PAL Kaua‘i listeners hear how to ‘fix’ the Jones Act

from Grassroot Institute, July 5, 2022

The Jones Act increases the cost of food and virtually all other products in Hawaii and needs to be fixed.

That was the overriding message of a June 27 conversation on Kauai’s KCCR AM radio, sponsored by PAL Kaua‘i, a nonprofit organization dedicated to “changing the paradigm of affordable housing to affordable living.”

Representing the Grassroot Institute of Hawaii during the program were research associate Jonathan Helton and Grassroot Scholar Colin Grabow, who also is a trade policy analyst with the Cato Institute in Washington, D.C.

The 1920 Jones Act runs counter to the ideal of affordable living, they explained, mainly because it requires all cargo moved between ports in the United States to be on ships that are U.S.-built, U.S. flagged, and mostly U.S. crewed and owned by Americans.

These mandates suppress shipping competition, increase U.S. shipping capital and operating costs, and increase the cost of food and other necessities.

After listening to Helton and Grabow discuss how the act harms Hawaii consumers and endangers the state’s shipping security, the show’s hosts — Larry Graff, Jim Edmonds and Leilani Spencer — asked what could be done to “fix” the situation.

Grabow outlined several possibilities, including repeal the Jones Act outright, selectively exempt Hawaii and other noncontiguous states and territories from the act, or at least eliminate the act’s U.S.-build requirement.

Helton said reforming the build requirement is “probably the easiest one politically, and that’s probably the part of the law that harms states like Hawaii the most.”

But what really caught the ear of the hosts was when Grabow talked about the political realities of Jones Act reform.

Since “we’re talking about the politics of this, and what can get done,” Grabow said, “it’s worth pointing out that, unfortunately, only one member of Hawaii’s delegation, Rep. Ed Case, supports Jones Act reform. Both senators from Hawaii — Mazie Hirono, Brian Schatz — they’re Jones Act supporters. They support this law.”

So “it’s a difficult conversation in Washington, D.C.” he said. “People say, ‘The delegation of Hawaii, [which is] most affected by this law, well they support it. So why should I care?’ That’s something that needs to change.”

To subsequent laughter, Spencer added quickly: “OK, you just told us what we can do. Thank you. That’s very helpful.”

She continued: “Just the fact that you shared the way that our politicians lean, that makes a big difference. … because we do have access to our representatives, and we can make our voices heard.”

Said Edmonds: “Yes, it’s a small place, and I’m really shocked by the alignment the way you described it. I would have thought it was completely reversed from that.”

Grabow said “what’s revealing about it — and kind of sad, frankly — is that a couple of years ago, Rep. Case gave an interview and he said that standing against the Jones Act has actually been one of the most difficult stances politically for him because of all the blowback he has received from entrenched interests there in Hawaii. 

“Matson funded some of his opponents. [And] right now, he’s in a primary challenge and a bunch of maritime unions have unsurprisingly endorsed his primary opponent. … Politicians pay attention to things like that, and if they see groups saying, ‘You should support the Jones Act,’ and they don’t hear from other people, well, that’s the way they’re probably going to lean. 

“Like you said,” he added, “the good news here is that Hawaii is a relatively small place. I don’t think it would take a tremendous number of people to have a great impact and to perhaps alter the thinking on this law a bit.”

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TRANSCRIPT

6-27-22 Jonathan Helton and Colin Grabow on KKCR / PAL Kauai Radio Show

Leilani Spencer: Yes, so PAL Kauai Radio is a talk show and it’s also a call-in show, reminding you all. It’s a listening show too obviously. If you have a question for our guests, the call-in number is 808-826-7771. Do feel free to call us in, participate, ask questions and I’m sure you’ll have questions for sure about the Jones Act or make comments. We’re waiting for your call once again, 808-826-7771.

Larry Graff: Thank you, Jim and Lei. You know, if you’re in your car, if you’re listening — and thank you to our listeners for continuing to listen to us, we really appreciate your support, because we think we really cover a lot of valuable topics. And this one, I know it sounds dry we’re talking about the Jones Act, but really this one hit you where it hits hardest. It’s in your stomach. And your wallet, that’s right, Jim. If you can’t– If the food’s not here, during COVID how many of us went through the markets and saw shelves that were empty? And according to what we understand, this is going to happen again, and potentially be worse.

Spencer: That includes toilet paper. We don’t manufacture that here on this island.

Jim Edmonds: Really?

Graff: What about ti leaves? Never mind. [chuckles]

Edmonds: I just have to tell you there were some people I couldn’t get for this show. They told a story that during COVID, fascinatingly enough, this state — I’m not talking about Kauai, I’m talking about the entire state — was in two to three days of not having any food to put on the shelves. 

