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Thursday, May 26, 2016
Jones Act Worsens Puerto Rico’s economic crisis
By Michael Hansen @ 10:09 AM :: 2601 Views :: Jones Act

Jones Act worsens Puerto Rico’s economic crisis

by Michael Hansen, Hawaii Shippers Council, May 18, 2016

The Washington DC news site Inside Sources LLC published on May 18, 2016, the opinion-editorial (op-ed), “Puerto Rico’s Economic Crisis Rooted in History of Feds’ Anti-Trade Policies.”

The op-ed places much of the blame for Puerto Rico’s crisis on Federal policies and advocates Congress enact free-market reforms including repealing the Jones Act rather than providing bailouts as is currently being considered.

The author is Jesse Hathaway, Research Fellow, and Managing Editor, Budget & Tax News of The Heartland Institute, a free market think tank based in Arlington Heights, Illinois.

Key excerpts:

Alejandro Garcia Padilla, the governor of Puerto Rico, has skipped out on a $422 million payment owed to private-sector creditors.

The missed payment, due on May 1, was just another scene in the slow-motion train wreck that has been termed “Puerto Rico’s economic crisis,” but to call the territory’s status a “crisis” understates the severity of the problem.

Puerto Rico’s territorial government is responsible for some of the problems its people are facing, such as its overly generous entitlement programs for workers, but Washington, DC lawmakers are ultimately responsible for the territory’s economic death spiral.

One Washington, DC policy making things worse for Puerto Rico is called the Jones Act.

A 2012 report issued by the Federal Reserve Bank of New York (FRB-NY) studied the effect of the Jones Act on Puerto Rico and concluded increasing the cost of shipping goods to Puerto Rico from the mainland has resulted in fewer goods being shipped to Puerto Rico and less money available to Puerto Ricans.

According to the American Maritime Congress, a lobbyist organization representing the interests of the merchant marine industry, only 77 ships in the entire world comply with the requirements of the Jones Act. By artificially reducing the volume of shipping, the cost of shipping increases, making everyday goods more expensive for Puerto Ricans.

“It costs an estimated $3,063 to ship a twenty-foot container of household and commercial goods from the East Coast of the United States to Puerto Rico; the same shipment costs $1,504 to nearby Santo Domingo (Dominican Republic) and $1,687 to Kingston (Jamaica)—destinations that are not subject to Jones Act restrictions,” the Federal Reserve Bank of New York wrote.

Instead of considering targeted big-ticket bailouts from the mainland’s treasury to patch over their past mistakes, national lawmakers should enact free-market policies, including repealing the Jones Act, to help make prosperity more readily available to everyone, regardless of whether they live in Chicago, California, or Canóvanas.

---30---

House Freedom Caucus unable to compel Jones Act reform in Puerto Rico relief bill

Obama opposed to Jones Act and minimum wage relief for Puerto Rico

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