Energy Absorption and Conversion, Vibration Isolation, Dampening, Oscillation, Advanced Building Technologies, Building Codes and Code Enforcement

Posted by PITHOCRATES - March 7th, 2012

Technology 101

Springs and Shock Absorbers on a Car provides Vibration Isolation from the Shocks of the Road

Roads aren’t perfect.  They have their bumps.  And their potholes.  Especially in the north.  Where they use salt to melt snow and ice.  Which get to the reinforcing steel within the concrete.  Causing it to corrode.  Further stressing and cracking the concrete.  Allowing water to get underneath the concrete.  Where it expands as it freezes, heaving and cracking the road.  Then there’s the normal heating and cooling.  That can buckle and crack blacktop.  Heavy truck traffic that stresses and hammers our roads.  Even sinking slightly into our asphalt roads making tire ruts.  And then there are railroad crossings.  Sewers and manholes that aren’t flush with the surface.  There’s a lot out there to make for a rough ride.  Yet in a new car you barely feel any of this.  And you can drink a cup of coffee while driving without it splashing out of the cup.  Why?

Because the shocks from the rode are isolated from the passenger compartment.  Air-inflated rubber tires smooth out much of that rough ride.  By compressing to absorb some bumps.  Then expanding back to their original shape.  Springs handle the larger bumps.  Which compress underneath the car as the tires hit a large bump.  Absorbing the energy from that impact before it reaches the passenger compartment.  By using it to compress a spring.  Then the energy in that compressed spring releases and the spring expands until it can expand no longer.  Placing the stretched spring into tension.  The stored energy in the tensioned spring compresses it again.  And this continues back and forth until the energy fully dissipates.  Or is absorbed in a shock absorber.  That dampens the oscillation of the spring.  Bringing it back to a steady-state quickly.  Further smoothing out the ride.

A car is a magnificent piece of engineering.  From converting a fuel into motive power.  To brakes slowing a car down by converting kinetic energy into heat via the friction of brake pads or shoes on rotors or drums.  To the isolation and dampening of the road forces imparted to the car.  It’s a remarkable control and conversion of energy.  That provides for a comfortable ride.  And a smooth ride.  Smooth enough to enjoy a cup of coffee while driving.  Without being too distracted from the business of driving.

Tuned Mass Dampers prevent Dangerous Oscillations in Buildings that can lead to Structural Failures

But a car moving over a road is not the only way energy transfers between the earth and something manmade.  Sometimes the earth moves.  And energy is transferred into something stationary.  Manmade structures like buildings and bridges.  During earthquakes.  And some of these stationary things get damaged.  Some even collapse.  Depending on how we constructed them.  And how similar they are to a car.

Tectonic plates are trying to move.  But the friction between these plates as they jam into each other holds them in place.  Until the pressure builds so much that the plates shift.  Causing an earthquake.  Sending seismic waves through the earth.  In active seismic regions structures need to be like cars.  They need isolation and dampening from the shockwaves caused by shifting tectonic plates.  For during a seismic event these shockwaves ‘grab’ these structures by their foundations and shake them.  This energy applying great forces on these buildings.  Energy that needs to go somewhere.  Because of the conservation of energy principle.  We can’t create it.  Nor we can destroy it.  At best we can redirect it.  Absorb it.  Or convert it.  Like converting the forward movement of a car (kinetic energy) into heat (created during braking).  Or the conversion of kinetic and potential energy of moving springs into heat (via shock absorbers). 

Waves have an amplitude and a frequency.  They oscillate.  That is, they vibrate.  And have energy.  Which is why we build buildings and bridges to move.  To bend and sway.  To dissipate this energy.  For if they were too rigid the forces could instead lead to a structural failure.  However, if they move too much and the external force is in ‘resonance’ with the building’s natural frequency of movement, this oscillation can grow.  Producing great vibrations.  (Like a car driving without any shock absorbers.)  And great forces on the structural integrity of the building.  Itself leading to a structural failure.  That’s why high rises include dampening systems.  Such as tuned mass dampers.  A great mass suspended within a building and restrained by hydraulic cylinders.  Such as the tuned mass damper atop Taipei 101 in Taiwan.  So when the building sways in one direction the mass swings in the opposite direction.  Thus dampening the oscillation of the building.