And this guy was saying, he was on television, he was saying, “I was calling everybody, all the politicians and saying, ‘So what’s the backup plan?’ And they were all going …” 

Graff: Backup plan?

Edmonds: [laughter] Yeah, what backup plan? Hopefully things are happening now and that’s one of the reasons we’re starting to rattle their cage doors with this show to see if we can get enough people thinking about it.

Graff: We’d like to be wrong, but we’d like to also be prepared.

Edmonds: All right, amen.

Graff: This is a serious subject, of course, everybody but we always like to insert a little humor because we want to keep it fun. Right, Jim?

Edmonds: It’s a matter of opinion as to whether it’s humor but when we tell our jokes I’m going to ask really for you folks to laugh really loud you know we can never hear you. If you laugh really loud maybe we can tell you thought it was funny. Today’s first guest is the Grassroot Institute of Hawaii. So I mean, how can I resist? 

My first question for them is, do you actually sell grass? And if you don’t sell it, do you mow it? Exactly what do you guys do? I was walking around one time in Lihue and I saw this drug rehab center and they had a sign in the front on the lawn that said, “Keep off the grass.”

Graff: Wasn’t sure if it was Guinea grass or what it was.

Edmonds: Come on guys, I was joking.

Graff: OK. We’re supposed to lie?

Spencer: Bad, bad jokes brought to you by PAL Kauai. The jokes are free and the groans are priceless.

Edmonds: Are they here? Do we have our guests?

Spencer: Yes, we do. I would like to introduce to you our guests from Grassroot, Jonathan Helton, research associate, and Colin Grabow, scholar and trade policy analyst from Cato Institute in Washington, D.C. And Mark Coleman may join us. I’m not sure if he will be or not. If he does, we’ll bring him in.

Edmonds: Whoever makes it, I sure hope they have a good sense of humor.

Graff: Well, Jonathan and Colin, can you hear us? Are you on the air? You’re on the air.

Jonathan Helton: I can hear you. Can you hear me?

Graff: We can hear you perfectly. Thank you so much.

Edmonds: We always try to test our guests to see if they have a sense of humor right up front. And you’re welcome to carry us with a joke as long as it’s not better than our jokes.

Spencer: They might have changed their mind after they heard that joke.

Graff: They’re running away from us now. Mark and friends, you’re on the air and we sure hope you have a good sense of humor, but have a good time today. We’re talking about a very serious subject and if you’re listening, pay close attention. Right, Jim?

Edmonds: Amen. Maybe you guys can just take turns introducing yourselves. Who are you? What are you doing? Why are you doing it and how did you get started in it? Just give us a little background.

Helton: All right. I’ll be happy to start. I’m Jonathan Helton. I’m a research associate at Grassroot, but we don’t sell grass that I know of. Although I’m in the unique situation, I’ve never been to Hawaii. 

I was born and raised in Tennessee and I’ve been working with Grassroot for the past three years. I got interested in the Jones Act actually because of a debate in high school. Out here in Tennessee, we were arguing about education policy my senior year and that got me interested in the Jones Act. 

I contacted Grassroot. I’ve been working with them ever since and right now I’m hoping I can actually visit Hawaii. COVID kind of messed up our plans there. I’m hoping I can visit Hawaii.

Edmonds: Jonathan, don’t let me interrupt you but you’re cutting out, and I don’t know if there’s some way you can move to another place with your phone, or maybe speak more directly into the microphone or do something …

Spencer: Or speak slower too.

Edmonds: Speak a little slower.

Spencer: Colin, you’re on [line] 2, right? Because they’re both on a conference call.

Helton: I am on. Yes.

Edmonds: Well, yours sounds much more clear.

Helton: OK, is this better?

Edmonds: Not really. Most people can understand what you’re saying if you speak more slowly, but if you speak quickly, it’s getting really clipped, Jonathan.

Helton: Sorry about that. I don’t know if this is any better, I can just maybe try to move.

Edmonds: Who initiated the call? Was it you, Colin, or Jonathan?

Graff: All right. Well, Jonathan, thank you for your introduction. Colin, let’s hear a little bit about you. Can you tell us a little bit about you?

Colin Grabow: Sure can. My name is Colin Grabow, I am a research fellow at the Cato Institute. I’ve been at Cato for what will be five years in September, and I’ve been writing and researching about the Jones Act pretty much ever since I started at Cato. 

In fact, I started in September 2017 and it was about the same week as Hurricane Maria hit Puerto Rico and there was a lot of talk about the Jones Act at the time and the need to waive the Jones Act, suspend it to help bring aid to Puerto Rico. 

