Monthly Archives: March 2013

Institutions matter – but not the way we think

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A couple of days ago I tweeted a link to a paper estimating the effect of containerisation on world trade to be far greater than the effects of trade liberalisation and GATT. It tied in with a recent post here prompted by the appearance of a shipping container in the local park. I cited there Marc Levinson’s terrific book about containerisation, [amazon_link id=”0691136408″ target=”_blank” ]The Box[/amazon_link].

It’s always a pleasure when my ramblings here get some feedback, and as it turns out Thomas Marnane, the father-in-law of a friend of mine, had a key role in the containerisation process. He’s kindly given me permission to quote his fascinating email:

“I think the container like the transistor have probably been the largest contributors to trade and communications in the world’s history.

I was fortunate to work at Matson where most of it all started.  Malcolm McLean of Sea-Land actually created the first container to go with his land based trucks.  Matson picked it up from there and the world followed.  Matson’s historic introduction of containerization in the Pacific in 1958 launched the development of a container freight system that became a model for carriers worldwide. Matson’s S.S. Hawaiian Citizen  was the world’s first all-container vessel when it was converted in 1960. Many of Matson’s innovations of that period are still in use today: cellular container ships, intermodal containers, specialized container equipment and container handling equipment.

Matson’s “A-frame” gantry crane reduced ship turnaround time in port from three weeks to 18 hours and became a prototype for the industry.  …. You can see a picture of the first gantry container loading crane.  It was still sitting over in Oakland when I came to Matson.  It took up space and was an eyesore and the company wanted it gone.  I didn’t want to simply destroy it–found no bidders in the US and no museums (Smithsonian or local) that wanted it and eventually sold it to someone in Portugal and have no idea where it is now.

Matson’s A Frame Gantry Crane – where is it now?

I was given pretty free reign in my role as container equipment engineer and procurer at Matson and in partnership with Kiki Shahani, a very good friend and world class transpiration engineer, procured and made dozens of patentable design changes to the containers over the years.  Things like changing material to stainless steel on refrigerated containers, modifications to structure and corners (lifting castings), floors, airflow, side panel shapes, paint systems, auto carriers and handling, appliances (hinges, locks, connectors for refrigeration units, etc.  I say patentable because we only put patent pending on them long enough to get it to market and not have to fear that someone would steal the design, patent it and then ask for royalties.  It usually took two to three years for the industry to pick up the changes through the manufacturers and incorporate them in their own equipment and by then, hopefully, we had done something better to regain a competitive edge.

The design changes were primarily to reduce damage and weight and in the case of the refrigerated containers increase temperature reliability.  We were able through the growing capability of the computer to do finite element analysis and testing and determine where we needed  more or less strength.  The result over several years was that we achieved a reduction of about 20% in container weight and 50% in maintenance and repair.  For a forty foot long dry cargo container at 8375 lbs this is a savings of 1675lbs (.2x8375lbs=1675lbs).  Multiply the 1675 times any number of containers you want and you can see that the increase in load you can add to the container and thus reduction in number of containers needed and the reduced weight that ships, trucks, trains, etc have to carry is significant (cost savings, fuel savings in transporting, product damage, etc).  All of this was part of my recent recognition by the University of Rhode Island for my work in resource conservation.    

And just think, just like when I was a kid and loved to play with blocks, when I got to be a big boy I got to play with containers which are just really big blocks.  What more could a guy want.

As you can see I still have a love affair with containers and cranes (they let me design and build cranes also with help from one great electrical engineer, Al Siver, one great mechanical engineer, Ed Stephens and a world class crane designer from Liftech, Michael Jordan–I got to travel the world with those guys and still talk with them frequently).”

And in a follow up email, having looked at the summary of the Levinson book, he added:

“I note Harry Bridges on the summary in Amazon.  He is something of a legend in San Francisco (the area around the Ferry Building is called Harry Bridges Plaza) and it is still not fun to negotiate with the Longshore Union even though their numbers, as a result of containers and the handling thereof, are down by 80-90%.  

Matson also had the first semi-automated system for container handling at Terminal Island, CA.  It was finally abandoned because it was technically difficult to maintain and the equipment got out of date and was a big expense to replace (the business is highly capital intensive now vice labor).  Some European terminals are automated (as I recall Rotterdam, Hamburg, Amsterdam and one UK Port  that I cannot remember, perhaps Southampton–it has been awhile since I visited–were the leaders) and Rotterdam was the best.  I got to visit them all and have exchange visits, even got the Hamburg guys to get in my hot tub!!.  In the US American President Lines paved the way for intermodal (sea, truck, rail) shipping across the U.S and got us to “double stack” trains by working out routes that had overpasses, tunnels etc. in place or modified to handle the heights.  I got to play with trains too when we went to moving our cargo from Seattle to Portland by train instead of having a ship come into Portland every week (the Willamette River is long and slow). We moved the cargo down from Seattle to Portland by a weekly double stack train which had to have cars modified to fit the route (some places “humping” of cars through their connections was a problem, etc.).

