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Building codes were on the books in Haiti too. There is a lot more to this question, including the presence of honest government, the ability of an economy to

Building codes were on the books in Haiti too. There is a lot more to this question, including the presence of honest government, the ability of an economy to afford the code, and a healthy insurance market. Insurance companies often require higher standards than building code demands. Also, politically, the reason some societies have strict building codes is because there is a group-- insurance companies-- that have an economic incentive to push for stronger codes.

Vivtek 16y ago
Excellent point.
cheez 16y ago
I once read a passage on how insurance companies would be the biggest driving force in a completely free state. For example, you would insure your house against theft which would make it economical for them to create a kind of police force. Not saying I'd like that, but interesting to see how other things already operate that way.
- notahacker 16y ago
  At the risk of letting this discussion degenerate into a debate over the libertarian definition of "free"... It would also make it economical for insurance companies to quite literally be thieves, and uneconomical for individuals not to pay protection money to the most powerful (and likely also most expensive) insurance company.
  - sethg 16y ago
    Aside from the problem of outright extortion, even the savviest financiers can underestimate low-probability risks (as the recent mortgage debacle shows). You would have cycles of price wars among insurers trying to attract customers by lowering premiums, until one larger-than-expected crime wave (or even a hiccup in the bond market) leaving major issuers unable to pay out their claims.
    - joe_the_user 16y ago
      Aside from the problem of outright extortion, even the savviest financiers can underestimate low-probability risks (as the recent mortgage debacle shows). While savvy investors may indeed underestimate low-probability risks, I take issue with any claim the mortgage bubble showed this. The sad end of that bubble was an extremely high probability event. The main thing the debacle showed was the willingness of many people to believe fallacious arguments which made reference to claims about low probability events. Even there, the willingness of investors to believe that standard "this time it's different" line has been shown over and over again.
      - stretchwithme 16y ago
        Yeah. Actually, the savviest investors were the ones betting that the bubble would pop. Of course, the majority thinks otherwise or there would have been no bubble. Savvy in this case was simply looking at the facts and not letting popular opinion keep you from acting. And, for some, having friends in the government to bail out the fools who bet on the bubble growing forever so you can get paid.
    - OstiaAntica 16y ago
      The "underestimation" of mortgage risk was deliberate, the bankers were motivated by short-term bonus payouts.
    - wisty 16y ago
      That's hard to say. People are often really scared by things like climate change (uncertain, huge impact), and less scared of everyday disasters. http://www.schneier.com/blog/archives/2009/11/fear_and_overre.html http://www.schneier.com/blog/archives/2009/11/fear_and_overr... Or table here: http://www.schneier.com/essay-170.html http://www.schneier.com/essay-170.html
  - far33d 16y ago
    You mean the mob?
    - VladRussian 16y ago
      i think he meant government.
  - cheez 16y ago
    Sadly, this is already the case in the "War on Drugs". In another sense, we already do this but there is no competition. A free society is not exclusive of a strong government to protect property rights and handle externalities economically. It's when they take liberties with their charge when things get bad.
- johngalt 16y ago
  The original fire departments operated in this manner.
notahacker 16y ago
Much of it is down to the perception of imminent threat, with actually having the money to pay for measures to circumvent it being the next most important factor. Neither of those really existed in Haiti, or South East Asia. (The implication in the original article that the South East Asians weren't all that smart staying on the coast is pretty insulting when you've seen what the infrastructure on the SE Asian coast is actually like.) Insurance companies can coexist perfectly with lax building codes so long as the market can bear higher premiums - if cost of damage multiplied by probability of earthquake over a time frame is lower than the increased cost of construction or remedial work then nothing gets done. Engineer cartels and political will to avoid preventable casualties at all costs are more important in saving lives here than the free market.
- WalterBright 16y ago
  One of the most effective things you can do when building a house to save your own life and property is to install a fire sprinkler system.
- drinian 16y ago
  What's interesting is that, fifty years ago, Japan started in largely the same economic place as SE Asia and China, but somehow managed to do things like enforce strict building codes before becoming the world's most developed nation. Seems like a good illustration of just how insidious systemic corruption can be to the development of a nation.
  - joe_the_user 16y ago
    My clock says fifty years ago was 1960. "The Industrial Revolution in Japan occurred during Meiji period." [September 1868 through July 1912] http://en.wikipedia.org/wiki/Meiji_period http://en.wikipedia.org/wiki/Meiji_period
  - angus77 16y ago
    Japan was a highly industrialized and highly educated country that happened to be down in the dumps 50 years ago due to WWII. For instance, the city I live in (Shizuoka) was pretty much obliterated by napalm. Then they rebuilt. China's not rebuilding anything---they're building up a modern economy pretty much for the first time.
dmlorenzetti 16y ago
There's also political pressure in the opposite direction, from the construction industry. I heard a lecture once by a structural engineer who had worked in hurricane alleys in Florida. He said there was a cycle of tightening up rules (for instance on the number of nails needed to hold down a roof) after big storms, then relaxing them as the years went by. Without a big storm to remind people just why the rules were tightened up, there was inevitable pressure to relax them in order to make it cheaper to build. This is more off-topic, but another interesting thing he said was that you could get a sense of maximum local wind speeds by looking at airstream-type trailers. They are, as you might expect, extremely well engineered to resist the sorts of wind pressures you get at highway speeds, so winds of 60-80mph don't tend to rip the hide off them. But you get above a certain threshold, and they all tend to give way at once.
- OstiaAntica 16y ago
  Florida is an interesting example. If development patterns there were left to market forces, the coasts of Florida would not be as significantly developed. Insurance costs would prohibit it. But the state's insurance regulations control prices and force inland homeowners to subsidize the insurance rates of coastal homeowners. Even worse, as insurance companies flee this distorted market, the state stepped in and now runs its own insurance company, which is building a massively underfunded risk portfolio. Literally the state of Florida is at risk of bankruptcy if another hurricane Andrew hits. Another factor is, if the storm is big enough, the feds step in with FEMA and bailout people who are underinsured. People living in Florida's hurricane alley pay nowhere near the cost of the risk of living there, and the result is overbuilding, and catastrophic property losses when the big one eventually does hit.
  - sbov 16y ago
    Sorta like earthquakes in the SF bay area. Humans aren't rational. Considering relatively few people actually get earthquake insurance in California, I'm sure theres some level of the cognotive dissonance by many of those who agree with the main thrust of your point.

