The Slow Shift South

by W.F. Price on June 23, 2014

In just a week or so, the International Longshore and Warehouse Union is set to renegotiate contracts for its West Coast port workers. The ILWU has a long history in Seattle and San Francisco, and has won incredibly sweet concessions from ports over the decades. A foreman, for example, makes over $200,000 per year, and a normal employee about $130,000. Getting into the ILWU has become something of a dynastic process. The jobs are passed from father to son and even grandson. Outsiders are treated terribly by those in the union, which prevents them from ever making it in themselves. From all appearances, the ILWU has become little more than a gang.

This is the real problem with unions — like unrestrained corporations they can eventually become monopolistic guilds that reward only insiders at everyone else’s expense.

But it’s a big world out there, and the ILWU isn’t really as “international” as its name suggests. It has no authority over East Coast and Gulf Coast ports which, given the recent expansion of the Panama Canal, has put the union in a tenuous position. Added to this is the refusal of a number of West Coast ports to ship coal to China, “because global warming” or whatever (actually, many locals are simply so spoiled that they don’t like the idea of coal trains going through town, even if they add jobs and inject cash into the local economy). Finally, US manufacturing is shifting to the South as the greens gain political prominence on the West and East Coasts, and high land and labor costs drive manufacturers elsewhere. To Chinese and European shipping magnates these may be mere annoyances for now, but these things all add up, and it’s the bottom line that counts in business.

As I look at the West Coast with its “progressive” leftist policies, which are not a result of need so much as the entitlement born of prosperity, it’s apparent that the entire region is willfully setting itself back in all areas except high tech, which itself is significantly more mobile than manufacturing (i.e. the companies can easily pick up and leave if it’s in their interest). If tech isn’t enough or, heaven forbid, it also leaves, West Coast states are going to be in big trouble. At this point, I don’t see the progressive momentum slowing down, but rather a doubling down on the policies that are undermining the fundamentals of a modern, diversified economy.

The development that is capturing businesses’ attention is the transformation of the formerly slow, lazy and impoverished South – and the Gulf Coast in particular – into a global energy, manufacturing and shipping powerhouse. Despite its relative poverty and reputation for being backward, its growth has been impressive, with states like Texas and Louisiana adding jobs and wealth. In the meanwhile, aside from tech and finance, the coastal cities grow older and stagnant, and families suffer under increasingly burdensome property values and egregiously high working class unemployment, straining social welfare services.

I have no doubt that Asian companies will continue to ship products through West Coast ports, but in the future – thanks in part to the Panama Canal expansion – we can expect to see more of these ships bypassing our ports entirely to head on to friendlier Gulf Coast ports that are not only cheaper, but also offer products that can be shipped back to Asia. In the meanwhile, it’s time for our West Coast politicians to get their act together and change course before they succeed in hollowing out our industrial base. If they aren’t up to the job, they shouldn’t be in office.

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