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With the help of the Biden administration, the House voted to avert a rail strike that would have crippled the U.S. economy to the tune of up to $2 billion daily. The legislation, which now goes to the Senate, approves new contracts that give workers a 24% pay raise from 2020 through 2024. However, some unions say Biden betrayed them, arguing the contract needs to do more around paid sick days. Straight Arrow News contributor Peter Zeihan breaks down how the American political system, including the Jones Act, created the conditions for the potential strike.
Excerpted from Peter’s Dec. 1 “Zeihan on Geopolitics” newsletter:
Rail is one of the primary means of transport in the U.S., and a union strike could put all of that at risk. To understand how the US got itself into this mess, we have to consider the following facets of the American system.
First, the Jones Act diverted a majority of the cargo away from waterways, meaning without rail a whole lot of things just…stop. Second, the turning of the political system has forced the organized labor faction into a game of tug of war between both parties, each vying for the union’s support.
As long as there is a threat to the systems that the union has a stake in, they will resist. This will likely result in government intervention, but not necessarily the kind of intervention we would have seen 10 years ago.
(The situation surrounding the potential U.S. freight rail strike remains fluid. At the time of publishing, the U.S. House of Representatives has voted to approve a tentative labor deal to avert a strike, but it remains unclear how the U.S. Senate and rail workers will respond.)