Free Market Capitalism allows a Higher Standard of Living and Creates the Kind of Wealth that can build Safe Houses and Buildings

Smaller buildings may use springs-with-damper base isolators.  Which does the same thing springs and shocks do for a car.  Isolates the structure from vibrations.  But using the proper building materials to allow a building to move or withstand destructive forces without structural failure provides most seismic protection.  And this is nothing new.  The Machu Picchu Temple of the Sun in Peru is an early example of good seismic engineering.  Peru sits on the Ring of Fire.  A highly seismic region that circles the Pacific Ocean.  The Inca were highly skilled stone cutters.  They built the Machu Picchu Temple of the Sun without mortar.  Because of this the stone can move during seismic events.  Which has let it stand through the millennia.  Today we use mortar.  And reinforcing steel to strengthen our masonry construction (these blocks can’t move but when the walls they make crack the steel inside keeps them from collapsing).  As well as other advanced building technologies.  And ever evolving building codes and code enforcement to make sure builders meet the exacting standards of these technologies.  To keep these buildings from collapsing and killing hundreds of thousands of people.  Which is why in the most modern and advanced cities in seismic regions survive some of the worst seismic events with minimal loss of life.  Where they count deaths in the hundreds instead of the hundreds of thousands.  As they did before we used these advanced building technologies.

The countries and regions sitting on the Ring of Fire (New Zealand, Indonesia, the Philippines, Japan, Alaska, California, Mexico, Peru and Chile) use some of the most advanced building technologies.  And can withstand some of the most severe earthquakes.  With little loss of life.  Now compare that to the impoverished country of Haiti.  Their 2010 earthquake was devastating, claiming 230,000 lives.  Because they have no such building codes or code enforcement.  Or advanced building technology.  Because Haiti is not a nation of free market capitalism.  Or the rule of law.  But one of political corruption.  And abject poverty.  Are they predisposed to be impoverished?  No.  Because countries can change.  If they embrace free market capitalism.  And the rule of law.

Chile was one such country at one time.  Corrupt.  And anti-capitalistic.  During the heyday of Keynesian economics.  Where nations said goodbye to the gold standard.  And ramped up their printing presses.  Igniting hyperinflation.  Including the Chileans.  But they changed.  Thanks to the Chicago Boys.  Chilean economists schooled in the Chicago school of economics.  With a little help from Milton Friedman.  Perhaps the most esteemed member of the Chicago school. Economic reforms produced solid economic growth.  A prosperous middle class.  And advanced building technologies, building codes and code enforcement.  So when Chile suffered a more powerful earthquake than Haiti did that same year Chile measured their death toll in the hundreds.  Not the hundreds of thousands as they did in Haiti.  And the major difference between these two nations?  Chile has a higher standard of living than Haiti.  And has less poverty.  Because Chile embraces free market capitalism.  Which creates the kind of wealth that can build safe houses.  And safe buildings.  For everyone.  Not just the ruling elite.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Monetarism, Laissez-Faire Capitalism, Augusto Pinochet, Chile, Hyperinflation, El Ladrillo, Chicago Boys, Milton Friedman and Miracle of Chile

Posted by PITHOCRATES - March 6th, 2012

History 101

During the 19th Century Mercantilism gave way to Laissez-Faire Capitalism and Free Trade

Portugal and Spain were superpowers around the 16th and 17th centuries.  Great monarchies with mercantilist economic policies.  Which was all about trade.  Maximize exports.  Minimize imports.  Settle colonies to mine/harvest raw material.  To ship back to the mother country.  Where they manufactured goods from the raw materials.  And exported them to other countries.  Selling them for gold and silver.  Which was key.  Maximizing the trade surplus in the balance of trade.  Finished goods going out.  Gold and silver coming in.  For the nation that gathered the most gold and silver won in the zero-sum game of mercantilism.  Where the monarchy works with business.  Picking winners and losers.  And rewarding the winners who help enrich the monarchy.

Of course, these policies force a kingdom’s subjects to pay higher prices.  By keeping out lower-priced imports.  And with special deals favoring some domestic industries so they can sell at monopoly prices.  They nationalized their Industries.  Creating an aristocratic class.  Composed of government officials.  And their partners in the nationalized industries.  Living the good life on the backs of the poor.  Who paid high taxes.  And high prices.  To support those mercantilist policies.  And it was these policies that settled South America.  Taking all of their gold and silver (bullion).  Shipping it back to the mother country.  The surge in bullion in Europe made it less scarce.  And less valuable.  Meaning it took more of it to buy the same things it once did before this surge.  Resulting in higher prices.  And inflation.  Hurting the consumer more.  And leading to the development of the quantity theory of money.  And monetarism.  Which held that the amount of money in circulation had a direct impact on prices.  The more money the higher the prices.

