Savannah’s Port and Megaships

Wednesday the largest ship to ever call at the Port of Savannah snaked its way up the Savannah River. The news coverage I’ve seen was all positive, basically echoing the press releases from the Georgia Ports Authority, commenting on the size of the crowds that came out to see the 1300 foot ship, and similar fluff coverage (link goes to WTOC TV). Entirely missing was the perspective that this kind of global commerce is destructive to local and national economies, and has created an unstable situation. The collapse of this system will create disruptions across the entire world. Sound dire? Well, this is doomwatch … so let’s look at two reasons this isn’t a good thing: economics and resiliency.

GPA Savannah Container Port (Enki Research Photo)

Economics: The economic implications of this kind of global shipping is often hidden. During the studies of the deepening of the Savannah harbor, and periodically since, the Georgia Ports Authority (GPA) trots out economic analyses of the “benefits” of the port. I’ll be blunt: these “analyses” are misleading – even bogus. One key problem is that all the numbers about local jobs or regional impact overlooks the lost manufacturing jobs, and the distortion of the US economy from a balanced producer/consumer economy in to a consumer dominant economy supported by a service sector. This is one of the factors behind the increasing levels of disparity in income in the US, and the depressed middle class sector in the country: those middle class, manufacturing and repair service type jobs disappear since cheap goods means it is more “cost effective” to import and replace rather than repair them when they fail or break. Of course, it is only “cost effective” if you ignore the resources wasted in a throw-away world, but that is a different issue.

You’ll notice when GPA reports statistics, they talk about containers and tonnage exported, rather than the overall value of imports vs exports. If you run the numbers that way, billions of dollars a year (and therefore tens of thousands of manufacturing and related jobs) flow out of the US to foreign countries, some hostile such as China. In other words, China is treating the US like an extractive colony – but the US goes along with it because US based companies profit from the somewhat lower retail prices, even though the average person sees only marginal benefits. Ten or even 20% lower prices doesn’t mean much if your neighbors are either out of work or working lower paying jobs, or your taxes are high to cover social costs. You have to look at the whole society impacts – not just narrow sectors.

One of the reasons behind the American Revolution was that Great Britain restricted certain kinds of manufacturing in the Colonies. It makes sense from a colonial/control standpoint: extract the raw materials, force the colonies to buy the finished products. That way the net value is not equal – money flows out of the colony and enriches the mother country, and makes the colony dependent on them. China has been doing this to the US for at least three decades now – and we’re actually cooperating with our own subjugation.

Resiliency: Lost in the discussions over the ports and global commerce discussions are the social stability aspects, in that a mostly consumer based economy is vulnerable and ultimately unsustainable. The COVID pandemic came very close to crashing the US economy and even stability of the society. Critical supplies such as plastic tubing almost ran out because no US companies make them, and the global system of moving goods and supplies came to a standstill with the quarantines and shutdowns. In the past a disruption might cause a rise in prices, but many critical goods are no longer manufactured in the US. The loss of supply lines – be it due to natural disaster or geopolitical instability – can rapidly spin in to a crisis since there is diminished or nonexistent ability to replace the lost sources of those goods.

Underlying all of this is a philosophical meta-question: what is the purpose of an economy? In the US, the purpose of the economy is primarily geared to create shareholder profit. Human factors such as the dignity of work, providing a sustainable livelihood for the average person, and social stability are all lost in the pursuit of maximum quarterly profits. The celebration of the arrival of the Marco Polo is that distorted worldview writ large.

So for a variety of reasons, the global system of commerce that has evolved in to massive transfer of the manufacture of goods that could be made anywhere to a few areas like China (generally with exploited/oppressed workers), all in the name of increasing profit margins, has created a hidden global crisis that could for a variety of reasons trigger a collapse of the economy – with societal turmoil following close behind.

Rather than celebrating, at least we should be mourning, and better yet protesting if we had any sense.

3 thoughts on “Savannah’s Port and Megaships

  1. Quite an interesting analysis. There are several points that I question in your article.
    1) pursuit of maximum profit. Should a company pursue minimum profit? Profits benefit the shareholder and the consumer. Profits enable a company to invest in new equipment and hire additional workers.
    2) sustainable livelihood and dignity of work. These attributes are not the responsibility of an economy, government or society. The individual has to provide the impetus and desire to improve themselves. If not, we become wards of the ever expanding state.
    3) all nations and their economies depend on importing product. No nation has every resource necessary for the production of its products. There’s a controversy right here in Georgia concerning the mining of Titanium near the Okefenokee Swamp. Environmentalists decry this attempt to mine in this area. If we aren’t able to mine for this resource in the US, what do we do. Import from another country. You can’t stop this kind of operation and not expect it to be imported. There are many other products the US must import, not only because we lack the resource, but because the cost of a product made here is simply too expensive, such as steel.
    If not imported, steel products would be more expensive to produce. Not only does this hurt the consumer, through higher prices, but will affect the manufactuer through lower profitability because of decreased sales. Lower profitability means less investment, and less labor required to produce the product.
    4) products can be manufactured anywhere? Doubt it.

    Of course I’m not an expert in economics, so my view of your article could be entirely wrong. In my view the consumer will always purchase the best product at the best price. As long as people believe that wages must be increased to provide for a more sustainable living, consumers will act in their own best interests. Buying American has proven not to be in the people’s best interest. Therefore, here comes the Marco Polo.

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    • It’s a very complex issue, here are a few comments on your points:
      1) We have to be careful what we mean by “profits” and our terminology. You say “Profits enable a company to invest in new equipment and hire additional workers.” If you mean “profit” in the technical sense of “revenues after expenses” you are right; but investments in the future of a company are often seen as hurting short term “profits” (better defined as “shareholder distributions”). Corporate governance is presently driven by the big financial investors, who are mostly concerned with quarter over quarter shareholder distributions. That nuance is often confused in financial discussions. Another huge issue with international trade and extractive vs mutual relationships. If the profits are transferred outside the national economy creating a significant imbalance, that’s a problem.
      2) This is a huge point of dispute. I agree it is not the responsibility of government – that path leads to oppression. It should be the objective of the economy. It is the responsibility of society to create and support an economy that achieves that objective. Some of that implementation is via government, but the majority of that implementation is through corporate governance that reflects the values of the society.
      3) Technically true, but balance is required, and as you point out that is missing. What does it say about our values that we allow China to engage in environmentally disastrous operations that we could do more safely here (but don’t out of NIMBY syndrome), all to support our lifestyle?
      4) Technically false, but there are cost advantages associated with location that make it vastly more advantageous to manufacture in one location over another. The problem is how you do that calculation, and what factors you include or exclude. Again, a balance is required, and that is missing in the present US economy.

      Thanks for the discussion!

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