Satoshi's Sidewalk #16: Extreme Weather

The ongoing winter storm in Texas is revealing just how much building materials and methods have deteriorated which is exposing the fragility of the complex nature of cities.

Texas is currently experiencing a winter storm the likes of which occurs roughly once or twice every 10,000 years. Talk about extreme. On top of the chances of such weather the storm came through after 50 years of a purely fiat standard.

How does the money amplify the damage done by extreme weather to the built environment?

Why, dear subscriber, I’m glad you asked!

Extreme weather can and does happen around the globe. This is self evident. What can be done about it when building cities? How far out does one look when constructing their home? Do I plan for beachfront property in Arizona for the eventual “big one” along the San Andreas Fault? Do Floridians assume every hurricane will be on the right tail of a Category Five? What if it snows 50 feet overnight Wisconsin? What if…what if…what if…

The likelihood of extreme weather can be statistically calculated and severity guessed without actually accomplishing anything. The real question is: what kind of extreme weather can be built for and protected against? Is building to withstand extreme weather financially feasible? Tradeoffs must be made.

If certain weather patterns are sure to occur during a single human lifetime of 80 years it would be wise to prepare for major weather events as an eventuality. What about the future lives of your children and grandchildren? It’s safe to assume bad weather of some kind will happen in their life times too. How much preparation between generations is enough?

Today cities use minimum requirements for an array of situations. Buildings in Las Vegas are built to withstand earthquakes. Drainage systems in Phoenix are built to withstand monsoon flash floods. Miami buildings to be battered by hurricanes. You get the gist. Different weather events in different geographies. Add to this differing cost thresholds for differing weather events. Now we’re getting somewhere.

If your grandfather experienced this week’s Texas-level storm and so did his grandfather, we can assume the built environment is constructed to a level of quality which would withstand the event. Humans will plan for historical weather patterns known to repeat. On a much simpler level of analysis we know the four seasons occur each year in a cycle. We can reasonably guess how bad one day or one weather event will be based on recorded history - and that’s generally what we prepare for. Any weather outside of this scenario would be labeled an outlier - an extreme event.

How much does it cost to prepare for extreme events? Too much.

Cities are a multitude of complex systems comprised of buildings, utilities, networks, and people stretched over a given metro area. These complex systems are built, rebuilt, modified, managed, and observed by small sects of the population on a daily basis. More commonly known as a job. To ensure the systems and all the moving parts within are durable enough - and kept in this necessary state for continuous operability - in order to survive this week’s storm is cost prohibitive. Every bolt must be fastened correctly. Every telecom wire connected with care and minimal distortion. Each water pipe buried at the right depth or wrapped with the right amount of insulation. Power poles made of trees thick enough to withstand the winds. Each piece of the interwoven puzzle put together for a 12-sigma event. Good luck.

Humans should prepare to the degree which they can reasonably afford. This brings us back to knowing what’s coming: prepare to withstand weather which occurs once in a generation. Beyond that, well, damage will be done, lumps will be taken, and bad things will happen outside of anyone’s control.

Over time this can be mitigated. The use of fiat money itself posed a tradeoff. The gains made in spatial salability by paper money were at the cost of temporal salability. Paper money moved better through space, but worse through time. A second order effect of this tradeoff is the declining durability of goods and the substitution of materials used to compensate for eroding purchasing power. Homes once built of beautiful brick and stone are now built of 2x4 lumber with a collection of applied materials, most highly manufactured products, to protect the building under minimally acceptable circumstances. The erosion of purchasing power over time forces an increasing number of consumers to accept the inferior substitute goods as the limited, viable option.

I am not arguing the less costly materials and more complicated methods have their use in a marketplace. Lower prices for (durable) goods such as home allows for more people to own a home who otherwise wouldn’t be able to afford it. This is not the same when nearly all consumers are limited to substitute materials and methods. Soon, everyone’s house is a stick-built, stucco-wrapped, pex-piped insurance claim waiting to happen when the weather gets a little crazy. This is not normal, or at least, it shouldn’t be.

Buildings are constructed to last a certain period of time - 25, 30, 50, 100 years. The components within a structure will wear out with use (aka consumption) and must be replaced. With incremental, or traditional, development patterns the owners of buildings could reasonably plan to repair or replace certain parts of the building before demolishing the existing structure and starting all over. Each new iteration of the land use provided an opportunity to build more with better materials and methods, increasing the use intensity of the land and thus productivity.

The circumstance we find ourselves in today is the opposite. Technology has masked the degradation of materials in the sense that humans are able to find more and different ways to manufacture new materials or combine materials in different ways. Buildings today are closer to chemistry sets than collections natural materials. Steel is vastly useful but has limited use due to cost - which only seems to go down slowly, if at all. Limestone blocks used to construct thick external walls of a home are hard to beat. Copper pipes are not plastic and are less prone to “pop apart.”

Cheaper and cheaper materials are used for production level homebuilding to meet rising material and labor costs. Given a long enough timeline the inferior material concoctions of a home today will be put to the test. This week, those homes failed that test and the occupants are the one who suffered - first. It would be remiss of one to think the same process is not occurring on the level of utility provision - water, sewer, electricity, communication, and emergency services coordination. The substitution effect is not limited to first time homebuyers.

To turn the tide of inferior homes, inferior buildings, inferior infrastructure - hell, seemingly inferior everything - something has to change. The issue must be found out and pulled root and stem. We now know that issue is the money. The mechanisms of human cooperation via trade and coordination via prices must be allowed to occur without impingement. It’s the best, and possibly only, way to reverse the process of decaying and inferior practices in constructing the built environment.

Fix the money, fix the built environment.


To my friends in Texas: stay safe, stay warm, and help out where you can for those in need. Things could be better, but things could be worse. A tip from my snowy Colorado days: build a snowman, drink schnapps by the fire, and use this time to build your arsenal of snowballs for unsuspecting friends and neighbors! -KTL