A Discussion of Dockworkers and Creative Destruction
A few weeks ago, the International Longshoreman’s Association (ILA) and the United States Maritime Alliance (USMX) signed a new deal that will increase wages for U.S. dockworkers and safeguard workers from the threat of automation.
When it comes to the debate about automation, my instinct is to always embrace productivity enhancements. When we invent ways to produce more goods and services more efficiently, we make them more affordable and raise living standards. But greater efficiency also leads to job losses in the short term.
Consider how thousands and thousands of workers once collected tolls, until EZ-Pass replaced most of these jobs, significantly improving the driving experience. Or think of how the rise of the automobile led to the decline of horse-drawn transport, putting many blacksmiths, stable workers, and carriage makers out of business. Or keep in mind how canal transport was once dominant, yet few today would argue that canal lobbyists should have blocked the creation of railroads or that railroad lobbyists should have stymied the development of the airplane. Another favorite example is of bank tellers fearing mass job losses when ATMs came along. But as the economist James Pethokoukis writes, “ATMs initially reduced the number of tellers needed per branch, but they ultimately led to more bank teller jobs overall because they made it cheaper to open and operate more branches.” In short, what the economist Joseph Schumpeter called “creative destruction” is a good thing— and that applies to dockworkers as well.
Just as the shipping container revolutionized ports despite initial resistance, automation will improve over time. As Marc Levinson explains in The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, container shipping, introduced in the 1950s, helped lower the cost of loading cargo from $6 to 16 cents per ton. Containerization revolutionized global trade and increased prosperity for billions of people around the world. It’s a key reason why, according to the St. Louis Fed, world exports grew from $384 billion in 1970 to $25 trillion in 2018. Would today’s dockworkers really prefer to return to the days of loading and unloading heavy boxes by hand? As Tad DeHaven of the libertarian Cato Institute writes, “Containerization cost many union dockworkers their jobs. But those losses were dwarfed by the economic benefits realized by countless American consumers, businesses, and workers in other industries.
I get the human desire of unions to fight for their jobs and for their dignity. I think of how Jackie and I just finished watching the second season of The Gilded Age and of a powerful scene in which the steel workers fight for “8-8-8”— “Eight hours for work, eight hours for sleep, and eight hours for leisure!”— in the face of rifles. But when it comes to unions opposing automation at America’s ports, we must ask: Are these legitimate demands that will lead to a more prosperous nation? Or is the rejection of automation going to hinder humanity in ways that future generations will regret?
Of course, creative destruction only improves humanity when we offer training to those who lose jobs because of technology. Which gets me back to a regular theme in this newsletter. We need to train Americans to work jobs that will never be replaced by machines. I’m talking about skilled trades like electricians, plumbers, carpenters, mechanics, and welders, plus those jobs that require deep human connection.
The debate about port automation came to my attention a few weeks before the 2024 election, when approximately 45,000 dockworkers went on strike. Biden voiced his support for the strikers, as did Trump. When the talks reached a resolution a few months ago, Harold Daggett gave credit to Donald Trump for the successful deal. At the time, Trump said, “I’ve studied automation, and know just about everything there is to know about it. The amount of money saved is nowhere near the distress, hurt, and harm it causes for American Workers, in this case, our Longshoremen. Foreign companies have made a fortune in the U.S. by giving them access to our markets. … They’ve got record profits, and I’d rather these foreign companies spend it on the great men and women on our docks, than machinery, which is expensive, and which will constantly have to be replaced.”
Trump speaks of a golden age for America, but compared to the rest of the world, our ports are far from great. The annual rankings by the World Bank measure 405 ports based on productivity and the time a ship spends in port. The top U.S. port is Charleston, whcih comes in at 53rd. As the economist Scott Lincicome writes, “American port inefficiency acts as an invisible tariff on all goods transiting these ports and thus will inhibit U.S. “reshoring” and “friend-shoring” efforts because multinational manufacturers, even ones based here, will still need quick, easy access to global markets—access that U.S. ports can’t provide but competitors’ ports can.”
One study, commissioned by the Pacific Maritime Association, suggests that automation could increase longshoreman employment and wages at the ports. Dr. Michael Nacht, a Professor of Public Policy at UC Berkeley, and former Assistant U.S. Secretary of Defense, along with co-author, Larry Henry, founder of ContainerTrac, led the study. According to the report, “Automation is offering productivity and efficiency gains that will drive up growth and drive down cargo-handling costs.” Nacht and Henry caution that “failing to adapt threatens to drive cargo to other ports, with a cascading loss of jobs on the docks and throughout the regional economy.”
While dockworkers' concerns about automation are understandable, the broader economic benefits of increased efficiency and global competitiveness cannot be ignored. The challenge is not to resist change but to ensure that displaced workers have opportunities to adapt, retrain, and thrive in an evolving economy. History has shown that technological progress, though disruptive, ultimately leads to greater prosperity. Dockworkers’ resistance may delay the inevitable, but it will not stop it. The real question is not whether automation will come, but how we will manage its consequences.