Perspectives on Catastrophes in the London Review of Books

Here is a summary of 13 articles published by the London Review of Books (LRB). It covers fat-tailed distributions, the traditional natural catastrophe perils, climate change and man-made, ecological collapse. I pick out six themes and list them at the end.

Fat-tails

In 'The Blindfolded Archer', Donald MacKenzie reviews The (Mis)behaviour of Markets by Benoit Mandelbrot and Richard Hudson. A wonderful metaphor is given to explain the difference between normal and fat-tailed distributions. The archer's arrows will make a bell-shaped distribution around the target with a variance that tends towards a fixed value. The blindfolded archer will instead leave a distribution whose variance is theoretically infinite. In the 1950s, models were used which assumed that the logarithm of price changes in financial markets followed a normal distribution. This is the canonical model which can be elaborated to cope with the fact that over short periods of time the distribution of price changes is actually fat-tailed. The volatility of the prices is allowed to change over time, which fattens the tails.

The canonical model assumes that price changes are 'mildly' random and successive changes are independent. Price changes, Mandelbrot argues, have long-term memory. The theory follows H. E. Hurst's hydrological analysis of successive flooding of the River Nile. In the early 1960s, Mandelbrot championed the application of Paul Levy's statistical distributions to financial economics. At this time, they found evidence of infinite-variance Levy distributions in the markets. A key feature of Levy distributions is that of self-similarity.

Here is a wonderful description of what makes a good model. "A wildly random distribution with infinite variance can 'expect' extreme events" and this is why it is preferred as a model than the normal, thin-tailed distribution. When an extreme event does happen, because the Levy distribution was adopted, the parameters that determine the likelihood of future extreme events are barely modified. This prevents crises getting worse because extreme events are expected and taken into account by the current option price. The article is a prime example of how precise and clear the writing can be in the LRB, so the first theme found in this review is that of the clear communication.

One final note, on 12th October 1987, UK markets nose-dived and there was a great windstorm. An example of correlation, but not causation, between financial market collapse and natural catastrophes.

Traditional Perils

In catastrophe modelling, the traditional perils are tropical cyclones (e.g. hurricanes), earthquakes, floods and winterstorms. Modern perils include terrorism, cyber and wildfire, while the effect of climate change is an area of ongoing research.

In 'Was it murder?', Sheri Fink's Five Days at Memorial: Life and Death in a Storm-ravaged Hospital is reviewed. As Hurricane Katrina descended on New Orleans, Ray Nagin, the city's mayor, ordered everyone to leave the city except hospital staff. The Memorial hospital thought it was ready for Katrina. They had a plan premised on the emergency generator being able to run for 3 days. However the generator was in the basement, several metres below sea level, and so it inevitably failed. Swamp sewage conditions prevailed. Foul water, eight feet high. Dead bodies seeping from the morgue. There were fears of vigilantes and epidemic outbreaks. The hospital staff asked, "How do we stop it getting irretrievably out-of-control?"

Some of the patients died from a morphine overdose. Was this murder or compassion? The private corporation that owned the hospital, Tenet Healthcare, abandoned the Memorial's staff when they needed them the most. Surely Tenet Healthcare bears some responsibility? Federal ineptitude was also a factor, the National Guard fumbled and the Army Corps of Engineers did not make strong and tall enough levees. It must be admitted that The Memorial needed a better plan. New Orleans's Charity Hospital had a better plan and it kept going.

The review ends by noting that during Hurricane Sandy, hospitals lost power but the Goldman Sachs building kept the lights on. This alludes to the second theme of this LRB review: catastrophes impact the poor more severely than the rich.

Keeping to the traditional perils, in 'When the Floods Came', James Meek tells us about the U.K. summer floods of 2007.

The usual cliche is insurance companies do not pay out, so credit to the LRB for printing a counterexample. A poster on a pub window pleas with the Tewkesbury Borough Council's director of planning to "stop building on flood plain". In the catastrophe modelling industry, there is a lot of focus on the financial loss numbers and the perception is that insurance corrects all. But what about the 350,000 people without running water in Gloucestershire? There is no mechanism to correct for this. Instead human volunteers deliver bottled water in commandeered shopping trolleys. The trauma is acutely felt. A flooded house taking five months to repair.

Tewkesbury is a town divided into public servants, private servants and localists. The localists complain that the Environmental Agency only considers the flood risk from coastal and fluvial (on-plain) flooding but not pluvial (off-plain). Meek describes a "consistent venom" towards public servants while a "relatively moderate tone" towards the private ones such as insurance companies. Hostility towards the public servants for not stopping the housebuilders rather than to the housebuilders themselves. When insurers raise premiums, the government is blamed for not improving levees. But Severn Trent did not have a back-up pipeline in place despite knowing its site was on a flood plain. Since that flood, Severn Trent vowed to spend £25 million on a back-up pipeline, about 8% of its profits for 2007.