Vivtek 16y ago

Excellent point.

cheez 16y ago

I once read a passage on how insurance companies would be the biggest driving force in a completely free state. For example, you would insure your house against theft which would make it economical for them to create a kind of police force. Not saying I'd like that, but interesting to see how other things already operate that way.

notahacker 16y ago
At the risk of letting this discussion degenerate into a debate over the libertarian definition of "free"... It would also make it economical for insurance companies to quite literally be thieves, and uneconomical for individuals not to pay protection money to the most powerful (and likely also most expensive) insurance company.
- sethg 16y ago
  Aside from the problem of outright extortion, even the savviest financiers can underestimate low-probability risks (as the recent mortgage debacle shows). You would have cycles of price wars among insurers trying to attract customers by lowering premiums, until one larger-than-expected crime wave (or even a hiccup in the bond market) leaving major issuers unable to pay out their claims.
  - joe_the_user 16y ago
    Aside from the problem of outright extortion, even the savviest financiers can underestimate low-probability risks (as the recent mortgage debacle shows). While savvy investors may indeed underestimate low-probability risks, I take issue with any claim the mortgage bubble showed this. The sad end of that bubble was an extremely high probability event. The main thing the debacle showed was the willingness of many people to believe fallacious arguments which made reference to claims about low probability events. Even there, the willingness of investors to believe that standard "this time it's different" line has been shown over and over again.
    - stretchwithme 16y ago
      Yeah. Actually, the savviest investors were the ones betting that the bubble would pop. Of course, the majority thinks otherwise or there would have been no bubble. Savvy in this case was simply looking at the facts and not letting popular opinion keep you from acting. And, for some, having friends in the government to bail out the fools who bet on the bubble growing forever so you can get paid.
  - OstiaAntica 16y ago
    The "underestimation" of mortgage risk was deliberate, the bankers were motivated by short-term bonus payouts.
  - wisty 16y ago
    That's hard to say. People are often really scared by things like climate change (uncertain, huge impact), and less scared of everyday disasters. http://www.schneier.com/blog/archives/2009/11/fear_and_overre.html http://www.schneier.com/blog/archives/2009/11/fear_and_overr... Or table here: http://www.schneier.com/essay-170.html http://www.schneier.com/essay-170.html
- far33d 16y ago
  You mean the mob?
  - VladRussian 16y ago
    i think he meant government.
- cheez 16y ago
  Sadly, this is already the case in the "War on Drugs". In another sense, we already do this but there is no competition. A free society is not exclusive of a strong government to protect property rights and handle externalities economically. It's when they take liberties with their charge when things get bad.
johngalt 16y ago
The original fire departments operated in this manner.