With the rise of Parliament in Britain power shifted from the king to the people.  Via their representatives in Parliament.  Instead of rule by dictate there was rule by consent.  Which made the business of choosing winners and losers more difficult.  Parliament had the power.  But Parliament was more than one person.  It was full of special interests.  Which made it more and more difficult to choose any one special interest over another.  Unable to curry favor for one’s own interest one didn’t support another’s interest.  At least not when that support came at the expense of your interests.  So there was another power shift in addition from the king to parliament.  There was also one from the king to the markets.  So during the 19th century mercantilism gave way to laissez-faire capitalism.  And free trade.  An economic system that let the British Empire dominate the world during the 19th century.  Making it rich.  And powerful.  Thanks to that vigorous economic activity that could build the world’s most powerful navy.  And pay for an army to garrison an empire.  Meanwhile the old school mercantilist empires fell from superpower status.  And became shadows of their former selves.  Soon the Spanish and Portuguese colonies would gain their independence from these dying empires.

Milton Friedman’s Monetarism turned the Chilean Economy Around

The South American nations may have hated their European masters but they liked one thing about them.  Their mercantilist policies.  Which survived into the 20th century.  Where government partnered with business.  In the worst of crony capitalism.  Where special interests that favored the ruling powers received government favors in return.  Usually protected markets.  And favorable legislation.  That allowed them monopoly prices.  Giving them great profits.  Generous union wages and benefits.  And generous health care and pensions.  At least, for those politically connected.  So the government rigged the game for them.  And they made it worth the government’s while to rig the game.  All of this paid for on the backs of the poor.  Who paid high taxes.  As well as high prices.  And suffered abject poverty.  Which made for an unhappy people.  And a large amount of government turnover through revolution as dictatorships and military juntas overthrew other dictatorships and military juntas.

In 1973 it was Augusto Pinochet’s turn in Chile.  Who came to power in a military coup.  At the time the country wasn’t doing so well.  And in full mercantilism.  The economy was in the toilet.  There was abject poverty.  And hyperinflation (peaking at 1000% or so) as the government printed money to pay for its out of control spending.  To try and bribe the angry mob and keep them from overthrowing the latest dictatorship.  Pinochet was the guy to fix that.  Like everybody that came before him.  And after his military junta failed as the previous military juntas failed, he tried something new.  Thanks to something called El Ladrillo.  And economic plan so thick and heavy they called it ‘the brick’.  A plan prepared by the Chicago Boys.  Chilean economists schooled in the Chicago school of economics.  Pinochet even met with Milton Friedman.  Prominent economist of the Chicago school.  And monetarist.  Who came down to give a speech.  (Interestingly, for the American left roundly criticized Friedman for giving a speech in a right-wing dictatorship.  Though he received no such criticism for giving the same speech in a left-wing dictatorship – communist China.  Showing that the political left was okay with human rights violations as long as they were committed in the left-wing dictatorships they so admired). 

Pinochet asked for some economic advice.  Friedman gave it.  And Pinochet followed it.  He ditched the mercantilist policies.  Embraced laissez-faire capitalism.  Privatized the state industries.  Established free trade.  Cut government spending.  And stopped printing money.  Ending the hyperinflation.  Replacing it with a strict monetary policy.  This didn’t please the politically connected as they lost their privilege.  But Friedman’s monetarism turned the Chilean economy around.  Creating a prosperous market economy.  With a growing middle class.  The strong economic growth led to some healthy tax revenue.  Which in later years funded antipoverty programs.  The Miracle of Chile even replaced the military junta with a democratic government.  Chile now has one of the healthiest and freest economies in the world.  An economy better and stronger than their former colonial master.  Spain.  Who maintained enough of their mercantilist policies to pull them into the Eurozone debt crisis.  And probably could learn a thing or two from their one-time colony.  Who is doing very well these days.  Thanks to the Miracle of Chile.  Milton Friedman.  And the Chicago Boys.  Those great Chilean economists given a chance by of all people a military dictator.