I started writing about the topic then, and it’s Alice in Wonderland. I’ve gone down the rabbit hole, and it just gets more and more seeing that the more you read and research about it. 

So here I am, five years later, and I’m still very interested in this very important topic.

Spencer: Colin, what is Cato? What does that stand for?

Grabow: Cato is not an acronym. Cato Institute is named after a Roman politician; Cato’s Letters. We advocate for limited government, free markets, free people, peace, these kinds of principles, and we think that the Jones Act is a violation of those principles. So that kind of explains the institute’s interest and my own personal interest in this law.

Edmonds: Wow. That’s impressive stuff. Jonathan, let’s try a sentence from you. Speak up and let’s see if you got your sound cleared up. Make sure you’re holding your phone.

Helton: Can you hear me any better?

Edmonds: That sounds much better.

Helton: OK, awesome. I moved the room so hopefully I have better reception.

Spencer: That’s much better.

Edmonds: Much better thank you. You may not be as comfortable. I’ve been in that, I’ve had to actually walk and stand in one spot on my deck to get it to work.

Graff: Then I lift one foot up and pat your head and rub your tummy at the same time.

Edmonds: Jonathan, and I grew up in South Carolina, we would’ve always said, and you also have to hold your mouth right, that’s one of the most important things. So, anyway, we’ve got a couple of questions for you guys. 

Please feel free to take off on any subject. This is live radio. Anything can happen. We could get a phone call that would ask you a question that would throw you a curveball. We’ve even had to hang up on some caller guests at times who got a little out of hand. We’ve been doing this show, I think this month for two and a half years, which is pretty incredible.

Actually, Lei joined us like two months later, so she’s been with us almost the whole time. Larry and I are sort of crazy. We’ve galloped off on all these different …

Graff: What do you mean sort of?

Edmonds: I was trying to be polite to you.

Graff: That’s OK, everybody knows me.

Edmonds: So basically, we are getting so much going on to try to help with the affordable housing situation in Hawaii. And this radio show is not only to attract attention to what we’re doing but also to try to help people with their lives. 

So the first question — and you guys can decide who wants to address it, or one can take it and then the other one jumps in to finish, if you want; it’s up to you guys. We’re not going to call on each one of you — the first question is, just what the heck is the Jones Act?

Helton: I’ll be happy to take this. The Jones Act is a 102-year-old law, and it basically says if you’re going to move cargo between two ports in the United States, that cargo has to be moved on ships that are U.S. built, U.S. flagged and then mostly crewed by Americans and owned by Americans as well. That’s the short of it.

Spencer: Then what was the original purpose of the Jones Act for that? It might be obvious, but please explain.

Grabow: I can field that one. The Jones Act actually passed in 1920 but we’ve had laws very similar to what Jonathan described, going back to the 1800s. 

When these laws were first passed, the idea was that we needed a lot of ships because this is a new country and we didn’t have a big navy. The British empire, with their great navy, were our big rivals or enemies. And we needed to ensure that we had a lot of ships. 

Back then, you could take merchant ships in a time of war, load a few cannons on them, and hey! presto! instant navy.

 And also back at this time, we had very good shipbuilding, the best shipbuilders in the world. You know, lots of forests along the East Coast. All the 13 original colonies had a coastline. So very much a maritime environment.

Well, the law was in place and as time went by, U.S. shipping and shipbuilding went from being some of the world’s best to becoming very uncompetitive. Right around the transition from the era of wooden ships to iron and steel and from sail to steam, the U.S. didn’t keep up. And U.S. shipping became so uncompetitive that, in fact, I believe by the late 1800s, it was cheaper to ship something from the East Coast to California, going first from New York and then to Belgium and then to go to … you could use a foreign ship going to a foreign port and then use another foreign ship to go all the way to California, then to use an American ship, just go directly.

So people started looking for ways around this law and little loopholes to avoid using expensive American ships. One way of doing that was, in Alaska, people could send goods over land from the U.S. to Vancouver and then from Vancouver to Alaska or the reverse. That way they could use foreign ships going between Canada and Alaska. 

Well, Sen. Wesley Jones of Washington state, with shipping interest in Seattle, the shipping interests didn’t like that; they wanted all the business to themselves. They didn’t want this Canadian competition. 

So in 1920 Sen. Jones got the law changed to eliminate that ability to send things overland. So the law was changed to essentially mean anything going from one part of the U.S. to another — doesn’t matter if you go through a foreign country, overland, whatever — you have to use U.S. ships. That’s how the Jones Act basically came to be. Apologies for the long-winded explanation. 

