The fog was especially thick one morning last week. Visibility was greatly constrained. The fog horns bellowed in the darkest hour before dawn while we stirred from our splendid slumber.
Here in Long Beach, the frenetic movement at the mammoth Port of Los Angeles / Port of Long Beach complex has stalled to a peculiar standstill. Offshore, in the near waters between San Pedro Bay and Catalina Island, are an abundance of container ships. They drift about…waiting for resolution to the latest labor dispute.
If you’ve never driven through Terminal Island and up and over the Gerald Desmond and Vincent Thomas Bridges you are missing out on quite a sight. The ports are the gateway for over 40 percent of U.S. containerized imports. The lineup of containers and cranes, and semi-trucks and railcars is too expansive to take in from a single vantage point.
Yet this vast lineup is backing up and filling in the Pacific Ocean. Ship loading and unloading activities were suspended last weekend. The number of ships anchored and waiting to enter the ports jump from 20 to 31.
By mid-week that number had been cut in half. But, unfortunately, it won’t be for long. This weekend things could get ugly…
Dead in the Water
It’s a holiday weekend, you see. Workers earn at least 50 percent on top of their normal pay. The Port Maritime Association doesn’t want to cave to the antics of the International Longshore and Warehouse Union at the very moment their inflated wages balloon up even further.
The Union, on the other hand, says they’re standing by ready to negotiate. But the Association says their demands are unreasonable. In the meantime, the $1 trillion in trade that passes through the ports each year is dead in the water…
“The failure to resolve the problems at the West Coast ports is causing widespread pain for shippers, retailers, meat and poultry companies, and manufacturers across the country” reports the Wall Street Journal. “Railroads have been reducing service to the West Coast, and for months a growing lineup of ships has sat at anchor outside the ports of Los Angeles and Long Beach.
Obviously, suspending activities Thursday, Saturday, Sunday, and Monday will contribute to the lineup of ships. Perhaps they’ll surpass the record of 65 ships set during the 2004 standoff. They were queued up “halfway down to San Diego, like 50 miles down the coast,” recalled Art Wong, Port of Long Beach spokesperson.
We’ll certainly check it out for ourselves. We are always ready to gawp at something odd and abnormal…like a hunchback or an extended cluster of container ships.
Dock Worker Shakedown and You
Naturally, the National Retail Federation wants President Obama to somehow do something. “It’s time for the White House to immediately engage in this critically important economic priority and force the two sides to remain at the negotiating table until a deal is done.”
But what can the President really do? Even if he could force a deal, it wouldn’t be a deal that would last. For it wouldn’t be centered on labor productivity.
“The belief that labor unions can substantially raise real wages over the long run and for the whole working population is one of the great delusions of the present age,” wrote Henry Hazlitt in Economics in One Lesson. “This delusion is mainly the result of failure to recognize that wages are basically determined by labor productivity.”
An agreement that doesn’t account for labor productivity is as unnatural as a floating brick…or the President’s ears. Without coercion, employers could pass on workers who demanded more than their productivity is worth. Similarly, workers could pass on jobs that pay less than their output merits.
Certainly we do not doubt that dock workers do a good job. Most of them probably work very hard. But if they are not happy with their pay it would be more beneficial to everyone if they developed a more productive skill…something other than shaking down imported goods.
Of course, they’d rather have the consumer – that’s you – pick up the tab.
for Economic Prism