Everyone does Better under Free Market Capitalism, not just the Politically Connected

In 2010 a 7.0 earthquake hit Haiti.  A country rife with political corruption.  With little, if any, free market capitalism.  And even less rule of law.  Where most people live in abject poverty.  In ramshackle housing.  This earthquake claimed 230,000 lives.  A heart-wrenching loss of life.  Especially sad because the impoverished masses suffered the most.  As is often the case in countries with poor economic and political institutions. 

Later that same year, an 8.8 earthquake hit Chile.  Thanks to the economic reforms that rebuilt Chile into a healthy and prosperous democracy, Chileans did not live in ramshackle housing.  The higher standard of living created by the Chicago Boys’ economic reforms created better housing.  And safer cities.  Because of this the far stronger earthquake in Chile killed far fewer people than the lesser earthquake in Haiti.  The death toll in Chile was less than 1,000.  Which is impressive considering that was one of the most powerful earthquakes in recorded history.

Economics matter.  Say what you want about free market capitalism.  Malign it all you will.  But you can’t change some facts.  In particular, everyone does better under free market capitalism.  Including the poor.  For if this wasn’t the case Chile would have seen the loss of life Haiti saw.  But they didn’t.  Because there were no impoverished masses living in ramshackle housing in Chile.  Because those economic reforms improved the standard of living for all Chileans.  Not just the politically connected. 

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

The Chicago School of Economics

Posted by PITHOCRATES - March 5th, 2012

Economics 101

Monetarists believe in Laissez-Faire Capitalism and Fiat Money

Keynesian economics supports hands-on government management of the economy.  Using fiscal and monetary policy to move the aggregate demand curve at will to end business cycles.  The boom bust cycles between inflation and recession.  Leaving only the inflationary boom times.   Using tax and spend fiscal policies.  Or simply printing money for government expenditures.  For in Keynesian economics consumption is key.  The more of it the better.  And when people stop buying things the government should step in and pick up the consumption slack.

The Austrian school is a more hands-off approach.  The markets should be free.  Laissez-faire capitalism.  And the business cycle should remain.  For it is a necessary part of the economy.  Part of the automatic pricing mechanism that adjusts supply to meet demand.  When people demand more prices go up.  Encouraging businesses to expand production to sell at these higher prices (inflationary expansion).  Then when supply exceeds demand businesses have excessive inventory that they can’t sell anymore at those higher prices.  So they cut their prices to sell off this excessive supply (deflationary recession).  Also, that hands-off approach means no playing with monetary policy.  Austrians prefer a gold standard to prevent central bank mischief that results in inflation.

The Chicago school of economics takes a little from each of these schools.  Like the Austrians they believe that government should take a hands-off approach in the economy.  Markets should be free with minimum government intervention.  But unlike Austrians, they hate gold.  And blame the gold standard for causing the Great Depression.  Instead, they believe in the flexibility of fiat money.  As do the Keynesians.  But with a strict monetary policy to minimize inflation (which is why proponents of this school were also called monetarists).  Unlike the Keynesians.  For monetarists believe only a government’s monetary policy can cause runaway inflation.

(This is a gross simplification of these three schools.  A more detailed and comprehensive study would be a bit overwhelming as well as extremely boring.  But you get the gist.  At least, for the point of this discussion.)

We used Gold and Silver for Money because it was Durable, Portable, Divisible, Fungible, Scarce, Etc.

At the heart of the difference between these schools is money.  So a refresher course on money is in order.  Money stores wealth temporarily.  When we create something of value (a good or a service) we can use that value to trade for something we want.  We used to barter with other creative people who made value of their own.  But as the economy got more complex it took more and more time to find people to trade with.  You had to find someone who had what you wanted who also wanted what you had.  If you baked bread and wanted shoes you had to find a shoemaker who wanted bread.  Not impossible.  But it took a lot of time to find these people to trade with.

Then someone had a brilliant idea.  They figured they could trade their good or service NOT for something THEY wanted but something OTHER people would want.  Such as tobacco.  Whiskey.  Or grain.  These things were valuable.  Other people would want them.  So they could easily trade their good or service for one of these things.  And then later trade it for what they wanted.  And money was born.  For various reasons (durable, portable, divisible, fungible, scarce, etc.) we chose gold and silver as our money of choice.  Due to the inconvenience and danger of carrying these precious metals around, though, we stored our precious metals in a vault and used ‘receipts’ of that deposit as currency.  And the gold standard was born.

