Fundamentals - Moisture Vapor
Design walls, foundations, and roofs to control water and seal air to provide a long lasting structure.
Warm air holds more moisture than cold air.
When warm air hits a cold surface, the water drops out as condensation.
In northern climates, the air inside your house is most of the time warmer than the outside air temperature. This suggests putting the vapor barrier on the inside face of the wall.
In southern climates, the air inside your house (thanks to air conditioning) is most of the time cooler than the outside air temperature. This suggests putting the vapor barrier on the outside face of the wall.
Most building materials are permeable to water vapor, but a 6 mil (6 thousandths of an inch) polyethylene sheet can be considered impermeable to water vapor and therefore is used as a "vapor barrier" and if sealed properly an "air barrier".
Walls in practice get wet inside no matter how hard you try to keep them dry inside, so you must have a way for them to dry out again rather than trapping the water inside. This means you only want one vapor barrier and you need to be able to dry from both sides of the vapor barrier.
EPS (Expanded Polystyrene) is somewhat retardant to water vapor, but does slightly allow some water vapor through. Some people refer to this as allowing the wall to breath. 8" thick EPS (as I use on my walls) is about 0.25 perms. I judge this to be sufficient to avoid needing a separate vapor barrier membrane in an above ground wall.
Not designing and implementing properly for water vapor is much more likely to make your house uninhabitable than earthquakes or any other bad thing.