One final note is that Meek wrongly interprets a flood return period. He is plain wrong to say that if a flood event has an annual probability of 100 years and it has not occurred in 137 years then it is "well overdue". A correct interpretation of the 100-year return period is that the flood has a 1% chance of occurring in 2007 as it does in 1997, 1987 or 1977. The probability of a flood occurring in 2007 could be conditional on whether a flood occurred or not in previous years but this is not what the 100-year return period means. Here unfortunately is a counterexample to the first identified theme of clear communication.

A blog article by Michael Amherst titled 'In Tewkesbury' is also about the 2007 summer floods. Some residents were out of their homes for two years citing disputes with insurance companies. Forced to live in caravans or mobile homes by the roadside. Ten years on from the flood and the recession, the high street has not fully recovered. In 2019, the Brexit Party won in the Tewkesbury borough. Do local people know better than outside experts? It is a shame that multinationals like Amazon pay proportionately less tax than Tewkesbury's high street traders. Here is an example of where economic globalisation has slowly eroded a community and then a natural disaster has tipped it into collapse.

Compare this to another blog on floods but in Bosnia. In 'Bosnia under Water', Peter Geoghegan explains the difficulties faced by Bosniaks returning to Republika Srpska while the River Sana overtops its banks. International media ignored the story. People are angry with politicians. No help from the governments, but it is desperately needed if there is no private insurance. This becomes an opportunity for the political opposition to score points. It has brought the "Balkans' kleptocratic political class together". The third theme then is that catastrophes, if mishandled by the sitting government, can become an opportunity for opposition political parties.

Climate Change

In 'If on a Winter's Night a Cyclone', Thomas Jones reviews Amitav Ghosh's The Great Derangement. On 28th March 2017, Trump signed an executive order to promote energy independence which may well exacerbate climate change. Trump positioned a former CEO of Exxon Mobil (Tillerson) as Secretary of State and an irrational fool (Pruitt) as head of the Environmental Protection Agency (EPA). Note the latest information about Climate Change on the EPA's website is dated 2016!

Around 2015, the U.S. was responsible for 15% of global carbon emissions and China for 30%. The E.U. was the third largest polluter and then India (5% in 2015). 125 million people in India and Bangladesh could be displaced by rising sea levels. Ghosh asks, "What might happen if a Category 4 or 5 storm, with 150 mph or higher wind speeds, were to run directly into Mumbai?" He conjectures severe floods, widespread devastation, nuclear meltdown. More broadly, he asks, who are spared during a disaster? Are the rich as vulnerable as the poor? "The rich have much to lose, the poor do not," the article says. This echoes the second theme.

The Pentagon "devotes more resources to climate change than any other branch of US government." Global warming will lead to local problems around the world. If your enemy is likely to suffer more than you then climate change is your weapon. Ghosh suggests future generations will think our time failed to address climate change through the arts. Hence the title of his book. Climate change is contracting into a "narratable span".

In 'Unfrozen Sea', Michael Byers sails the Northwest Passage. In 2004, the Arctic Climate Impact Assessment reported that the average extent of sea-ice cover in summer had declined by 15-20% over the previous 30 years. The remaining ice was 10-15% thinner (40% in the middle of the Arctic Ocean). Possible positive feedback as plants die out and marine bacteria release carbon into atmosphere. Leaching of mercury from soils and into the food chain. Shorter feeding seasons for polar bears. Governments are capitalising on the new opportunities opened up by climate change. The opening of the Northwest Passage to regular navigation by regular vessels. But then there is the risk of an oil spill in the Arctic, also the introduction of foreign species. The latter is particularly of grave concern to Inuits. Will the Northwest Passage be a back-door to North America for smugglers or even terrorists? Big Oil is all over it. 25% of fossil fuels await in the Arctic.

In 'Besides I'll Be Dead', Meehan Crist reviews Jeff Goodell's The Waters Will Come. In talking about Miami, Goodell tells a wider truth, "nobody wants to spend the money to build a more resilient city because nobody owns the risk." Real estate brokers should disclose flood risks. As sea levels rise (8 feet by 2100!), should we retreat from the coastlines forming climate refugees, or divert the waters, or lift the city? High-risk, low-lying areas will be taken on by the poorest, who are used to the hardship. Apparently the Thames Barrier in London is in need of replacing but it's too expensive and would take too long to build. In Bangladesh, the land is sinking too!

