PORT OF LB AT 100: A COMPARISON OF ITS COFFERS AND OUR COUGHERS
By LBReport.com
[EDITOR'S NOTE: The Port of Long Beach continues the celebration of its 100th anniversary today with a huge carnival that was well-promoted by other local publications. LBReport.com attempts to counterbalance some of that booster-style coverage with a perspective that encourages looking closer at the Port's costs versus benefits to the region---keeping in mind that the Port is an entity of the City of Long Beach ... that is, publicly owned. At least one prominent economist has argued that those net benefits may be far less than others assert. In February 2005, LBReport.com reported in detail (when others didn't) on a presentation by Jon Haveman, Ph.D., an economist with expertise in trade and port issues at the Public Policy Institute of California. Haveman delivered his remarks at a Long Beach conference ("Growing Pains: Health and Community Impacts of Goods Movement and the Ports") organized by the Southern California Environmental Health Sciences Center based at USC's Keck School of Medicine. Haveman explained that the Ports of Long Beach (and Los Angeles) effectively benefit from taxpayer subsidies while simultaneously imposing significant costs ... and that because subsidized Port operations don't fully reflect costs, related "goods movement" projects typically encourage the growth of more "goods movement" projects. LBReport.com republishes his podium statements in extended form below.
John Haveman, Ph.D.:
The Ports make a profit. The carriers make a profit. The shippers make a profit. Lots of profits, and profit’s a good thing. Also responsible for a fair amount of tax revenue at the state, local and federal level, so these are all positive things that Ports do. However Ports also generate significant problems. They are in noise pollution, traffic congestion, safety issues and land use issues…
…Absolutely, there are hundreds of thousands of jobs in the neighborhood, maybe 300,000 jobs in Los Angeles, that are affiliated with the Ports. And what that number means, if the Ports were to suddenly disappear, those folks would be unemployed. But it doesn’t mean that if the Ports never existed, there would be 300,000 fewer jobs in Los Angeles, because other economic activities would come in and replace the economic activities of the Ports.
And part of the reason that the Ports are here and generating so many jobs is because you all subsidize them. The Ports are tremendous polluters. By their own admission, they’re responsible for about 25 percent of diesel emission in the L.A. area. These emissions are equivalent to those from about 1 million cars.
The region is heavily impacted to the tune of about $2.5 billion in externalized health care costs a year. Now $2.5 billion is a very large number, but I would argue that a number you really should use in this calculation is much larger still, because this number doesn’t take into consideration the effects on the individuals. It doesn’t take into consideration the lost time off from work. It doesn’t into consideration the discomfort, the unhappiness. It doesn’t take into consideration early death that sometimes result.
But I’m going stick with the $2.5 billion number because it’s big enough to make the point, and the point is that this is a subsidy to goods movement of about $7,000 per job. Seven thousand dollars per job, I think, is enough to attract nearly any industry to the local area.
But certainly what it’s doing for goods movement is it’s encouraging more goods movement activity than would otherwise be the case…
…The demand for the resource that is willing to pay the most for it ought to get it. That’s a simple economic principle that leads to basic economic efficiency provided prices reflect the true cost.
Air is another matter. Here the principle also holds that the use that can pay the most for it ought to get it, but the use that’s getting it is not paying for it. So here’s an example where price does not reflect the cost. The goods movement industry is using it for free and that costs all of you to the tune of about $7,000 per job…
1 Comment
I recently attended a high level meeting in the Port of Long Beach (POLB)headquarters between POLB Officials and construction company owners who were working on one of the many Port expansion projects. During the meeting, a question was asked about a potential problem that could cost several million dollars to correct. The highest ranking POLB Official in the room responded, “It’s just taxpayers money.” Followed by laughter.
I raised my hand and stated my objection, “I happen to be one of those Long Beach taxpayers you are talking about.”
The Port Official responded, “I apologize. That’s just what everyone says around here,” referring to the Port of Long Beach Headquarters.
Only fear of retaliation prevents me from providing the names and details of the meeting.