This morning’s massive earthquake in Chile caught my attention because of its magnitude: 8.8. I remember experiencing the Loma Prieta quake here in the Bay Area in October of 1989. That one was pegged at something like 6.8, so the quake in Chile was one hundred times more powerful. As I write this, tsunamis are heading across the Pacific, threatening a long list of nations. Now that these nations are more connected commercially than ever before, I’m wondering what potential exists for overall disruption of the global economy?
 Landsat satellite image of Thera. |
It’s happened before. In fact, one of the best-known technological transitions is due to a cataclysmic event in the Mediterranean around 1600 BCE. I’m referring to the volcanic explosion that blew open the island of Thera, also known as Santorini. This explosion weighed in at around 7 on the Volcanic Explosivity Index, which is comparable to the Richter Scale used to describe the intensity of earthquakes. Like the Richter, it’s a logarithmic scale, each step being ten times bigger than the one before. The scale is based on the size of the plume of smoke and ash, and the volume of ejecta blown out by the event. a VEI event of level 7 blows out more than 100 km3 of material.
Just for comparison, Mt. St. Helens in 1980 scored a 5. The Krakatoa eruption in 1883 and Mt. Pinatubo in 1991 were both sixes.
Anyway, back to our story. This was the late bronze age. To make bronze, one needs copper and tin. Copper was common in the ancient Near East, but commercially viable supplies of tin were not. Most of it came from mines around the Black Sea. The relative rarity of tin made it an important strategic mineral that found its way to buyers in the Mediterranean basin through a trade network run by the Minoans. Thera wiped out the Minoan civilization and destroyed many of the coastal trading towns that were part of the tin trade.
So because of the destruction of Thera, the tin supply dried up. This prompted the peoples of the Near East to turn to iron as an alternative. Up to that point, bronze was actually the preferred material for most things; it was quite hard and strong enough for most purposes. It was easy to work, didn’t require as much heat to forge or cast it, and it didn’t rust. But with the tin supply gone, they had little alternative, and the Iron Age began.
I don’t expect quite so drastic a change in our economy because of the Chile earthquake and the tsunamis it created, but it does make one wonder about how vulnerable our global economy is to the ripple effects (pardon the pun) caused by disasters like this in far-away places.
This area of Chile is, as you may know, a major global source of copper. Early reports mentioned that mining operations were suspended, but expected to be back in production within hours. Clearly, safety of the miners is not foremost in the mind of whoever makes such decisions– some reports indicate as many as 30 aftershocks already (10 am 2/27, Pacific Time).
It sounds like the mining companies were probably not (yet) thinking about sending their workers into the cities to help clear rubble and rescue trapped people. I hope they have that idea soon and act on it.
But, globally speaking, a significant lapse in copper production would impact industries such as plumbing supplies, home wiring, electronics, electric motors/generator production and much more. So, there is an economic imperative (both for Chilean workers and industry worldwide) to return to production as soon as it’s safe, but I hope they take care of trapped people and emergency support first.
Our society is more vulnerable to individual incidents, even “minor” ones, than you might think. There’s an interesting example of the vulnerability of Wall street to a double click that cost $150K – and we got off easy.
It’s really apparent that the more we automate, the more vulnerable we are, as in an inverted pyramid. The more connected we are, the easier it is to catch viruses, invasive species, etc. The answer is to create inefficiencies, redundancies and multiple paths, but that is not an economically attractive approach in the short term. And humans are all about short term.
These vulnerabilities you rightly point out are the result of a single-minded push for efficiency. The just-in-time business model is a good example of this kind of thinking. The problem is that the greater the efficiency, the more you depend on everything going just right, and that all the pieces will function when you need them to.
I have a hunch that as things like global climate change, decreasing cheap oil, political instability, and other factors start to have their effects, business and government as a whole will start to value robustness over efficiency. I think that will mean more localization of economics, which I think is a good thing anyway.