Graff: No, that was really fascinating.

Edmonds: That was really fascinating. So basically just to protect commercial American interests.

Grabow: That’s right. We also have to recognize that at this time, like Hawaii, Alaska was a territory. So that means Alaska didn’t have a say in this when this law was passed. Alaska didn’t have two senators and a member of the House. So they, I believe, had a nonvoting member of Congress. 

They were powerless to stop this because this was very good for Washington state and the shipping interests there, but not so good for people in Alaska who then saw their shipping costs rise after the law was passed.

Edmonds: Well, if you’re listening, it’s not so good for people in the state of Hawaii, right? Raises our costs.

Grabow: Hawaii of course is in a very similar situation as Alaska, and, perhaps, even more dependent on water transportation to and from the U.S. mainland. In fact, what’s interesting is that, like I said, the Jones Act goes from 1920, but very similar laws were around even before that. 

Hawaii, of course, became part of the U.S. in 1898. And I found congressional testimony from the early 1900s for people in Hawaii — back before airplanes — they also had to use ships for transportation for passengers to go to the mainland. They were saying it was easier for us to get to the mainland when we were not part of the United States, and now we are part of the United States because now we fall under these shipping laws that are very restrictive. 

Of course, this continues to the present day. People thankfully can get airplanes, but they still have to rely on very expensive ships to transport goods to and from the mainland.

Graff: Just to give you an interesting little tidbit that connects to this. We live on the north shore of Kauai. I do, I live in Kilauea. The Kilauea lighthouse has always had the nickname, “The landmark lighthouse on the Orient run.” 

So everybody going from the mainland to anywhere in Asia, a Japanese port or a Chinese port, whatever, they use our lighthouse as their orientation to make sure that they’re on the right path as they go north of Kauai. 

So all of these ships, all of this stuff that is being shipped to the mainland and then transshipped back to Hawaii under the Jones Act, goes within about 30 to 50 miles of our island on the way to the mainland to have to be shipped back to Kauai.

And then they won’t even ship it to Kauai. Then they ship it to Oahu and we have to ship it to Kauai from Oahu. So it’s really a thorn in our sides. I’m surprised we don’t have any calls because I’ve heard some people really get on a soapbox about this.

Spencer: I think they need to learn a little bit more about this whole plan.

Edmonds: Yeah. Listen, we should be outraged. We have a law that’s over 100 years old and gentlemen …

Graff: It’s costing us money.

Edmonds: Jonathan and Colin, does this mean that we can’t receive items directly from overseas to Kauai, or that it just has to have an American ship carrier from a foreign port into, say, Kauai or Oahu or a state?

Helton: Well, the Jones Act doesn’t really apply to imports. So if you’re going to buy something from Asia, you can ship it directly to Hawaii on a foreign-built ship, on a foreign-flagged ship. There’s no Jones Act requirements for imports in Hawaii. 

What’s interesting is that Hawaii on a tonnage basis, the majority of its goods are actually from foreign countries, not from the U.S. mainland. Now, a lot of that is crude oil, which, as a bit of a side note, that’s become very interesting in recent months because Hawaii, for the past several years, has gotten a lot of its crude oil from Russia. And once Russia invaded Ukraine back in February, Par Hawaii said, “We’re not going to buy any more Russian oil.” That means that they had to find a different supplier.

But back to your question. The Jones Act only applies to goods that are moving from the mainland or from another U.S. port. So, what you mentioned, a shipment moving from Oahu to Hawaii, would be covered under the Jones Act. A shipment coming in from say Japan to Hawaii wouldn’t be covered under the Jones Act.

Edmonds: I was not aware of that, because I know that we receive almost nothing from Asia that I’m aware of. All cars come from the mainland, even if they’re made in Japan, or in Asia. So I guess that’s just efficiency, just shipping to the mainland first?

Helton: Yes, that’s a big reason. For whatever reason, a lot of the ports on the West Coast are a lot larger, so they can accommodate larger vessels than the ports, especially the port in Oahu, can accommodate. So sometimes it’s just easier for businesses to send it to the mainland first because they can use larger ships, which bring efficiencies with them, and they can’t move their ships to Hawaii.

Graff: And bigger unloading facilities, etc.

Edmonds: So let me ask you, how does this make things more expensive? What kinds of shipments are impacted, and how does it make it more expensive or more of a laborious supply-chain issue for people specifically for Hawaii, and specifically for Kauai?

Grabow: Let’s talk about this factor, and how it does affect your pocketbook and why is this so important? 

