MYTH: The Jones Act contributes to economic growth
from Grassroot Institute of Hawaii, September 23, 2021
The following is taken from the Grassroot Institute of Hawaii’s July 2021 policy brief, “Five myths about the Jones Act,” by institute research associates Josh Mason and Jonathan Helton.
The American Maritime Partnership — a powerful lobby group representing Jones Act carriers, shipbuilders and unions — has claimed that the Jones Act contributes $150 billion to the U.S. economy.1 This claim is based on a private study by PricewaterhouseCoopers for the Transportation Institute, not available for review by the public.[eftn_note]“Jones Act: Critical to Economic and National Security,” Transportation Institute, 2020. According to the Transportation Institute posting, “Economic information about the American domestic maritime industry for this paper is taken from ‘Contributions of the Jones Act Shipping Industry to the U.S. Economy,’ prepared by PricewaterhouseCoopers for Transportation Institute (January 2019) (private study).”[/efn_note]
In contrast, Jeff Pagel, Russ Kashian and Ike Brannon found that between 2006 and 2017, the Jones Act cost the U.S. economy $11.1 billion.2 The Organisation for Economic Cooperation and Development published an analysis in 2019 that estimated the law’s repeal would increase U.S. economic output in the long term by up to $135 billion a year.3
Even the PricewaterhouseCoopers study doesn’t say what AMP says it says. According to a leaked excerpt of the study, the “total impact” of the Jones Act on U.S. gross domestic product in 2016 was $72.4 billion — less than half AMP’s claim.4
In either case, the reality is that the Jones Act is a drag on U.S. economic growth.
- “The Jones Act,” American Maritime Partnership, 2020
- Jeff Pagel, Russ Kashian, and Ike Brannon, “Jones Act: protectionist policy in the twenty-first century,” Maritime Economics & Logistics, May 15, 2019.
- “Local Content Requirements and their Economic Effect on Shipbuilding: A Quantitative Assessment,” OECD Science, Technology and Industry Policy Papers, No. 69, April 2019, p. 21. Must click “PDF” to access.
- “Contribution of the Jones Act Shipping Industry to the US Economy: Executive Summary,” PricewaterhouseCoopers, prepared for the Transportation Institute, January 2019, p. 236.