notahacker 16y ago

Much of it is down to the perception of imminent threat, with actually having the money to pay for measures to circumvent it being the next most important factor. Neither of those really existed in Haiti, or South East Asia. (The implication in the original article that the South East Asians weren't all that smart staying on the coast is pretty insulting when you've seen what the infrastructure on the SE Asian coast is actually like.) Insurance companies can coexist perfectly with lax building codes so long as the market can bear higher premiums - if cost of damage multiplied by probability of earthquake over a time frame is lower than the increased cost of construction or remedial work then nothing gets done. Engineer cartels and political will to avoid preventable casualties at all costs are more important in saving lives here than the free market.

WalterBright 16y ago
One of the most effective things you can do when building a house to save your own life and property is to install a fire sprinkler system.
drinian 16y ago
What's interesting is that, fifty years ago, Japan started in largely the same economic place as SE Asia and China, but somehow managed to do things like enforce strict building codes before becoming the world's most developed nation. Seems like a good illustration of just how insidious systemic corruption can be to the development of a nation.
- joe_the_user 16y ago
  My clock says fifty years ago was 1960. "The Industrial Revolution in Japan occurred during Meiji period." [September 1868 through July 1912] http://en.wikipedia.org/wiki/Meiji_period http://en.wikipedia.org/wiki/Meiji_period
- angus77 16y ago
  Japan was a highly industrialized and highly educated country that happened to be down in the dumps 50 years ago due to WWII. For instance, the city I live in (Shizuoka) was pretty much obliterated by napalm. Then they rebuilt. China's not rebuilding anything---they're building up a modern economy pretty much for the first time.

dmlorenzetti 16y ago

There's also political pressure in the opposite direction, from the construction industry. I heard a lecture once by a structural engineer who had worked in hurricane alleys in Florida. He said there was a cycle of tightening up rules (for instance on the number of nails needed to hold down a roof) after big storms, then relaxing them as the years went by. Without a big storm to remind people just why the rules were tightened up, there was inevitable pressure to relax them in order to make it cheaper to build. This is more off-topic, but another interesting thing he said was that you could get a sense of maximum local wind speeds by looking at airstream-type trailers. They are, as you might expect, extremely well engineered to resist the sorts of wind pressures you get at highway speeds, so winds of 60-80mph don't tend to rip the hide off them. But you get above a certain threshold, and they all tend to give way at once.

OstiaAntica 16y ago
Florida is an interesting example. If development patterns there were left to market forces, the coasts of Florida would not be as significantly developed. Insurance costs would prohibit it. But the state's insurance regulations control prices and force inland homeowners to subsidize the insurance rates of coastal homeowners. Even worse, as insurance companies flee this distorted market, the state stepped in and now runs its own insurance company, which is building a massively underfunded risk portfolio. Literally the state of Florida is at risk of bankruptcy if another hurricane Andrew hits. Another factor is, if the storm is big enough, the feds step in with FEMA and bailout people who are underinsured. People living in Florida's hurricane alley pay nowhere near the cost of the risk of living there, and the result is overbuilding, and catastrophic property losses when the big one eventually does hit.
- sbov 16y ago
  Sorta like earthquakes in the SF bay area. Humans aren't rational. Considering relatively few people actually get earthquake insurance in California, I'm sure theres some level of the cognotive dissonance by many of those who agree with the main thrust of your point.