Chemical Technology February 2016

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COMMENT
Chemical Technology • January 2016 3
Toanswer theabovequestion, we could say
any of the following: Optimistic, Cautious-
ly Optimistic, Pessimistic or Negative.
A wonderful tool used by Control Systems in
their design work, is the Cause-and-Effect Dia-
gram. It is a graphic matrix that helps identify,
sort, and display possible causes of a problem
or quality characteristic. It is widely used to
structure the inherent safety considerations
during the start-up or shut-down of a plant and,
in graphic form, allows the designer to build into
the instrumentation, all those requirements to
safely start up the unit or, conversely, to shut
it down.
Can we as engineers, or more specifically,
chemical engineers, not use some of these tools
to try to understand quite what is happening in
the world of macro-economics raging around
us? We should be trying to do so because the
current state of affairs results in a shortage of
work opportunities and contracts for engineers,
which consequently stifles the industry, a cause
of grave concern.
More specifically, is the current downturn
just amanifestation of the knock-on effect of an
economy in a downturn like China? Or are we
on the downwards slope of a Kondratieff wave,
a concept which Russian economist, Nikolai
Kondratieff, developed in the 1920s, stating
there was a definite cyclic wave of economic
indicators always either in ascent or decline.
He postulated that these waves fluctuated in
phases of about 50 years; he also chosemany of
the indicators used by economists today such as
trade balances, resource and commodity prices,
interest rates, iron and steel production rates
and unemployment rates. Fortunately there
are other theories that indicate dips in these
longterm trends that could explain the current
worldwide economic downturn.
The Cause-and-Effect Diagram could be put
to use in interpreting the causes of the current
downturn. Engineers could make a study of
the available information regarding trends in
the production rates and consumption rates of
many of the natural resources and beneficiated
materials that make up the major components
of world trade.
By studying, for example, the units of sup-
ply and demand and current capacity, we can
make our own predictions regarding whether
the upturn in the Kondratieff wave may be a
reality. As David Stockman, former business-
man and Former Director of the US Office of
Management and Budget said, in one of his
online newsletters: “What really happened is
that the central bank instigated global macro-
economic bubble-ripped commodity pricing
cycles out of their historical moorings, resulting
in a one-time eruption of price levels that had no
relationship to sustainable supply and demand
factors in themines and petroleumpatch. What
materialised, instead, was an unprecedented
one-time mismatch of commodity production
and use that caused pricing abnormalities of
gargantuan proportions.”
An interesting perspective is afforded by
Warren Ingram, an executive at SmartRand, that
“In times like these, it is important to remember
that the markets always look forward and some
investors will be in a perpetual state of gloom,
as they believe things are going to get much
worse. …... If you were to graph the rand versus
the dollar since 2011, you would see that it has
moved in a nearly straight line upwards. This
means the potential for a reversal of this trend
is increasing. That is not to say that the rand will
recover to R5/$, but a significant recovery from
its current level is likely.”
Let us continue plotting the curves and any
change in the trends, from whichever Cause,
could then be converted to an Effect, and allow
for some considered and informed opinion.
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How we feel about the cycle of
the world economy