…. Don’t hold me too tight to the reduced container weights because it has been a while but it was at a minimum a 15% reduction and we worked on it ever year for every type of container and chassis when we placed our new container orders.  Refrigerated containers got heavier with the stainless steel but the damage was reduced by more than half and the combination of less damage and subsequent less product loss was substantial. Prototype testing in Korea with Hyundai was also a lot of fun–we tried to break new designs of containers with some interesting test gear. That and leading in automating our refrigeration equipment really kept us in the game  We ended up buying most containers in China–they become a commodity … as their price came down,  and some of the weight reduction was the result of good thought by Chinese container engineers.  Surprisingly every person in charge of container engineering in the companies we purchased from were women and they could work the drawings from behind their eyeballs vice on paper because they know their business so well.”

The close-up account is fascinating. It has also led me to reflect on what economists mean when we say – as we do all the time these days – that ‘institutions matter’ for growth. Probably most of us have institutions like trade rules and agreements in mind, but it may well be that the setting of standards and engineering principles – as in containerisation – matter much more.

 

Robot wars – the prequel

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[amazon_link id=”B00BIOFLWE” target=”_blank” ]America’s Assembly Line[/amazon_link] by David Nye is fascinating. It’s a history of the origins of the assembly line and mass production, with a strong focus on the motor industry, and traces the spread of mass production through other manufacturing and non-manufacturing sectors (such as housebuilding). The organisation of the line evolved over time, and varied in different places. The imperative of wartime production was an important driver. Post-war, the cybernetics revolution led to far greater automation. On the other hand, the Toyota lean production system brought in greater flexibility for workers on the line.

[amazon_image id=”B00BIOFLWE” link=”true” target=”_blank” size=”medium” ]America’s Assembly Line[/amazon_image]

The public loved the product of the assembly line, affordable mass-produced consumer goods. “In a typical American town, a working class family that couldn’t afford both a bathtub and a car was more likely to opt for a car,” Nye writes of the 1920s. (There’s a parallel with the well known factoid about the greater prevalence of mobile phones than toilets in Indian households now – any kind of means of communication seems peculiarly compelling.) Access to assembly line products, alongside the growth of a suburban middle class, spread far faster in the US than in Europe.

The relationship between machines and workers is an important theme in the book. Although Henry Ford famously paid $5 a day, double the going rate, many workers left before they qualified for it, so hard was the work. The unions had to fight hard to get recognition in the industry. The factories were notorious for robbing workers of any autonomy, and for speeding up the line to extract greater effort. Although 1927 had even brought a symphony to the Model T (premiered by the Boston Symphony Orchestra) he pressure of the assembly line soon became a frequent theme in films, songs and TV – Charlie Chaplin’s Modern Times being a prominent example.

The monotony and conformity of mass production also meant it was slow to spread in Europe, where the markets were anyway far smaller and therefore less able to sustain huge volumes. And there was a culture clash: “British workmen regularly stopped the assembly line for tea breaks.” More importantly, though, “No European nation could develop an American style production system unless it also embraced mass consumption.” None did before the war – the Soviet Union was most interested in Ford’s methods, but could not provide the workers capable of doing the jobs.

Through the post-war era, opinion divided between the welcome given to consumer products and welfare capitalism – Ford also offered savings plans, medical care in the factory, educational programmes – and the cultural distrust of conformity and the alienation of labour on the assembly line. The latter was, again, most pronounced in Europe. And yet European consumers were just as keen on cheap goods. Vice President Richard Nixon famously showed Nikita Kruschev around a model home at the American National Fair exhibition in Moscow in 1959 – Francis Spufford’ superb book [amazon_link id=”0571225241″ target=”_blank” ]Red Plenty[/amazon_link] brings this scene to life. Nixon presented Kruschev with a nice paradox about the benefits of mass produced goods and homes, in that American consumers had a vast choice: “We do not wish to have decisions made at the top by government officials who say all homes should be built in the same way.”

“Commodity fetishism meant that there was a widespread desire for what the assembly line produced but an equally widespread disdain for the work involved,” writes Nye. At the same time, concern began to grow – in line with automation – that the jobs involved were vanishing anyway. The fear of robots eliminating the need for humans emerged around this time.

No matter. Consumerist capitalism was even more heavily criticised by the counter-culture of the 1960s, culminating in 1968. And by the 1970s the far greater flexibility of the Toyota system was outperforming the rigidity of Fordism. By 1990, Volvo was advertising its abandonment of the assembly line. It had small teams assembling an entire vehicle. It took 4 months to train a Volvo worker, compared to 4 hours on a conventional line, but worker turnover was low and productivity high, and problems solved by individual teams with no spillover to the rest of the plant.

Yet the effect of automation on jobs remained a constant. The western economies ‘deindustrialised’. Detroit started its gothic decline – so well captured by photographers Yves Marchand and Romain Meffre in their book [amazon_link id=”3869300426″ target=”_blank” ]The Ruins of Detroit[/amazon_link]. and by the incomparable Bruce Springsteen, voice of blue collar America. Nye concludes: “Americans accepted mass production as though it were part of the natural order, with its subdivision of work, its interchangeable parts, and its organization of everyday life in terms of efficiency and productivity. Year after year they expected higher wages, more consumer goods and a general acceleration of experience. By 2013, however, this was an outdated and unsustainable economic order. The classic assembly line had been based on a large semi-skilled working class, not on robots and outsourcing.”