Reminiscent of Jared Diamond's latest book Upheaval, Goodell uses the five stages of grief to explain the inaction to facing rising sea levels: denial, anger, bargaining, depression, acceptance. Crist instead suggests the mourning for the 'ambiguous loss' of missing soldiers. One man pleas with the State of Louisiana to buy his house and enable him to get out of harm's way.

There is a call to architects to design cities that live with water: Kunle Adeyemi. The rising sea levels of 2030s may be our generation's version of the dust bowl of the 1930s. Natural disasters become man-made, natural disasters.

Greenland holds enough water to raise sea levels by 22 feet but a tipping point would need to be met for that to happen. Goodell's solution is clear: stop burning fossil fuels and move to higher ground.

Wildfire

In 'El Diablo in Wine Country', Mike Davis blogs about wildfire risk in California. 2017 and the Tubbs Fire has destroyed 2800 homes and businesses in Santa Rosa. The previous winter's record precipitation generated the fuel. Plus the arrival of hot dry offshore winds with gusts of 50 to 70 mph - known as El Diablo - that drive the fire. Pine beetles have massacred the forests of the Northern Rockies. The Montana fires ignited by lightning. A blaze in Greenland in July 2017. Peat is exposed as the permafrost peals back. Peat fires can burn for years. Will the drought-fuel accumulation-firestorm cycle become more common in California? "We ignore the real-estate juggernaut that drives the suburbanisation of our increasingly inflammable wildlands." Being now to see the fourth theme: real-estate greed is to blame for why we build in wildfire zones and flood plains.

In 'Smoked Out', McKenzie Funk uses a personal tale of how the smoke from nearby wildfires reduced his and his family's air quality. Intimates the increased activity is becoming the new norm borne out by the new habit of wearing smoke masks in summer.

The government's mixed messages: while the message from government to business is that there's no need to change your behaviour in response to climate change and don't worry we won't have a carbon tax, the departments of military and security are preparing for the worst consequences of climate change. This will pan out as the rich getting richer and protected from climate change and rest suffer what they may. This echoes Amit Ghosh's book, so governments are sending mixed messages on climate change is the fifth common theme. The external message is not to worry, but internally they are planning for its worst consequences.

Urban migration means that as-of 2007 there are more people living in cities than rural areas, add to this that the clearest climate change signal is sea-level rise and the fact that many cities are historically built around ports and by the sea, and it means cities are becoming ground zero for climate change. The convergence of migration and sea-level rise.

Land of Opportunity

In 'Free-Marketeering', Stephen Holmes reviews Naomi Klein's The Shock Doctrine, a book about companies that profit from catastrophes, both man-made and natural. Defence contractors, arms dealers, high-tech security firms, the oil and gas sectors, construction companies and private healthcare firms. For example, Lockheed Martin's and Halliburton's huge profits from the Iraq War. Corporations that see "exciting market opportunities" rather than human suffering, in wars, hurricanes, epidemics and other disasters. Holmes neatly summarises, "Disasters discriminate because the rich are equipped with shock absorbers that the poor cannot afford." Businessmen and evangelists - both will be saved when the rapture comes.

In 'Neo-Catastrophism: Sinful Cities?', Eric Klinenberg points to terrorist attacks such as dirty bombs, and extra-terrestrial attacks such as asteroid impacts as events that could shake cities and alter a city's self. Also the Cold War tests in deserts that left areas unhabitable and also afflicted towns downwind. The solution he says lies in the liberal intellectual classes to rebuild a city's culture and community. Sounds like catastrophe is being used as an opportunity to create new elite tastes. Some people just aren't intellectual, does this mean they should be excluded?

The last two articles suggest a sixth theme: catastrophes are an opportunity, not only to gain financial wealth but also soft power and influence. Build new tastes as well as new buildings.

In 'California Noir: Destroying Los Angeles', Michael Rogin reviews Mike Davis' Ecology of Fear. Highlighted ideas include: over-development violates a region's ecology; developers pretend they can invade without risk. The fear of an ecological judgment day is promoted by environmentalists and religious fundamentalists rather than capitalist developers.

Can the natural disasters of a landscape inform the political hopes and fears of that area? If a place experiences earthquakes, hurricanes and wildfires, is its politics more likely to be of a revolutionary flavour? Definitely not, compare Japan and France and all of Latin America.

This book seems to draw as much inspiration from science-fiction as science. The future city as a social apartheid, see Ernest Burgess' concentric zone model, JG Ballard's High-rise. The Left's adoption of environmental concerns, the similarity between a judgment day bestowed by Marxists as much as by environmentalists and evangelists.

Conclusions

To summarise, here are six themes identified from these articles:




Alastair Clarke
21 July, 2019