A recent op-ed in the Federalist written by Greg Jose raises significant questions about whose interests representatives of the domestic shipping industry are primarily concerned. When Jose argues that the Jones Act should be kept around, is it because he thinks the Act benefits his country or his company?
According to his byline, Jose is a “marketing professional employed by a DC-area naval architecture firm.” He is also a big fan of the Jones Act, as it is likely the reason his job exists. Yet by itself that hardly makes it good policy.
The Jones Act is an archaic law that represents a substantial burden on the economy, as I’ve pointed out in the past. The law mandates that any ship traveling between two American ports be built in the United States, crewed primarily by American sailors, and owned by American citizens. Its continued existence is also one of the best examples of corporate cronyism in action. The Act has gotten a lot of media attention of late due to the Trump administration’s delay in waiving it for the hurricane-struck island of Puerto Rico. According to the Wall Street Journal, Trump was concerned because “‘a lot of people who are in the shipping industry don’t want’ it lifted.”
Supporters of the Jones Act invariably start with the national security implications of repealing the Jones Act, and Jose asserts that repeal would “critically wound our preparedness for global conflict.” This may be a worthwhile point, if it was still World War II. Instead, in this era of nuclear weapons, the idea of the largest navy in the world being so overmatched that it has to try to fit guns on civilian vessels stretches the limits of believability. Even if this were the case, there are only 73 Jones Act ships classified as “militarily useful.”
The theme of using WWII-era logic to defend a WWI-era law continues with Jose’s claim that “it remains crucial that the U.S. maintain an independent shipbuilding and marine cargo capability to serve our nation in wartime.” Jose seems to still be thinking about Liberty and Victory ships, not modern realities. The fact is that the inefficient and protected nature of our domestic shipping industry has meant that the price of U.S.-built ships continues to rise relative to those built in other countries. This has the effect of harming national security, not safeguarding it.
In another veiled reference to national security concerns, Jose warns of a “lowest-common-denominator-built-and-flagged cargo vessel, crewed by severely underpaid and overworked foreign mariners, plying the highly sensitive waters of the Mississippi.” Touching as his concern for foreign mariners may be, the Jones Act does not keep them out of the Mississippi. It keeps them out of the Mississippi if they came from another U.S. port. Foreign mariners are perfectly free to operate inside the United States as long as they comply with this arbitrary requirement. In fact, approximately 8,000 foreign ships make over 50,000 calls in U.S. ports each year.
Specious national security smokescreens aside, Jose’s statement also leads into the real reason why Jones Act cronies defend the law: economic protectionism. Jose claims that the repeal of the Jones Act would result in “lowest-common-denominator” vessels carrying goods, but that statement would better refer to the current state of domestic shipping. Partly because of the protection it has enjoyed, the U.S.-flag fleet has shrunk to a mere 1 percent of global shipping, compared to 16 percent in 1960. Competition with foreign businesses may be what the domestic shipping industry needs if it is to revitalize.
Jose claims that the cost of the Jones Act makes it slightly more expensive to ship “diapers and bottled water.” The reality is that it is a lot more expensive to ship almost everything between two U.S. ports. One study found that it was twice as expensive to import goods to Puerto Rico, which is covered by the Jones Act, as the U.S. Virgin Islands, which is not, despite the two islands being right next to each other. U.S. states and territories disconnected from the mainland have suffered especially from these arbitrary restrictions. Coastal areas, while not suffering the same degree of economic harm, are still burdened with slow trucks that cause traffic congestion.
Don’t buy cronyistic arguments peddled by the industry that benefits from the cronyism. Congress should scrap the Jones Act.