[amazon_image id=”3869300426″ link=”true” target=”_blank” size=”medium” ]The Ruins of Detroit[/amazon_image]

Robots, in short, don’t buy washing machines and fridges, and all the skills of the Mad Men won’t change that.

This book is an excellent companion read to the current robot debate – nicely summed up in this Economist article.

Judging a book by its cover

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There are some books you can judge by the cover. [amazon_link id=”1845402626″ target=”_blank” ]In The Name of the People: Pseudo-Democracy and the Spoiling of Our World[/amazon_link] by Ivo Mosley starts out looking like one of them:

[amazon_image id=”1845402626″ link=”true” target=”_blank” size=”medium” ]In the Name of the People: Pseudo-Democracy and the Spoiling of Our World[/amazon_image]

What’s more, the blurb makes a point of explaining that the author is the grandson of the notorious fascist Oswald Mosley, so “he is acutely aware of the corruptibility of democratic governance.” The first chapters set out the argument that our electoral systems give us the illusion of people power but are merely mechanisms for a corrupt elite to perpetuate and enrich itself. The language is standard lefty academic rant, albeit more accessibly written than many such. ‘Here we go,’ I thought.

Still, the financial crisis, and the veils being lifted on the success of corporate lobbying, and the monstrous excesses of bonus culture, do lend rather strong support to the privileged elite idea.

And the book poses the interesting – still unanswered – question about whether new technologies and processes might make ‘true’ democracy rather more attainable. For the trouble with direct participatory forms of government, as opposed to the current system of electoral representation, is that the people have to be bothered to participate. And on the whole they’d rather chat to their friends, watch TV, play video games, and a million and one other things, before discussing political matters. Anybody involved in consultations or voluntary activities will know that very, very few people take part.

The final part of the book looks at some examples that have been more successful – albeit the same examples that crop up in every optimistic discussion of this kind. Porto Alegre, Christiania, James Fishkin’s deliberative processes. However, I don’t think it answers the questions it raises about the likelihood of participatory democracy driving out representative government and thereby delivering greater equality, higher environmental standards, a less dangerous financial system etc.

Personally, I’m still in the camp of trying to make representative government more accountable, as there are countervailing questions about whether the new technology-based mechanisms are making ill-informed populism and the tyranny of the majority greater dangers. But it’s an interesting debate and actually this short book is a better and more balanced guide to the issues than it pretends to be. The historical chapters are especially interesting and should help clarify for readers the distinction between representation and democracy, which is highly relevant to discussions about political reform and how on earth to start to rebuild general trust in the political system from its present shockingly low levels.

A policy no-brainer

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Some years ago it was my privilege to be involved with some work with James Heckman, commissioning him to look at skill policies in Scotland (the paper is published in [amazon_link id=”0691122563″ target=”_blank” ]New Wealth for Old Nations[/amazon_link]). So I’ve been aware of his absolute passion – this is no overstatement – for directing policies to help ensure children have the best possible chances in life. His careful econometric work, for which he won (with Daniel McFadden) the Nobel memorial prize in economics in 2000, identifies the causes of later disadvantage as lying in children’s earliest years, and in the development of non-cognitive skills and emotions as well as cognitive skills, on which so much policy attention is focused.

This work is encapsulated in a new Boston Review book he has written, [amazon_link id=”0262019132″ target=”_blank” ]Giving Kids a Fair Chance (A Strategy That Works)[/amazon_link], which includes as always some responses to Prof Heckman’s essay. The discussion is US-centric, but the analysis certainly applies elsewhere. The strategy promised in the subtitle is: “that predistribution – improving the early lives of disadvantaged children – is far more effective than simple redistribution in promoting social inclusion and, at the same time, at promoting economic efficiency and workforce productivity. Predistributional policies are both fair and economically efficient.” This is a rare and worthwhile combo – although, as he would point out, it does take the state into family life in ways that can feel uncomfortable, even when the families in question are impoverished or chaotic or damaged.

The responses make some good points. Emphasising early interventions should not make policy-makers give up on later interventions. Appreciating non-cognitive skills should not lead to the patronising and damaging assumption that children from poor backgrounds can’t make the grade academically. One contributor takes issue with Heckman’s emphasis on poor mothering rather than poor parenting, noting the damage caused by absent fathers.

Still, I agree with Carol Dweck’s summing up: “His review of the scientific evidence is compelling and makes the case that parental training and educational enrichment in the early years have critical and lasting effects on children.” There are not many areas of public policy where the evidence is so clear and experts from across the disciplines have such a high degree of consensus. Politicians have no excuse for not acting on it.

[amazon_image id=”0262019132″ link=”true” target=”_blank” size=”medium” ]Giving Kids a Fair Chance (Boston Review Books)[/amazon_image]