Well, we, first, of course, have to keep in mind that Hawaii is incredibly geographically remote, and much of what it uses it has to import, and a lot of that comes by ship. It’s basically by ship or airplane, that’s it. There’s no railroads, there’s no pipeline, there’s no highway. So it’s one of those two. Airplane is, of course, an extremely expensive means of moving goods, which is why most things come by ship.

The problem with shipping, as Jonathan mentioned, is one of the conditions is that these ships have to be U.S.-built. It turns out, American-protected U.S. shipyards, they don’t have foreign competition. Remember, we have to buy from them. They’re not very good shipbuilders. They’re not very efficient. They’re much more expensive than foreign-built ships. 

According to the Congressional Research Service, a U.S.-built tanker is about four times more expensive than one built overseas. So we’re talking $40 million vessel overseas is about $150-$160 million ship in the U.S. 

Graff: Why am I not surprised?

Grabow: And let’s talk about Matson. Matson, their last ship delivered, which was the Matsonia, two years ago, that ship cost $255 million. Over in Asia, that’s closer to like a $70 million ship. Who pays that difference? Of course, it’s going to be the people that have to use the shipping service. Those costs get passed along.

But we’re just getting started because on top of that, you also have to crew with Americans. Well, Americans make considerably more than foreign mariners. Last I checked, I believe that U.S. crewing costs for these ships are about five times higher than those of foreign vessels.

And there are other expenses too. For example, if you’re an American ship, and you want to get your ship repaired in a foreign port, you’ve got to pay 50% tax on that for tariffs.

So all these costs add up. You have ships that the operating costs are around three times more expensive overall, and then you have these capital costs — the cost is actually acquiring the ship and building it — those are four to five times higher. You add that together, you have very expensive shipping. 

Then of course you have limited competition. You want to ship something to and from Hawaii, you’ve got two choices: you got Pasha, you have Matson. That’s about it. So it’s not a formula for efficient, reasonably priced shipping. 

And when everything — well not everything, but the vast majority of what’s consumed in Hawaii — has to come in by ship, someone has to pay the piper here. Those costs get passed along and ultimately manifest themselves in the form of higher prices. 

You talked about housing earlier. Well, housing materials, a lot of that has to be imported. That’s one way right there the Jones Act hits you.

Edmonds: Yes, let me just say, the only thing I would disagree with is, you said a lot of the housing materials have to be imported. I would say 99.999% of them have to be imported. [laughs]

Helton: Yes. I’ll just add a couple of things to what Colin said. I was doing a little bit of research earlier and so, the Koloa sugar plantation, there on Kauai, closed in 1996, and the last Hawaii sugar plantation closed a few years ago, in 2015. But here’s what the president of the Hawaii Sugar Planters Association told Congress in 1985. 

He said all sugar shipped to mainland refiners must be transported and shipped governed by the Jones Act. Transportation costs are consequently significantly higher than other suppliers of raw sugar to the U.S. market. 

So the way that the Jones Act harms Hawaii works both ways. It increases the cost of everything coming into Hawaii.

For example, Colin was talking about construction costs. The Grassroots Institute of Hawaii did a study back in 2020 and they looked at some of the costs of the Jones Act to Hawaii. The Jones Act cost Hawaii’s construction industry roughly $34 million a year. That’s definitely nothing to laugh at. 

The other thing the Jones Act does is it harms industries that are in Hawaii. So you’re talking about the sugar industry. It’s virtually nonexistent in Hawaii. And a big part of that is because of high transportation costs. 

One more thing that I’ll add is the pineapple industry, also significantly smaller than it used to be. Back in the 1970s, though, the U.S. the International Tariff Commission looked at some of the challenges Hawaii’s pineapple industry was running into. And one interesting statistic they found was it was cheaper to ship a crate of pineapples from Taiwan or the Philippines to the West Coast … than to ship from Hawaii to the West Coast. Keep in mind, Taiwan and the Philippines are 5,000 miles further west. It was still cheaper to move pineapples from there to the mainland. That’s one reason Hawaii’s pineapple industry just has gone under.

Spencer: Jonathan and Colin, if we could just interject, we’ve got a little station work to do here.

Graff: We’re just going to take a station break. This is KKCR Hanalei, KAQA Kilauea.

[Public service announcement]

Graff: All right, we are back, and thank you for bearing with us for the moment we took. Go ahead.

Edmonds: So Jonathan and Colin, this is a little bit of a curve I’m going to throw you here. I know this isn’t exactly your kuleana, but I’m going to ask both of you to weigh in on it. 

The title of this show is: “Is there a coming global food shortage?” And if so, how could it possibly affect Hawaii? What could the individual listeners do to prepare for it?

