Economics

How Is the Collapse of GM et al Like the Demise of the Merchant Marine?

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Here, let's let Richard Bank tell you:

[T]he U.S. maritime industry […] began its death spiral in the 1970s, a time when it was massively subsidized by the federal government and when laws guaranteed that U.S.-flag vessels would carry all government-related cargo. Yet even with these subsidies and guarantees, the dozen or more U.S. companies — including such once well-known names as American Export Lines, Grace Lines and Pacific Far East Lines — failed, one after another, in the face of competition from more efficient carriers as more and more countries entered the international shipping market.

Dude, where's MY bailout?

Initially, the unions and their congressional supporters pointed to "cheap foreign competition" as the source of their troubles. But those cries persisted even into the late '70s and '80s, when European and Japanese carriers were paying higher total wages per seafarer than U.S. flag vessels. It's widely believed that along with less-than-stellar management, union demands for ever-higher wages and excess manning levels — such as insisting on crews of 35 or 40 when crews of 18 are sufficient to operate safely — doomed the U.S. flag industry. Even with all the subsidies, even with technical innovations, containerization and other pioneering cargo advances, U.S. companies couldn't survive the financial burdens of the union demands.

I was frustrated watching all this unfold when I served in the State Department's Office of Maritime Affairs. Instead of fixing the problem and meeting the competition, industry officials offered excuse after excuse and repeatedly trekked to Capitol Hill in search of more money. They sought protectionism as a remedy. […]

The only U.S.-owned liner shipping company that did well during those times, SeaLand, was the one carrier that held out longest without taking subsidies and sought out profitable trade lanes.

Whole thing here.