To understand the gold standard think of a balance scale.  The kind where you put weights on one side to balance the load on the other.  When the scale balances the weight of the load equals the sum of the weights needed to make the scale balance.  Now imagine a scale like this where the VALUE of all goods and services (created by talented people) are on one side.  And all the precious metal in the gold standard are on the other.  These must be in balance.  And the sum of our currency must equal the amount of precious metal.  (Because they are ‘receipts’ for all that gold and silver we have locked up someplace.)  This prevents the government from creating inflation.  If you want to issue more money you have to put more precious metal onto the scale.  You just can’t print money.  For when you do and you don’t increase the amount of precious metal on the scale you depreciate the currency.  Because more of it equals the same amount of precious metal.  For more currency to equal the same amount of precious metal then each unit of currency has to be worth less.  And when each unit is worth less it takes more of them to buy the same things they bought before.  Thus raising prices.  If a government prints more currency without adding more precious metals on the scale they increase the value of that precious metal when MEASURED in that currency.  It becomes worth more.  In other words, you can trade that precious metal for more of that depreciated currency than before they depreciated it.  You do this too much and eventually people will prefer the precious metal over the currency.  They’ll lose faith in the currency.  And when that happens the economy collapses.  As people move back towards a barter system.

Milton Friedman wanted the Responsibility of the Gold Standard without Gold’s Constraint on increasing the Money Supply

A healthy economy needs a stable currency.  One that people don’t lose faith in.  Imagine trying to shop without money.  Instead, taking things to trade for the groceries you need.  Not very efficient.  So we need a stable currency.  And the gold standard gives us that.  However, the thing that makes gold or silver a stable currency, its scarcity, creates a liability.  Let’s go back to that balance scale.  To the side that contains the value of all goods and services.  Let’s say it increases.  But the precious metal on the other side doesn’t.  Which means the value of that precious metal increases.  The currency must equal the value of that precious metal.  So the value of the currency increases.  And prices fall.  It takes less of it to buy the same things it bought before.  Not a bad thing for consumers.  But it plays havoc with those who borrowed money before this appreciation.  Because they now have to repay money that is worth more than when what is was worth when they borrowed it.  Which hurt farmers during the 1920s.  Who borrowed a lot of money to mechanize their farms.  Which helped to greatly increase farm yields.  And increased food supplies while demand remained unchanged.  Which, of course, lowered farm prices.  The supply increased on the scale.  But the amount of gold didn’t.  Thus increasing the value of the gold.  And the currency.  Making prices fall.  Kicking off the deflationary spiral of the Great Depression.  Or so say the monetarists.

Now the monetarists wanted to get rid of the gold supply.  The Keynesians did, too.  But they wanted to do it so they could print and spend money.  Which they did during the Seventies.  Creating both a high unemployment rate and a high inflation rate.  Something that wasn’t supposed to happen in Keynesian economics.  For their solution to fix unemployment was to use inflation to stimulate aggregate demand in the economy.  Thus reducing unemployment.  But when they did this during the Seventies it didn’t work.  The Keynesians were befuddled.  But not the monetarists.  Who understood that the expansion of the money supply (printing money to spend) was responsible for that inflation.  People understood this, too.  And had rational expectations of how that Keynesian policy was going to end.  Higher prices.  So they raised prices before the stimulus could impact unemployment.  To stay ahead of the coming inflation.  So the Keynesian stimulus did nothing to reduce unemployment.  It just caused runaway inflation.  And raised consumer prices.  Which, in turn, decreased economic activity.  And further increased unemployment.

Perhaps the most well known economist in the Chicago school was Milton Friedman.  Who wanted the responsibility of the gold standard.  But without gold’s constraint on increasing the money supply to meet demand.  The key to monetarism.  To increase the money supply to match the growth in the economy.  To keep that scale balanced.  But without gold.  Instead, putting the money supply directly on the scale.  Printing fiat money as needed.  Great power.  But with great power comes great responsibility.  And if you abuse that power (as in printing money irresponsibly) the consequences of that abuse will be swift.  Thanks to the rational expectations of the people.  Another tenet of the Chicago school.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,