So, I’m going to ask both of you guys, if you wouldn’t mind addressing this: Do you believe it, based on what you know about the shipping industry and the supply chains and what’s going on in the world? I don’t know if you got a chance to listen to the little blurb I read from The Economist at the beginning. But you know, we live on a small island. Jonathan, you said you’ve never been here. I’ve been living here for almost 50 years. Leilani grew up here. We know that when anything threatens shipping or food supplies or anything, you can’t get to the market. You can’t get anything out of the markets. 

The second the news arrives, the markets are stripped. There’s nothing on the shelves. This is mostly the Asian people who live here, whom we love dearly. Wonderful people. But they grew up in a situation where they had to be ready to survive. We really didn’t tune into it that much until later on.

But, you know, there was a shipping strike, I think it was in 1983, and I was driving by a market and I hadn’t heard about it yet and I’m looking and there’s like 400 people in line outside this market. I said, “I better find out what’s happening.” 

So I park and go in, and somebody says, “Oh, yes, there’s a shipping strike happening starting today.” And I waited in line and got in the market. And there was nothing to buy. Nothing there at all.

Spencer: On top of all, the very huge number of visitors that we have stock up on water and beverages and everything else, too. So that impacts us, the local population, quite a bit as well.

Edmonds: And we found out about toilet paper during COVID. Actually, my wife had to go to one lady and beg her to sell her a bag of pet food for our dog. She was buying everything in Costco. She had two floats and had all of the food in Costco. 

Essentially, I’d like it if you would both address it. So maybe start with Jonathan. Give us your opinion on what you think could happen. If you think it is going to happen. How would it affect a little tiny island out in the middle of nowhere? And also, if you have any suggestions for what the people of this island could do to prepare for it, and then Colin, if you could take that afterwards.

Helton: Sure. I will take a stab at that. The global food industry is a little bit out of my wheelhouse, but I do know how shipping would interact with that. 

So you mentioned the strikes that happened in the 1980s. There’s been a lot of similar strikes. And there’s been a common theme for a lot of them. There was a strike in 1949 by Hawaii dock workers. You saw something similar: toilet paper, a lot of other things were in short supply. 

There was another strike in 1971. This was one of the biggest strikes from the International Longshore Warehouse Union. They shut down all 56 West Coast ports for 130 days. That included shipments coming from the mainland to Hawaii and vice versa. So that caused a lot of pain to consumers in Hawaii as well. 

But recently there’s been a couple of strikes that actually exempted Hawaii. For example, in 2015, the same organization, the International Longshore Warehouse Union, went on strike again in 2015. Unlike with their previous strikes, they decided to make some carve-outs. 

They made carve-outs for Jones Act vessels, cruise ships and military ships. So this included vessels that were visiting Hawaii. So if you lived in Hawaii, you were going to see a similar degree of reliability as you’ve seen before the strike. So that’s good. 

To bring us to the present day, we’re seeing a very similar situation. That organization, the ILWU, is trying to renegotiate their contract with the port authorities. And there’s been a lot of rumors that the ILWU might strike again, and Hawaii would be in a similar situation. You’d food off the shelf. However, as of right now, the organization, the ILWU, is saying they’re not planning a strike, they’re currently still negotiating. 

So right now, that’s good. Right now, there’s not a strike planned. For that specifically, right now, there’s not a lot of reason to worry, which is good. Because the last time, there was a hint that there would be a strike, in 1999, and they talked about it for about a day, and it caused panic buying. Toilet paper, rice, etc., was literally off the shelf.

So as far as how the shipping industry interacts with the possibility of food shortages in Hawaii, whether or not the ILWU goes on strike plays a big factor in that. It doesn’t look like right now they’re going to. So I’ll turn it over to Colin if he has anything else to add on this.

Grabow: I don’t have a ton to add. As Jonathan said, I think the ILWU, they have to make a political calculation here. I think they probably realize that if they were to involve Jones Act shipping from the mainland to Hawaii in their strike, that would produce a lot of angry people in Hawaii, and that might blow up in their face. They probably wouldn’t get a ton of sympathy for that. 

So I imagine their current thinking is target foreign shipping, less political blowback, and then, of course, the vast majority of shipping is foreign shipping, so they can still have quite an impact just by targeting those ships. So I would just mostly just echo what Jonathan just said.

Edmonds: Well, unfortunately, the people who live on this island have to really think about this and try to be ready in the event that something does happen. The next segment of the show will have a farmer here who will help us figure out how to help the farmers because, as you heard Larry say earlier, we’re importing 95% of the food on the island, which is absolutely ridiculous. 

