Win-Win Unions?

As I finish this, dock workers have paused their strike in the East and Gulf Coast. Workers have won a bigger cut of the massive profits of the shipping industry. But they are still demanding a total ban on the automation of cranes, gates and container-moving trucks used for loading and unloading freight.

Two years ago, I wrote a relevant article “In Praise of Idleness” (from a Bertrand Russell piece) about this type of irrationality in our economic system. In a rational economic system, automation and labor-saving equipment should be a benefit to all. It should bring lower costs, and a raising of hourly worker pay, as workers become more productive.

In 1930, economist John Maynard Keynes published a short essay “Economic possibilities for our grandchildren.” He predicted that the standard of living in 100 years would be 4-8 times higher. That has come to pass. But he also predicted a 15-hour work week. Why are we stuck with the same 40-hour work week, despite orders of magnitude gains in productivity?

Because our economy is not rational. We have an adversarial system where only six percent of private sector U.S. workers are in unions. They fight to survive against powerful corporate interests who would happily put them all out of work.

A New York Times article by economist Clifford Winston explained how protectionist regulations from over 100 years ago compound the problems of the shipping industry. Laws like the 1906 Foreign Dredge Act and the 1920 Jones Act, which also were created for national security reasons. These laws serve no modern purpose and neither party has repealed them. Though Biden did sign the Ocean Shipping Reform Act of 2022 that reins in some excessive shipping charges.

Germany has a totally different union system called “Social Partnership” (Sozialpartnerschaft). This is a truly win-win system for business, labor, and consumers. Entire industries are unionized, rather than individual businesses. One notable provision: Corporate boards are required to include labor representatives.

Instead of an adversarial relationship, labor and business work together to maximize productivity for mutual benefit.

Another surprising rule: Individual workers and individual businesses can opt out of the union arrangement. You might wonder why any business would voluntarily opt in. Because the cooperative system increases productivity. And it avoids conflicts that can shut down operations or lead to lawsuits.

In the U.S. union system, individual workers in most states cannot opt out if their company is unionized. This is justified by the fact that all workers benefit from union protection, so all workers should pay into that system.

But it can lead to accusations of corruption, where the union leaders are working for their own benefit, rather than for the benefit of rank-and-file workers. In the German system, the union has to keep each worker happy or else each worker can opt out.

We are entering a new era of automation and artificial intelligence on an unprecedented scale. Clifford Winston pointed out that the port of Los Angeles ranks 375 out of 405 ports globally, in a World Bank ranking. Can the U.S. compete in the world by unilaterally banning modern technology? Just to create unnecessary work to keep people unnecessarily employed?

I recently read that the California and U.S. governments are offering billions of dollars in subsidies for electric trucks to replace polluting trucks that serve our congested harbors. This does have some environmental benefits. But maybe there is a better solution: An automated electric rail system to transport the shipping containers out of the congested harbor to a less congested area. From there, the containers could be placed on railroad cars or trucks that get the freight moving, instead of sitting in a traffic jam.

Local company LaunchPoint Electric Propulsion Solutions gave me a tour of their proposed solution about 20 years ago. Sadly, they gave up and switched to a different line of work. Because their system would have created efficiencies that are opposed in our irrational economic system.

Can we move forward to a new union and economic system that rewards using automation and other technology? In a win-win benefit for workers, businesses and consumers?