Labor Strife That Could Dock U.S. Economy

[Omaha Steve]

http://www.miller-mccune.com/article/293

By: Matt Smith | April 09, 2008 | 04:01 PM (PDT)

International trade bottlenecks at ports, and the specter of a strike sends shivers through the nation's body economic.

In 2001, market manipulation by electricity traders provoked a California fiscal crisis. This March, risk taking by mortgage-backed securities investors threatened the U.S. financial system.

Now, a University of California, Berkeley economist adds to the list of faceless functionaries with their hands on levers that, if pulled in the right combination, can bring down the economy. Would you believe ... blue-collar dock workers?


Longshoremen picket in San Francisco during the 1934 strike that cemented the role of the International Longshore and Warehouse Union in West Coast shipping.Bancroft Library, UC Berkeley


Members of the International Longshore and Warehouse Union, began negotiations for a new six-year unified West Coast contract with shippers in March. If talks stutter, a ports shutdown could threaten the economy, said Stephen Cohen, co-director of the Berkeley Roundtable on the International Economy.

A stoppage "carries the very real risk of triggering a sudden crisis in international financial markets," Cohen wrote in a paper published in 2002. That summer, talks dissolved into a 10-day lockout that Cohen said panicked White House economic advisers.

In 2008, "I don't think the significance is any different," Cohen said. "At some point you start running out of parts, and the factory stops, and the factory that relies on that factory for components stops, and you have a chain reaction that's really rather a nightmare.

"This is not just another industry like aluminum or tires, or even automobiles. It's more like utilities. This affects the whole economy very broadly and very quickly."

FULL story at link.