We live on an island that has a 12-year cycle of growth. The average temperature here is 72 degrees. We get a lot of rain. We could grow anything here, but it’s been one joke after the other of trying to get the agricultural economy to work better. We’re still beating that horse, trying to get things to roll.

But we are going to try to offer some suggestions in the next hour of what people can do to be prepared. 

The thing that I would say now is begin to lay in food supplies just in the event that this happens. Anything that you trust will last a long time, try to prepare it and take care of it. And, you know, if you’re in a tight financial situation, just commit to buying 2% or 5% extra each month of something that you could keep and use later on. 

Do we have a guest?

Graff: Yes, we have a question.

Edmonds: We have a question.

Spencer: We actually have a comment. Caller, go ahead with your comment.

Caller: Hey! Aloha. I just wanted to say thank you for so much detail on this topic. I’m not always super in alignment with a lot of Cato’s work, but this topic is really clear and concise, and I appreciate the intellectual honesty. And I love that we can have clear thinking, and we don’t have to agree on everything. 

But on the things we do agree on, we can take information from all angles and come up with solutions. And I just wanted to say thank you for that. I’m grateful for the topic and the thoroughness that you guys are covering it with. Thanks.

Edmonds: Awesome. Thank you.

Graff: I’d just like to ask a quick question. Jonathan, Colin, what’s the fix? I mean, shipping, obviously, all the food, anything shipped to us is going to be so much, four time, more expensive. The ships are more expensive. The shipping is more expensive, and it’s costing us more money. Is there a carve-out? Do we just do away with the Jones Act? 

There’s probably a lot of unions that are not in favor of that, and unions have influence.  

But what’s a feasible fix to this problem so that we’re not paying so much for one of the most expensive places to live? How do we fix it? What do we do?

Edmonds: Are you looking for a magic wand, is what he’s asking.

Graff: I would like one. But is there a policy avenue to address all of this?

Grabow: Yeah, I can answer that really quickly, I think. 

There’s a few different possibilities here. One is, obviously, repeal the Jones Act. The chances of that happening are remote. A lot of deep support in Washington and elsewhere for this law.

But I also think there are other options that should be looked at. One could be an exemption for either Hawaii or the noncontiguous states and territories that are highly dependent on ocean transport. 

The logic behind the Jones Act is that it’s supposed to provide a fleet of ships to support the military. Well, let’s set aside whether that is a valid argument or not. Let’s just accept for a second, assuming that’s true, why should the no-contiguous states and territories that account for a wildly disproportionate amount of Jones Act shipping, why should they be footing the bill when this is  about a national security that  should benefit all of us? 

That’s not fair. That’s not equitable. That’s just not right. So an exemption for Hawaii or other noncontiguous states and territories should be examined. 

And then also we should take a real hard look at that U.S.-built requirement. As I said, this forces the use of expensive ships. Ships are expensive. If ships are expensive, that also means that they’re old because companies are very reluctant to go out and find new ones. So internationally, ships get scrapped after 20 years. 

There are ships serving Hawaii right now in the Jones Act trade that are 40 years old and older. Those require more maintenance. They’re not as reliable. 

And let me just point out, this is inconsistent with other U.S. policies. You can take a foreign-built airplane to and from Hawaii. Here in the contiguous 48 states, you can use a foreign-built truck to haul things around. For some reason, [our ships have to be] U.S.-built, at extremely high cost, and then Hawaii consumers pay the price for that. So just taking a look at that provision, I think it would be very useful to relieve some of the burden on Hawaii.

Spencer: What specifically? Taking a look? Studying it? Talking about it? What can actually happen? What can we actually do?

Grabow: Jonathan, I’ve done a lot of talking. Can you take that?

Helton: Sure. I think the big thing that needs to happen, obviously, there’s been in the recent yearsa far greater number of studies on the law and looking at how it affects the United States, than there were in previous years. So those are very helpful. 

There’s a couple of bills in Congress that would reform the Jones Act in some form or fashion. Even if one of those bills could get a hearing and both sides — those who support the Jones Act and those who oppose it — could get their say in the hearing, that would be progress. There hasn’t been a hearing that’s actually taken a critical review of the law in years.

So even that would be a win, but I think idealistically, as Colin mentioned, one of the best things that could happen is if Congress were to revisit the build requirement and were to allow the U.S. shipping industry to be treated the same as every other U.S. transportation industry. 

And real quickly I’ll add, there’s only four shipyards in the United States that are capable of building these large oceangoing ships. And most of those shipyards rely on contracts with the government to build Navy ships, which are not subject to the Jones Act, They don’t carry cargo, they’re under different laws. 

