Efficiency and Environment Hand in Hand

April 26, 2016

Bloomberg reports that the Port of Los Angeles is increasing automation with the installation of self-driving cranes and other equipment. The automation is being partly driven by the need to minimize the use of high cost and troublesome unionized labor.

The West Coast longshoremen and their unions have long caused disruptions and slowdowns at the seaports. This is one reason why U.S. seaports have fallen behind the efficiency levels of the best facilities in the world, such as the Port of Rotterdam.

A new incentive for seaport managers to automate is the need to minimize the environmental impact of shipping. The new machines are faster and cleaner than the old human-operated equipment, and so they cut air pollution. For this reason, California’s government is behind the push to automate.

Jon Slangerup, head of the Port of Long Beach, concluded: “Efficiency and the environment go hand in hand … They’re two sides of the same coin.’’

In an upcoming Cato study on privatization, I describe how this theme applies to business activities of the federal government. In government-owned businesses, inefficiencies imposed by Congress and the bureaucracies harm the environment. To cut waste and pollution, we should privatize:

  • privatized Amtrak would save energy as it ended low-volume and inefficient routes.
  • privatized U.S. Postal Service would save energy by closing thousands of little-used locations and cutting its fleet of more than 200,000 trucks.
  • privatized air traffic control system would adopt technologies to reduce flight times and cut fuel use.
  • A privatized Tennessee Valley Authority would likely be a better environmental steward than this mismanaged government utility has been.

While liberals often assume that the environment and profit-hungry businesses are enemies, the opposite is true. Profit-seeking is a friend to the environment because it generates incentives to minimize waste, to recycle, and to discover better ways of producing products with fewer resource inputs.

While private profit-driven recycling is efficient, government recycling tends to be wasteful. And some federal agencies, such as the Department of Energy, have had terrible environmental records. The problem is that governments have incentives to maximize costs, not minimize them.

Politicians talk a good game about saving the environment, but it is markets and private businesses that actually deliver.



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