The Box

Last post’s exploration of “the way things work” was “Infrastructure”, Brian Hayes’ photo survey of industrial infrastructure. This week’s episode of “Richard-Scarry-for-grownups” is The Box, by former Economist editor Marc Levinson, which delves into the history of container shipping.
The Box is compelling history of things and people. It dives into the details of industry structure, finance and technology and assembles an intricate picture of transformative change. And recounts the adventures of the competing entrepreneurs racing to get the system working, beat competition, and outwit regulation.
Container shipping appears inevitable from the perspective of technological determinism. Boxes, trains, trucks, motorized ships, cranes, none of the technology was dramatically new. Container systems had been tried in the railroad shipping since the 1920s. The old system, where each item needed to be loaded, unloaded, and reloaded with manual labor, was costly and slow. But, a clear view is not the same as a short distance, to quote Paul Saffo.
The incumbent industry had strong incentives to preserve the status quo. Shipping, trucking, and trains were regulated industries with centrally set prices and terms of service, established cartels, and a focus on the mechanics rather than on the service of transport. It took an innovative entrepreneur and some well-timed government handouts to break the logjam. Malcom McLean, a trucking magnate, envisioned the system in his minds eye, drove the engineering for the interlocking containers and the fast-loading cranes, put together aggressive debt financing, and benefited from the US government’s giveaway of WWII surplus transport ships. Far-sighted port agencies in New Jersey, Long Beach, and Singapore invested heavily in container ports, securing early leads. When change came, it was rapid. Levinson writes, “Three years after containerships first sailed to Europe, only two American companies were still operating breakbulk ships across the North Atlantic.”
But even the folks who saw change coming had very imperfect foresight. Many cities invested in ports, but only a few succeeded, and others invested heavily without return. After making a fortune in his first container ventures, McLean himself bet badly, on a fast, fuel-guzzling container ship that hit the market during the 1970s oil crisis, then on a huge slow ship that was introduced just in time for the 80s oil price crash. From a distance, the transition to container shipping seems orderly and logical, like water flowing downhill. Close up, it’s rapids.
And its attention to evidence shows a more complicated picture of the relationship between labor, capital, and government than would be predicted by ideology. Much economic writing in the popular press has a clear ideological slant. The free market generates the most efficient economic outcomes, while regulation, government subsidy, and labor protection reduce economic growth. Alternatively, regulations protect against excessive corporate power, subsidies protect infant industries and local economies, and unions empower workers.
Levinson’s history of the rise of container shipping uncovers a more mixed and subtle story. The early innovators in container shipping got a jumpstart from a government fire sale of surplus WWII ships. WIthout the gift of lowcost ships, the capital costs of ships would have been higher than the entrepreneurs could carry. Early on, some port cities and agencies invested heavily in the creation of container ports. The government investment paid off spectacularly well for some, and badly for others.
At the same time, the shipping, trucking,and rail industries were highly regulated. Players were attuned to manipulating the regulatory agency rather than competing. Much later on, the successful container industry helped drive deregulation. Levinson doesn’t touch the reasons that the railroads got regulated in the first place; they had been an overly powerful oligopoly that abused their market power. So, when does it make sense for government to subsidize or regulate industry? Sometimes, in the cases of early industries, very high capital investments, and to combat market power. And sometimes regulations and subsidies outlive their usefulness.
The biggest expense in shipping was not the transport itself, but the repeated loading and unloading of every item. Longshoreman’s unions arose to protect workers against an abusive contingent labor system, where workers scrambled every day for the chance to unload the days ships. The union policies provided steady work, but also created work rules that mandated more workers than were needed to do the job. The longshoreman protested containerization vehemently. In some regions, protracted labor conflicts kept the port from adapting to the new technology; by the time the union lost, the container ports had been set up elsewhere. But in the US west coast, the union negotiated a settlement where longshoremen whose jobs were made obsolete received retirement payouts. The benefit of containerization was shared with the workers.
The Box tells a story that is more complicated than an ideolog would prefer. Unions and government actions are sometimes helpful and sometimes harmful, and helpful structures can outlive their usefulness and need replacing.

Infrastructure: A field guide to systems on the verge of change

Have you ever wondered what all of those gizmos were in the local power station? Wondered how water treatment works? The benefits and drawbacks of different styles of bridges? Brian Hayes, whose day job is a senior writer at American Scientist, didn’t just wonder. He took pictures over a 15 year period, found out how things worked, and explained it to the rest of us in Infrastructure, The Book of Everything for the Industrial Landscape. As a science writer, Hayes avoids “coffee table book” syndrome, where beautiful pictures are matched with superficial text. He figures out how the system works and explains it. The pictures are fabulous, and would be even better if they were complemented by some diagrams with labels — it wasn’t always easy to figure out which bit of circuitry or process gear was which (the picture below is a set of air-blast switches with porcelain insulators at the Ravenswood power plan in Queens).

The hardback first edition was titled: “A Field Guide to the Industrial Landscape.” Hayes describes the artifacts of the industrial landscape like nature guides describe birds and mountains. While describing the artifacts and systems, Hayes also strives to explain why the industrial landscape is obscure to many of us. From Hayes’ point of view a major reason for the obscurity of industrial objects in plain sight is that industrial infrastructure has an image problem. There is a great divide between the green/populist image of “Dark Satanic Mills” and the reality of the engineered systems that our society depends on, which have a pragmatic intricacy, elegance and beauty of their own. Hayes sees a self-reinforcing gulf between the negative stereotype of the industrial landscape, and the paranoid and secretive attitude of some industrial organizations. Hayes therefore describes the industrial systems as they are, without much critique, in the hope of increasing appreciation and understanding.
Still, Hayes notices the smokestack-scrubbing, emissions-reducing, landscape-restoring, material recycling, and other environmental innovations that have modified industrial systems in recent decades. These were put into place because of valid criticism of the destruction wrought by industry. Mining companies that behead mountains in West Virginia and oil refineries that create cancer alley in the Houston area may be secretive because they don’t want to share information about the harm they cause.
Seeing the big picture of industrial systems also felt like looking at a crystal on the verge of phase change. Oil processing, roads and bridges for gas-fueled cars and trucks, centralized energy power plants and big power grids; factory farms; massive waste creation and disposal systems — all of these depend on the last century’s abundance of cheap energy, and much of it is going to change, hopefully without civilization collapsing. Renewable, decentralized energy generation, electrified transport, sustainable agriculture, cradle to cradle no-waste manufacturing or bust. I’m wanting to read “Infrastructure” as annotated by Natural Capitalism and the Journal of Industrial Ecology, showing the opportunities to reduce wasted material and energy throughout the industrial ecosystem. I hope that this book appears 50 years from now like a tour guide to Colonial Williamsburg, with descriptions of blacksmithing, barrel-making, candle-dipping, quill pen cutting, tub laundry, and other antique technologies.