
Trucking Is the Security Crisis You Never Noticed - molecule
https://foreignpolicy.com/2018/09/19/trucking-is-the-security-crisis-you-never-noticed/
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maxander
Lurking behind the article's entire thesis, and yet barely addressed in it, is
the issue that despite demand for truckers outstripping supply, their
employers aren't willing to significantly raise wages. They instead eat the
costs of trucks sitting empty despite loads available to carry. "Higher demand
for labor raises wages" is the bread-and-butter of mainstream economical
arguments for how to help poorer segments of society and, fundamentally, why
economic growth is a good thing- yet cases like these show that it is _simply
not true_. Raising wages for less skilled workers is apparently so absurdly
painful for employers in almost any field that they'll pay almost any _other_
cost.

This is how wage growth has stagnated for the majority of workers in the U.S.,
even in the face of a prolonged economic boom [0]. The standard economic
models of the labor market _do not work_ , and yet almost no one is willing to
acknowledge this.

[0] [http://www.pewresearch.org/fact-tank/2018/08/07/for-most-
us-...](http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-
real-wages-have-barely-budged-for-decades/)

~~~
jhayward
They can afford to have trucks sitting idle rather than raise pay because the
cost of capital is at historic lows. If the cost of capital were higher, the
balance between capex and opex would favor labor more.

Much of the middle class hollowing effect could be helped by rather small
changes in capital costs.

~~~
maxander
I’m not an economist, and the following argument is qualitative- “cost of
capital” essentially means the cost of _things_ (as opposed to, the cost of
services/labor.) Perhaps, indeed, when the cost of things goes up, this will
lead to an increase in wages- but humans also require and purchase _things_ ,
so this will drag their effective earning (their purchasing power) back down,
even if their nominal wage has increased.

Which leaves peoples’ motivation to be truckers (and the fortunes of the
middle class) in roughly the same boat regardless of the cost of capital.

~~~
jhayward
No, cost of capital is not synonymous with "cost of things". It's how much you
have to pay to use someone's money for a while. There are all kinds of other
costs that go in to the cost of goods.

Big trucking companies borrow money and buy semi trucks. They get them
straight from the manufacturer complete with 4-5 years worth of all
maintenance and warranty. They run them for that time, spending nothing else
other than fuel, tires, driver pay, and insurance cost, and then sell them at
the end of the 4-5 year period. The cost of using the truck is essentially the
difference between the purchase price-selling price, plus the interest cost of
the borrowed money.

If that interest rate is low, let's say it's zero: they can buy 1,000 trucks
and let them sit idle and not lose much money because they just turn around
and sell them as almost new, and don't have to pay interest. If the interest
cost is high, they need to keep the trucks working to bring in revenue to
cover the depreciation + interest cost.

Lower and middle-class people don't use debt anywhere near the extent that
capital-intensive businesses do. Higher interest rates do not affect their
bottom line as much. So if the cost of capital goes up, there is pressure on
that capital to produce, which makes it more beneficial to spend money on
labor to create revenue. Labor gets a bigger slice of the revenue pie because
it is more valuable compared to capital.

Even better, a dollar spent by a consumer is far more beneficial to the
economy than a dollar spent by a corporation, because such a high proportion
of corporate spending ends up back in the pockets of plutocrats and
plutocratic corps. A dollar spent by a consumer tends to go back in the local
economy at the grocery store, gas station, mechanic's shop, child care, etc.
That same dollar gets spent again and again in the local economy as it passes
along.

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2sk21
Why not rebuild railroads here in the US? On a trans-country trip by Amtrak, I
was struck by the number of abandoned spurs to industries which still seem to
be operating. Presumably those industries have switched to road-based
transportation.

~~~
RobLach
Freight rail in the United States is unmatched. Cheapest ton/$ and on-time.

Coal power plants are comfortable scheduling supply intake on a daily
granularity as it’s very rare for it to arrive late. It’s also a reason
passenger rail is more dismal in the states; the rails are operated by the
freight companies and passenger trains have the lowest priority so they pull
over to let a 2 mile train of coal pass by at 15 mph.

It’s also difficult to expand this capacity as the complexity of handling so
many trains isn’t linear. Rail yards are both tough to revamp because they’re
near 100% in-use and even just tough to physically expand:
[http://www.chicagonow.com/dennis-byrnes-
barbershop/files/201...](http://www.chicagonow.com/dennis-byrnes-
barbershop/files/2016/07/rail-yards.jpg)

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HillaryBriss
> _In the past, the fee per container going from Asia to Europe was often
> 2,000 euros [$2,300]. Today, it’s 200 euros [$233]._

wow. i had no idea a container shipping fee was that low.

