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Turkey Earthquake Shows That Corruption and Crony Capitalism Kill. Is California next?

When seismic regulators fail and builders seek short-term profits, the magnitude of human tragedy is enormous. And it can happen here.
 
 
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The recent Turkish earthquake, as with its modern predecessors, has shown that the witch's brew that crony capitalism produces is a leading cause of death and severe injury.

The phenomenon of " control fraud," the use of a seemingly legitimate entity by those that control it to commit fraud, exists in all three major sectors – private, public, and non-profit. Crony capitalism typically involves the interaction of public and private sector control fraud. I have written primarily about accounting control frauds, which are property crimes of mass destruction. Anti-customer, anti-public, and anti-employee control frauds can all cause mass casualties. Earthquakes and the tsunamis they produce can kill hundreds of thousands of people. Government programs have been exceptionally successful in reducing the loss of life from natural disasters. Early warnings, evacuation routes, barriers, and training can greatly reduce the losses caused by tsunamis. Seismic building codes, if properly enforced, can reduce direct deaths from earthquakes to exceptionally low levels even in severe seismic events. The saying is: earthquakes don't kill people; collapsing structures do.

The Long Beach Earthquake of 1933

On March 10, 1933, a magnitude 6.3 earthquake with its epicenter near Long Beach, California destroyed or severely damaged nearly 200 schools. Had the quake occurred during school hours, over a thousand children would likely have been killed and large numbers would have been injured. California school structures did not have to meet any seismic code. Scientists had warned of this danger to school structures prior to the Long Beach quake without producing a policy change, but the quake allowed tens of thousands of parents to see collapsed school buildings that would have obviously put their children at grave risk. They knew that a magnitude 6.3 was powerful, but that earthquakes could be dramatically more destructive.

The Field Act of 1933

Public demand for change was so intense in California – during the Great Depression, with the State and its localities in financial crisis – that the Field Act was enacted on April 10, 1933. The Field Act originally applied only to new construction. It required school buildings to be built in compliance with a seismic code designed to keep the structures from collapsing even in a severe earthquake. It also created a special periodic inspection process and professional staff designed to ensure compliance with the seismic code. The sponsor of the legislation, Mr. Field, was an extremely conservative elected official. The Field Act was enacted with bipartisan support – one month after Long Beach earthquake. In the 78 years since the enactment of the Field Act, no one has died from a seismic event in a California school covered by the Field Act. The Act has also virtually eliminated serious injuries from seismic events in California schools covered by the Field Act.

Turkey: Control Fraud and Corruption Kill

Turkey has decent seismic codes, largely modeled on California, but its enforcement of those codes is undermined by crony capitalism and poverty. Structures in seismically active regions are often more cost-effective if they meet seismic building codes because they are less likely to be damaged, and far less likely to suffer catastrophic damage, during a moderate or severe earthquake. The cost savings that code compliant buildings can achieve, however, are only likely to be demonstrated in the long-term and only in regions that suffer material earthquakes. In the short-term, it is cheaper to construct buildings that are death traps in a strong earthquake. Honest builders, therefore, find it difficult or impossible to compete with builders that falsely claim to have complied with the seismic codes. This is another example of a Gresham's dynamic in which fraud drives honest firms from the marketplace. It is essential that the regulators serve as the “cops on the beat” to detect the fraudulent builder during the construction process and to prevent their frauds and the death traps they would otherwise complete and sell to the public. The need is greatest in structures that aggregate large numbers of people, e.g., schools and apartment buildings.

The seismic regulators, however, can fail for many reasons. The poorest homes may be constructed by the owner or the informal economy out of materials that are inherently likely to fail even in moderate earthquakes. The government, private sector, and non-profit sectors can reduce this danger by popularizing inexpensive designs that reduce the risk that the buildings will collapse in a moderate quake. The seismic regulators can also fail if they are denied the resources to succeed, become complacent, or are corrupt. Fraudulent builders have powerful incentives, and no moral restraints, to bribe the seismic regulators. Fraudulent builders that successfully bribe the seismic regulators can gain a decisive competitive advantage over honest builders. Endemic corruption is only possible when those that control the seemingly legitimate regulatory entity use the entity as a means of looting.

The more corrupt the nation, all other factors being held constant, the more likely people are to die in natural disasters. [See, generally, Black, W., “Corruption Kills” in “International Handbook of White-Collar and Corporate Crime,” eds. Pontell, H. and Geis, G. (Springer 2007). Nicholas Ambraseys and Roger Bilham published an article with the same title in January 2011 in the journal Nature (Vol. 469). They reported the results of their study that found that “83% of all deaths from building collapse in earthquakes over the past 30 years occurred in countries that are anomalously corrupt.”]

The recent earthquake in Turkey continues this familiar pattern. Al Jazeera's Anita McNaught reported from Turkey on October 25, 2011 about the failure of the authorities to enforce the seismic codes:

“Turkish authorities are likely to face questions over why they have failed to tighten up construction regulations to make buildings more earthquake-resilient," McNaught said.

"Experts have continuously told the Turkish authorities that the earthquake itself is not what kills people. It is faulty building construction that kills people," our correspondent said.

"There have been pleas from all quarters - from people working in civil defence, from academics, from architects and urban planners - for successive governments to tighten up the building regulations. But that involves a huge investment of money."

Turkey Earthquake Death Toll Nears 300

The Wall Street Journal's Marc Champion reported on October 28, 2011 that initial inspections are revealing a pattern design and building materials failures in the structures that collapsed. He accompanied one the inspectors, Mr. Tasarsu:

"The building, like many others old and new, was built as a single unit, but was too long. Inside, it should have been split into a separate skeleton with twin columns every 40 feet, so that each section shook independently when the earthquake hit, he said. 'It's like when three men link together with their arms and then you push them around. They bump into each other and its very unstable,' said Mr. Tasarsu, adding that it is cheaper to build as a single unit.

A big issue is the poor materials and construction techniques used in Turkey, in some cases still today.

As Mr. Tasarsu toured, a woman came out of the van where she and her family have been living, to let him into the yard of her home. The house, a two-story structure, had no columns or frame at all. It was built 40 years ago with concrete walls poured onto stone foundations. Being short and the walls thick, it wasn't a problem, Mr. Tasarsu said.

A few houses over, a building made the same way had cracks running straight into the foundations, which were made with lightly compressed gray sand and cement blocks that crumbled to the touch. 'This place is dangerous,' he said. 'It will have to be demolished.'

 
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