braced Frames, Base Isolation and Ductile Design—saving literally millions of lives around the world, and hundreds of thousands in Christchurch.

Where just seventy years ago in First World countries like ours people still died en masse in earthquakes like the Napier disaster, today the earth can shake well beyond what even modern building were designed to handle—as it did in Christchurch on February 22nd—and ninety-nine per cent are still able to survive heroically and allow people to get out safely.

That we are talking about just two that didn’t (this one and Pyne Gould) is a tragedy on a massive scale. Let’s not downplay that. But that we are talking about just one that didn’t is a testament to the engineering in all the buildings that did. The engineers responsible used all the the knowledge acquired in recent years to design them; knowledge that will increase in future years.  But as the knowledge continues to increase, some of the methods used today will also shown to be wrong and less than adequate by engineers fifty years from now (as they undoubtedly will).

That  will not make today’s engineers negligent. They will simply be revealed as less than omniscient.

Just like every other human being.

SO EARTHQUAKE ENGINEERING IS still an inexact science, with new understanding emerging  after every earthquake that helps engineers understand more for the next one. After this one, for example, we’ve learned that the ground can move in very different ways than buildings have been designed for. It’s not necessarily a matter of criminal negligence, then—it’s more the nature of knowledge and how it improves, is tested and expands.

Reading summaries of the report with that in mind, when you boil it down it seems that in the early eighties we knew less about designing buildings to resist earthquakes than we do now.  Which is nothing to blame anyone for. And (perhaps) that too little was done to upgrade buildings like CTV’s that were designed before the modern era of seismic design.  Which is where any blame, if it’s deserved, probably lies.

This building for example was designed with its bracing walls disposed asymmetrically. But, for whatever reason, the importance of symmetrical bracing was less well understood then.

The building’s floors appear to have “pancaked,” which is what happens when columns collapse and one “soft storey” after another collapses on the one beneath. But back in the early eighties, engineering wisdom was still dictating that beams be designed stronger than columns—a situation eventually recognised as causing columns to fail before beams, leading inexorably to the pancake problem.

The columns are described as “brittle”—which is say they were not ductile—on which were imposed extra loadings from the increased twisting of the building. But the building was designed before the importance of Ductile Design was fully understood. 

As the engineers responsible for designing CTV, Alan Reay Consultants, said in a prepared statement yesterday:

We need to remember that the [design methods] of the day, when the building was designed and constructed, were not intended to withstand the magnitude and type of earthquake ... experienced on February 22.

They’re quite right.

Things have changed since then—but to call the engineers of the time negligent because they knew less than they we do now, and will know in the future, is to blame human beings for not being omniscient.

Which is not anything you can blame engineers for.

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Wednesday, February 08, 2012

This is cool

Workers on BHP Billiton’s new building in Perth, West Australia, replicated the famous ‘Lunch Atop a Skyscaper’ photo from the thirties of workers having their lunch on a steel beam high above Manhattan.

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Colding kills

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Several inches of global warming have now covered Europe for eleven days. Here’s the tragedy in a  headline:

Europe death toll now 400 from icy weather.

Can we now, please, begin to recognise the dangers to human beings of cold weather—which far, far outweigh the dangers of warming.

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Can you own water? [update 2]

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That’s become the question of this political term, hasn’t it, the answering of which is going to hold up the government’s flagship sell-a-little-bit programme for its power companies: Can you own water?

Simple answer: Yes, of course you can.

The ownership of water is not only possible, it’s often highly desirable.

It de-politicises arguments about resources.

It solves the Tragedy of the Commons in water.

It solves the increasing problem of dirty dairying.

It solves the problems involved in the South Island river systems, where there are many competing uses for the limited water available.

Recognising ownership in a water resource is not only moral, it’s practical. The answer to the problems cited and many more besides is to recognise there is no greater protection for both environment and water users than the protection of property rights and the legacy of common law -- if only these were allowed to function as they should, by placing the power of law behind those who truly value the specific resource under threat.

Ownership of water not only could happen, it should happen.

If the way to open those floodgates is by recognising specific claims to ownership, however flawed initially, then so be it.

Better it begins some way than never to begin at all.

* * * * *

* I make no comment at all here on the veracity of claims now hitting the headlines, nor on the anachronistic argument asserting property rights were recognised in New Zealand before 1840.
But as Ronald Coase points out, once a property right is finally recognised in law then (as long as transaction costs are kept low) it will end up in the hands of those who value it the most. And that would be a good result, right?

UPDATE 1: The collectivisation of water has failed New Zealanders.

So in addition to the excellent links I’ve provided above, I’d like to highly recommend a Canadian organisation called Environment Probe who have written many excellent things on The Role of Property Rights in Protecting Water Quality, including these many wonderful publications.

UPDATE 2: Yes, I do own water says Liberty Scott.

