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Chile Earthquake Assessment

Jim Prevor’s Perishable Pundit, March 5, 2010

As we went to write about the earthquake in Chile, we held off, just because the information was as much rumor as fact.

In fact it was just March 4th when the authorities reduced the estimated death toll from 805 people to 279 as The New York Times reported:

Chilean emergency management officials announced Thursday that they had significantly overestimated the death toll from last weekend’s earthquake, lowering the figure from about 805 people to about 279.

Carmen Fernàndez, the director of the emergency management agency, known as Onemi, said in an interview that in several badly damaged municipalities, officials had erroneously included the names of people who were missing on the lists of those who had been killed.

“The number of people dead continues to be lamentable,” she said. “But it is significantly lower than those killed in earthquakes like this one that have occurred in other parts of the world.”

The total number of people who died in the earthquake could still change substantially over time. Many people are still missing, and not all of the dead have been identified.

The loss of life is, of course, a tragedy but considering the power of this earthquake — roughly 500 times what hit Haiti and literally strong enough to throw the earth off its axis — it is a remarkable achievement to have kept the death count so low.

We owe thanks to many who offered us reports: Rick Eastes, William Kopke, David Marguleas, John Pandol, Fred Vandenberg and others. We didn’t publish these reports because, in the chaos of the moment, they were often contradictory.

The most recent report from the Chilean Exporters Association says there was some damage to packing stations and cold storage facilities but relative normality will be restored with five working days:

UPDATE ON CHILE EARTHQUAKE
IMPACT ON FRUIT SUPPLIES

SANTIAGO, CHILE (March 3, 2010) — The Chilean Exporters Association (ASOEX) has surveyed the industry to assess the condition of the infrastructure, including internal transportation, electrical and port services.

Results indicate damage in major production areas and in the infrastructure, including packing stations and cold storage facilities. Seventy-eight percent of the damage occurred in regions VI, VII, Metropolitan Region and VIII, affecting mostly tablegrapes, apples, pears and blueberries.

Consensus among industry exporters and growers, however, is that the critical issues will be resolved within the next five working days, with a return to relative normality. Additionally, companies are showing the expected solidarity and are working together to ensure that the industry will be back on its feet and operating normally.

Meanwhile, the Chilean government has put in place well-rehearsed plans and programs to help speed the recovery of operations. Authorities have begun to repair the highways and bridges that are crucial to the transport of fruit from the growing areas to the ports. Since last Saturday’s earthquake, most areas have remained connected through alternative routes, but there have been inevitable delays in arrival times.

As of Wednesday, the Santiago Airport had begun servicing both incoming and outgoing flights from almost all major airlines for international and domestic routes, but with some key delays, it will take a few more days to return to full capacity.

The country’s main port of Valparaiso is loading from piers No. 1, 2, 3 and 6, working at 90% capacity. The northern fruit port of Coquimbo is operating normally and receiving without any problem fresh fruit that has been redirected from other ports.

Chile’s second-largest port, San Antonio, is operating at 60% capacity through the terminal EPSA (Empresa Portuaria de San Antonio) via piers 4, 5, 6 and 7, while the STI (San Antonio Terminal Internacional S.A.) is currently lacking electrical supply. Power is expected to return shortly, and will then be functioning at 90% capability. The small amounts of fruits that were destined to the port of Lirquén will have no problem being forwarded to alternative ports.

In regards to the fruit inspection sites servicing the U.S. market, all five facilities are up and running and receiving fruit for inspection.

“There are still some production areas as well as packing and cold storage facilities that have either no electrical supply or that have highway infrastructure damage, but through our discussions with authorities, complete electrical supply should be restored within the next 48 hours,” said Ronald Bown, Chairman of the Board for ASOEX. “All involved in the growing, harvesting and shipping of fresh fruit in Chile are committed to holding distribution disruptions to a minimum.”

ASOEX would also like to thank the international fruit community for itscontinuing support and would like to emphasize that fruit growers and exporters in Chile are committed to reducing the impact of this tragedy.

On a more personal level, we enjoyed this missive from John Pandol:

Produce Emergency Response

Since word of the Chilean earthquake hit Saturday, we’ve dialed more than our share of international calls. We worked the list of every cell phone and land line until we finally got through to a sister-in-law. One goes down a check list of priorities: Is everyone OK? How’s your house. What are you doing? What’s going on in the country? Do you need anything?

Back in the office we started the commercial version of the same list. Is everyone OK? How are your office, packing shed and cold storages? Are your people showing up to work? What’s the update on trucks, highways and ports? What is your estimate for the rest of the season?

Under regular conditions we in the produce trade spend a great deal of time separating information from speculation. A natural disaster makes it harder. We’ve received calls from the press and the trade wanting ‘to know’ the situation. We want to be positive and we have reason to be positive.

If confidence is the lifeblood of produce business relationships, we must work especially hard to maintain trade confidence.

Please be patient and flexible. The grapes will come.

There have been questions about how to support the relief effort. It was announced Tuesday that Chilean television personality Don Francisco will be putting on a 24-hour Telethon Friday in Chile. Don Francisco, star of the Sabado Gigantes variety show, has been on TV from Chile and later from Miami for 50 years. He is part Ed Sullivan, part Bob Barker and part Oprah. His Telethon, modeled after Jerry Lewis’ Telethon, has been a major source of charity for years. The Telethon Foundation will be working with the other major Chilean social welfare charities, like Hogar de Cristo, Techo para Chile and Caritas Chile. And the Chilean Red Cross will supply the boots on the ground to get aid to where it is needed most.

