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Wednesday, April 8, 2020
The Jones Act is American Self-Sabotage
By Michael Hansen @ 9:57 AM :: 2406 Views :: Jones Act

CATO asserts Jones Act is self-sabotage

by Michael Hansen, Hawaii Shippers Council, April 7, 2020

Real Clear Policy published on April 6, 2020, the opinion-editorial, “The Jones Act is American Self-Sabotage,” written by Colin Grabow, a Cato Institute policy analyst. It describes how the extraordinarily high cost of domestic ship construction mandated by the Jones Act is shooting the U.S. in the foot, economically speaking, which benefits competitors like the Peoples Republic of China (PRC).

Key excerpts from Real Clear Policy:

In their zeal to defend the protectionist Jones Act, supporters of the law argue that it helps thwart the ambitions of countries such as China. The truth is almost the complete opposite. If Beijing was able to vote for its favorite U.S. law, the Jones Act would surely be a strong contender. It’s been a disaster for both the U.S. economy and its maritime sector.

The reasons aren’t hard to understand. Out of the tens of thousands of ships in the world, a mere 99 comply with the Jones Act. That’s only 99 ships to meet the needs of the world’s largest economy and its non-contiguous states and territories including Alaska, Hawaii, and Puerto Rico.

And these few ships were built at fantastic expense. A ship built in the United States can cost up to five times more than one built abroad. Instead of paying $50 million for a ship Americans may instead be forced to pay $250 million.

With limited competition and expensively-built ships, the inevitable result is higher transportation costs.

Faced with high shipping costs, Americans do their utmost to avoid the use of Jones Act ships. Instead, they often use alternative forms of transportation such as trucks and rail.

Shipping-dependent areas of the country such as Alaska, Hawaii, and Puerto Rico, however, don’t have this option.

But sometimes the Jones Act doesn’t just deter the purchase of American products—it makes it impossible. Puerto Rico and New England both import natural gas for electricity generation, but none of it comes from the U.S. mainland.

The few ships that are built, meanwhile, feature numerous imported components such as the engines, so any notion that the Jones Act makes the U.S. self-reliant in shipbuilding is just wishful thinking.


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