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To investors,
The International Longshoremen’s Association went on strike yesterday in an attempt to pressure the United States Maritime Alliance into caving to their demands. Sounds like a story as old as time, right?
Kind of. There is some nuance that is important to understand.
The union is looking for a variety of things, but the two headline requests are a 70%+ increase in pay and a ban on automation technology in the ports. I am not here to pass judgement on how much the men and women at our ports get paid. Frankly, I am not informed enough to understand whether they should get paid 25%, 50%, or 75% more.
Someone smarter than me can figure that out.
But I do have enough knowledge to comment on the proposed ban of automation technologies — this is insane and dumb.
The United States of America was built on technological progress, free markets, and competition. Our country and economy suffers when we stray from that original path.
This is nothing new though. Candle makers tried to fight electricity. Horse owners tried to fight cars. Newspapers tried to fight the internet. None of them succeeded. History has proven that fighting technological progress puts you on the wrong side of the record books.
The ILA is going to be no different.
We have to take this analysis one step further though. I believe the Longshoremen are acting against the best interest of the United States by opposing technology.
It is obvious that automation technology will increase efficiency, decrease expenses, and create more resilience in our ports. These are ports that not only have an economic impact on society, but likely have a national security component to them as well.
Whenever you hear the Longshoremen saying “we don’t want automation,” you have to translate it to mean “we don’t want efficiency, speed, and lower costs.” That is insane.
It is possible to understand why the ILA is taking this position (they don’t want to lose their jobs!), while still arguing the action is wrong. I wrote in my new book we need more people with the mantra “compete, don’t complain.”
That lesson applies in this situation.
There is an even bigger takeaway though which has been ignored by the Longshoremen too — automation will create more jobs, not less. Use self-driving cars as an example. Google’s AI summarizes it well:
“Some truck drivers and unions are concerned that self-driving trucks will eliminate jobs. However, a 2021 Transportation Department study suggests that autonomous trucking could create new jobs for maintenance technicians, dispatchers, and fuelers.”
The same thing will happen in the ports. Remember, the invention of ATMs (automated bank tellers!) led to more bank tellers being employed today than ever before.
We don’t have time for history lessons though. It is estimated that every day of the strike will cost the US economy approximately $3 billion. If the strike continues for a week, some economists believe we could see a decrease in annualized GDP by as much as 0.3%.
Stop the madness. Get the workers back to work. Negotiate whatever pay increase the two-sides can agree to. And stop with the ill-informed demands about banning technology.
Hope you all have a great day. I’ll talk to everyone tomorrow.
-Anthony Pompliano
Founder & CEO, Professional Capital Management
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