Key Points:

• While workers are perfectly entitled to go on strike, within the law, to try to force management and shareholders to give them a better deal, they are not entitled to take uninvolved third parties hostage to do so, which is what the ILA proposes to do.

• Increasing automation at US ports is good because capital investment in new technologies is good, not just for companies' private shareholders, but for the country at large.

• We should have some empathy for blue collar workers who do not want their jobs to go away in an economy that produces too few good blue-collar jobs, but that empathy should not extend to allowing them to take the country's supply chains hostage or keeping US ports antiquated for no sound economic or technical reasons.

• There is an opportunity for the President to get all parties involved around the table, and get them to agree to a deal where companies and local governments put money into a fund to buy out longshoremen and invest in American-manufactured ports equipment.

• The President should use the threat of using his emergency authorities to give the parties an extra incentive to agree (and plan on following through with the threat should they nevertheless fail to do so).

• The President should propose and push a law based on France's 2007 "minimum service" law stating that workers in critical infrastructure industries must ensure a minimum level of service during a strike.

The Article

Take it from a Frenchman, you do not want critical services to be run by unionized workers with a unilateral right to strike.

Here are the basic facts about the ILA strike:

• Approximately 45,000-50,000 dockworkers affiliated with the International Longshoremen's Association began striking at 12:01 AM on October 1, 2024 at 36 ports along the East and Gulf Coasts of the United States.

• This is the first strike by the ILA since 1977.

• The strike affects major ports from Maine to Texas, handling about half of the nation's cargo from ships.

• It could potentially disrupt supply chains, lead to shortages, and increase prices on various goods if prolonged; and, of course, it comes at a critical time, just before the holiday shopping season and a presidential election.

• The Biden Administration has said that it does not plan on using its prerogatives under the Taft-Hartley Act to intervene in the dispute.

The main issues behind the strike are wages and automation:

• The ILA is demanding significantly higher wages—they initially sought a 77% pay raise over 6 years. The United States Maritime Alliance (USMX), representing the ports, had offered a nearly 50% wage increase over 6 years, which the ILA rejected.

• The union also wants a complete ban on the automation of cranes, gates, and container-moving trucks used in loading and unloading freight.

This is where New Right theories about unions come into contact with reality, don't they?

Obviously automating ports is a good thing (especially if the automation isn't remote-controlled from China, which is the case in most US ports), and having the nation's infrastructure and commercial economy held hostage by a labor dispute is obviously against the public interest.

The fundamental problem is that labor unions (as do shareholders and management, of course) represent private interests, and when private interests conflict with the national interest they must give way.

The point of a strike is to hurt the shareholders and management of the company whose workers are striking to coerce them into a deal, not to take uninvolved third parties hostage to try to force political authorities to impose a settlement.

Sadly because the ports are private the Administration can't pull a Reagan and just fire the workers.

Here's a good policy proposal: in 2007, Nicolas Sarkozy's government passed laws on "minimum service": this stated that, in critical industries, workers had to keep providing a minimum level of service, or else the strike would be illegal. So, for example, during a subway strike, there would be fewer subways but you would still have a "minimum" level of subway service. Commuters would be annoyed but the city wouldn't grind to a halt. This seems like a good principle which would balance labor rights with the general welfare.

But this would not solve the present conflict. Here, again, we have competing private and public interests. It's impossible for a sane person not to empathize with working-class people who have put in many years into honest work and don't want to see their families' livelihood disappear, especially in the context of a manufacturing economy where good blue collar jobs are so rare; at the same time, it is obviously in the interest of the nation at large, not just the private interest of manufacturers, when companies make productivity-enhancing capital investments into automation technology.

So buy out the longshoremen.

The money probably doesn't even have to come from the Federal government. Some of it can come from the local governments that have an interest in keeping their ports competitive.

Some of it can come from the port operators: they wouldn't be considering automating the ports if they didn't believe it would boost their profits, so they can consider it a cost of doing business. Running ports is an very profitable business (DP World, the only publicly-traded large ports operator we could find, has a very nice EBITDA margin of 28%). McKinsey should be contracted to find out how much incremental profit operators can expect from automation over the next say 20 years, and how much money they can spare to put into a longshoremen fund while still providing a satisfactory return on equity to their shareholders (this is exactly the sort of work they're actually good at).

Part of the money to buy out the longshoremen should come in the form of retraining vouchers; part in the form of very generous healthcare coverage for them and their families until they become Medicare-eligible; but most of it should be in the form of cold, hard cash; very generous early retirement for those over 49, and a very nice check for those under; something to make their eyes pop; something they can sell to their wives.

Once such a deal is on the table, the President should invite the parties involved to sign it, and inform them that if they do not, he will invoke the National Emergencies Act to take direct control of US ports and draft longshoremen to continue their work under pain of indefinite detention until they are replaced by machines, at which point they will be terminated with no severance or benefits.

He should also inform the port operators that during the emergency period all revenue generated from port operations will be diverted to the Federal treasury and earmarked to pay down the national debt.

Oh, and the deal should include "Buy American" provisions for the ports operators.

We believe this approach would be both politically popular and provide the best exit from the situation.