We think the low casualties in Chile offer a great lesson on how to address societal problems. The lesson is simple: If you have money, then you can act in such a way that you mitigate the damages caused by various problems.

In other words, the whole strategy of looking to prevent global warming, even if man-made global warming is true, may be counter-productive. If we do what will make society most wealthy, we will have more resources to deal with whatever problems are speculated to arise. If we impoverish ourselves to reduce global warming, then we may be powerless in the face of climate change.

This is not really an original thought. We dealt with it here, when we ran a piece about Bjorn Lomborg’s book, “Cool It: The Skeptical Environmentalist’s Guide to Global Warming”. The author had insisted on doing an interview with The New York Times on Water Street, which is now not near the water because New York has had the wealth to physically expand the island of Manhattan over time.

Perhaps the best article on the whole Chilean earthquake was a piece written by Bret Stephens in The Wall Street Journal, titled, How Milton Friedman Saved Chile:

Milton Friedman has been dead for more than three years. But his spirit was surely hovering protectively over Chile in the early morning hours of Saturday. Thanks largely to him, the country has endured a tragedy that elsewhere would have been an apocalypse.

Earthquake magnitudes are measured on a logarithmic scale. The earthquake that hit Northridge in 1994 measured 6.7 on the Richter scale. But its seismic-energy yield was only half that of the 7.0 quake that hit Haiti in January, which was the equivalent of 2,000 Hiroshima-sized bombs exploding all at once.

By contrast, Saturday’s earthquake in Chile measured 8.8. That’s nearly 500 times more powerful than Haiti’s, or about one million Hiroshimas. Yet Chile’s reported death toll — 711 as of this writing — was a tiny fraction of the 230,000 believed to have perished in Haiti.

It’s not by chance that Chileans were living in houses of brick — and Haitians in houses of straw — when the wolf arrived to try to blow them down. In 1973, the year the proto-Chavista government of Salvador Allende was overthrown by Gen. Augusto Pinochet, Chile was an economic shambles. Inflation topped out at an annual rate of 1000%, foreign-currency reserves were totally depleted, and per capita GDP was roughly that of Peru and well below Argentina’s.

What Chile did have was intellectual capital, thanks to an exchange program between its Catholic University and the economics department of the University of Chicago, then Friedman’s academic home. Even before the 1973 coup, several of Chile’s “Chicago Boys” had drafted a set of policy proposals which amounted to an off-the-shelf recipe for economic liberalization: sharp reductions to government spending and the money supply; privatization of state-owned companies; the elimination of obstacles to free enterprise and foreign investment, and so on.

In left-wing mythology — notably Naomi Klein’s tedious 2007 screed “The Shock Doctrine” — the Chicago Boys weren’t just strange bedfellows to Pinochet’s dictatorship. They were complicit in its crimes. “If the pure Chicago economic theory can be carried out in Chile only at the price of repression, should its authors feel some responsibility?” wrote New York Times columnist Anthony Lewis in October 1975. In fact, Pinochet had been mostly indifferent to the Chicago Boys’ advice until the continuing economic crisis forced him to look for some policy alternatives. In March 1975, he had a 45-minute meeting with Friedman and asked him to write a letter proposing some remedies. Friedman responded a month later with an eight-point proposal that largely mirrored the themes of the Chicago Boys.

For his trouble, Friedman would spend the rest of his life being defamed as an accomplice to evil: at his Nobel Prize ceremony the following year, he was met by protests and hecklers. Friedman himself couldn’t decide whether to be amused or annoyed by the obloquies; he later wryly noted that he had given communist dictatorships the same advice he gave Pinochet, without raising leftist hackles.

As for Chile, Pinochet appointed a succession of Chicago Boys to senior economic posts. By 1990, the year he ceded power, per capita GDP had risen by 40% (in 2005 dollars) even as Peru and Argentina stagnated. Pinochet’s democratic successors — all of them nominally left-of-center — only deepened the liberalization drive. Result: Chileans have become South America’s richest people. They have the continent’s lowest level of corruption, the lowest infant-mortality rate, and the lowest number of people living below the poverty line.

Chile also has some of the world’s strictest building codes. That makes sense for a country that straddles two massive tectonic plates. But having codes is one thing, enforcing them is another. The quality and consistency of enforcement is typically correlated to the wealth of nations. The poorer the country, the likelier people are to scrimp on rebar, or use poor quality concrete, or lie about compliance. In the Sichuan earthquake of 2008, thousands of children were buried under schools also built according to code.

In “The Shock Doctrine,” Ms. Klein titles one of her sub-chapters “The Myth of the Chilean Miracle.” In her reading, the only thing Friedman and the Chicago Boys accomplished was to “hoover wealth up to the top and shock much of the middle class out of existence.” Actual Chileans of all classes — living in the aftermath of an actual shock — may take a different view of Friedman, who helped give them the wherewithal first to survive the quake, and now to build their lives anew.

There are many places you can donate to send help to Chile, and with a blow like this, helping a friend recover is just good manners. But, thankfully, the Chileans will recover with or without charity. That is a testament to a People and a nation, and in that is a lesson for us all.

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