If I have land, and collect water on that property, it is mine.
Just because the state treats the sea, rivers and lakes as owned by it and local authorities, doesn't mean that water can't be owned.
It is ludicrous to claim otherwise.
Reticulated water costs money. It requires people to work, people to construct, lay, maintain and replace pipelines, dams, pumps and the electricity required to operate them. That isn't free.

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Tuesday, February 07, 2012

Clint: “Keep buying our shitty cars” [update 2]

Shitycars

Americans stopped buying American cars several years ago. Mostly because they were rubbish.

That didn’t bother American car makers. They kept making the shitty cars anyway and just went cap in hand to the government for a bailout.

"We shouldn't be bailing out the banks and car companies," actor, director and Academy Award winner Eastwood told the Los Angeles Times in November 2011.

That was November 2011. Now, however, in February 2012? He’s delivered an ad for half-time at the US Superbowl over the weekend about job growth, about “the spirit of America,” and how Americans should join together again and buy American cars.

Carefully, however, they show very little of the American cars they want Americans to buy.

Because they’re still shitty.

And the only “roar” is the roar of bullshit, and the sucking sound of money disappearing down a black hole.

UPDATE 1: Speaking of shitty cars … it’s half-time in the Lincoln Tunnel.

UPDATE 2: Here’s how a halftime ad by Clint Eastwood should have sounded …

[Hat tip Small Dead Animals]

QUOTE OF THE DAY: Printing money is not sustainable [updated]

Morons like Bernard Hickey have been beating the drum for our Reserve Bank to do what every other Reserve Bank in the world has been doing: to cross their fingers and print money like there’s no tomorrow.

_Quote_Idiot[Other governments’] print and hope strategies look set to leave anyone who doesn't print and hope sprawling in the dust [says Hickey]. 
The last one to print and devalue is the loser.

As I’ve said before, Bernard Hickey is a moron.  If anyone in authority listens to him, we will be the losers.

As if we should put our heads in the oven just because everyone else is! As if propping up share markets and bankers’ profits by faking reality is somehow a sound policy. As if  the printing of more coloured pieces of paper can somehow bring new resources into existence.  As if printing these new bits of paper doesn’t destroy your savings and devalue every existing piece of paper in your pocket. As if printing ever increasing tranches of this bailout crack (just another hit, please Doc!) isn’t like taking a tiger by the tail. As if the creation of new credit “out of the ether” is all it takes to create a sustainable boom…

“The boom can last only as long as the credit expansion progresses at an ever-accelerated pace. The boom comes to an end as soon as additional quantities of fiduciary media are no longer thrown upon the loan market. But it could not last forever even if inflation and credit expansion were to go on endlessly. It would then encounter the barriers which prevent the boundless expansion of circulation credit. It would lead to the crack-up boom and the breakdown of the whole monetary system.”
            - Ludwig von Mises, “Interest, Credit Expansion & the Trade Cycle,” Chapter 20 of Human Action

[Hat tip Foundation for Economic Growth]

UPDATE: From Detlev Schlicter’s Paper Money Collapse blog:

    …the public believes it was greedy bankers and ‘unfettered capitalism’ that brought us down. But cheap credit through state fiat money and the systematic subsidization of the housing market are not features of the free market but of politics. The present mess is the result of decades of institutionalized monetary debasement and the accumulation of public debt. These policies have left us with bankrupt welfare states and overstretched banks, yet none of this has diminished the enthusiasm of politicians and bureaucrats to give us more of their medicine…
Prosperity through money printing?
   
The persistent debasement of money in the modern state fiat money system is an obstacle to the smooth operation of the market, the production of wealth and the growth in prosperity. It keeps the middle class in bondage as its efforts to save and gain financial independence are constantly undermined by the official policy of inflationism.
   But the central planners and central bankers and their apologists among journalists and economists tell us that it is exactly the other way round: “Prosperity through monetary debasement” is Big Brother’s slogan, and he has spokespeople with outstanding academic credentials to explain this absurdity to the masses. In November 2010, MIT and Princeton man Ben Bernanke, the U.S. government’s money-printer-in-chief, wrote this in the Washington Post when explaining to the less educated why creating $600 billion out of thin air and messaging yields on government debt down was a clever policy:

_Quote_IdiotEasier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

Well, that was 14 months ago. As it turns out, manipulating the economy by artificially lowering rates (lowering rates not by saving but by simply printing money) has not started a virtuous circle. Such manipulations come with nasty unintended consequences, and after a few decades of such a policy the accumulated unintended consequences far outweigh whatever short –lived growth blip money debasement may have manufactured otherwise. None of this has anything to do with healthy growth and a functioning free market economy.
    But it is important that those in positions of authority do not admit that they are clueless. They never make mistakes. Their policy is never wrong. They simply need to do more of the same – and then even more. As I write this, the Fed is, of course, preparing another round of quantitative easing, and so is the Bank of England. And the ‘economists’ on Wall Street and the City of London cheer them on.
    The debasement of paper money certainly continues.

And the morons (and those who get first use of the new printing) stand by and cheer.

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