The New Luddites

Unless you are a history buff or an economist you may not have heard about the Luddites. The Luddites were artisanal workers in the textile industry back in England during the 1700s and 1800s.  During that period, at the beginning of the Industrial Revolution, the artisanal workers were being replaced by wide knitting frames, spinning machines and steam-powered looms that could mass produce textile products that, although of inferior quality, were less expensive than artisanal products. Named after a legendary apprentice named Ned Ludd who destroyed some knitting frames in 1779, the Luddites would periodically rise up and destroy the innovative machinery that could be operated by less skilled workers.

One could be sympathetic to the Luddites who were rising up to protect their livelihoods. The machines allowed textile manufacturers to increase production while paying lower wages to the less skilled workers. Losing their trade and employment in an era long before the modern welfare state doomed the workers and their families to poverty. But while the Luddites were trying to protect their livelihoods they were not acting in the common interest, only their interest. The artisanal textiles produced by the Luddites were very expensive. Only the rich aristocracy could afford such goods. The common folk were relegated to rags or homespun cloth. The new machines meant that many more people could afford nice, although not luxurious, clothing.

The recent strike by the 45,000 member-strong International Longshoremen’s Association will negatively impact many millions of Americans. They are not only asking for a 77% increase in salaries over six years, they are also demanding in Luddite-fashion a halt to any additional automation of port facilities. It is true that shipping companies and port operators made a killing during the supply chain disruptions caused by the Covid pandemic, so the dockworkers have a good case for that sharing some of that windfall.

But the cost of port operations is passed on to consumers so expensive labor contracts will lead to higher prices to consumers all across the country. Keep in mind that, due at least in part union work rules, US ports are already among the least efficient ports in the world according to a study by the World Bank. Of the 348 ports in the World Bank study, the east coast port of Savannah, Georgia came in dead last at number 348. Other east coast ports being struck by the ILA are Charleston (340), Houston (335), NY&NJ (306) and Baltimore (300). Not allowing innovation and automation at these ports will make them even less competitive globally than they are now. Guess who has the most efficient port in the world. That’s easy – China (the port of Langshan outside of Shanghai).

The US is the wealthiest country in the world and is the largest importing and second-largest exporting nation in the world. We need to have world class ports. Inefficient ports are like a tariff on imported goods paid by American manufacturers and consumers for the benefit of the dockworkers. Increasing productivity is an essential part of economic growth and American innovation has been a key factor in our becoming wealthy and prosperous.

So I say pay the longshoremen all they want. But don’t let them touch America’s ability to innovate and improve the productivity that benefits all Americans. High labor costs will only spur port operators to innovate even more quickly.

The Luddites were ultimately unsuccessful in holding back the industrialization of England as that country went on to become greatest textile manufacturing country in the world during the eighteenth century. We cannot allow these New Luddites to hold back America in the 21st century.