So the four shipyards that can even build these vessels. Most of their money comes from the U.S. government. They’re building only a handful of Jones Act ships.

So we’re talking about a slight reform allowing ships to be built in other countries, and it’s not going to affect a lot of people. Maybe affect four shipyards. That would be probably the easiest one politically, and that’s probably the part of the law that harms states like Hawaii the most.

Grabow: If I could just point out one other thing; so we’re talking about the politics of this, and what can get done, it’s worth pointing out that, unfortunately, only one member of Hawaii’s delegation, Rep. Ed Case, supports Jones Act reform. Both senators from Hawaii — Mazie Hirono, Brian Schatz — they’re Jones Act supporters. They support this law. 

And it’s a difficult conversation in Washington, D.C., to say, “Let’s reform the Jones Act.” And people say, “The delegation of Hawaii, that’s most affected by this law, well they support it. So why should I care?” That’s something that needs to change.

Graff: OK, you just told us what we can do. Thank you. That’s very helpful. [laughter]

Spencer: That’s really good. I have to say, gentlemen, I thought we were going to have — and we are having — a great and intelligent conversation. But I didn’t think it would be all ship talk. [laughter]

Spencer: That was a decent joke.

Graff: Was that a joke? Thank you very much. This is exciting. To our listeners, you’re driving in your car, you’re listening, it sounds like a very dry subject, but it’s not, because it shifts. But honestly, this sounds like it’s something you need to take interest in — all of us need to take interest in. 

It sounds like we’re talking about legislation, but what we’re really talking about here is the food on your shelves, the supplies in your stores and the money in your wallet. 

And if you’re not listening, it’s the Jones Act. You need to think about it, and please feel free to contact us if you have more questions. We’re always interested in hearing from our listeners. And this is a caller radio show, is it not?

Spencer: Yes it is. And everyone will be reminded every time you go to the grocery store because the shipping prices are reflected onto the consumer that all of our store products are much higher than anywhere on the mainland.

Edmonds: If I’m not mistaken, food prices on this island are the highest in the country, except for Barrow in Alaska, which is within the Arctic Circle, and they have to walk everything in with Eskimos. No, I’m just kidding.

Spencer: No, it’s shocking.

Graff: Dog sleds?

Spencer: The cost of food products and grocery stores is unbelievable, really.

Edmonds: Let me just ask you, guys: There’s a lot of technology changing. I’m sure you’re aware of it, if you’re tuned in this much to what’s going on in shipping. I just saw an article yesterday about a boat that carries passengers, and I think it carries 12 passengers. It rises up out of the water on fins, so it runs on 90% less power, and [goes] twice as fast, and it doesn’t make a wake. It can go into all of the harbors faster.

Graff: Hydrofoil.

Edmonds: It’s kind of a hydrofoil. That wasn’t what they called it. That’s a good analogy. I know that electrical boats and boats without crews are coming, everything is changing now. 

There’s a proposal on the table right now to carry passengers between the Hawaiian islands in an item that they’re saying is not a boat and it’s not a plane. It rises up to about the height of its wingspan and flies to Kauai from Oahu in 35 minutes, I think, they said, at 90 miles an hour or something like that. 

So anyway, I’m just wondering, what do you guys think: Will the future of technology in shipping, is it going to change things, and will it help us with the Jones Act in any way with the cost of this whole thing to us?

Grabow: I’ll say that there is a possibility, yes. We’ve heard a lot of talk about autonomous cars. Self-driving cars. You still hear some talk about that. Same things, people in the shipping industry are talking about self-automated ships, autonomous ships. And there are some limited examples of these already entering service on a small scale that don’t go tremendous distances. But it’s happening. Things are being automated.

Of we can take that further and further, that will reduce the crew sizes and reduce the cost of operating these ships. So if you could combine that with getting the foreign-built prices, that would do a lot to mitigate the cost of this law.

Spencer: Just the fact that you shared the way that our politicians lean, that makes a big difference, too. Because we do have access to our representatives, and we can make our voices heard.

Edmonds: Yes, it’s a small place, and I’m really shocked by the alignment the way you described it. I would have thought it was completely reversed from that based on … 

Grabow: It’s interesting. I think what’s revealing about it, and kind of sad, frankly, is that a couple of years ago, Rep. Case gave an interview and he said that standing against the Jones Act has actually been one of the most difficult stances politically for him because of all the blowback he has received from entrenched interests there in Hawaii. 

Matson funded some of his opponents. Right now, he’s in a primary challenge and a bunch of maritime unions have unsurprisingly endorsed his primary opponent.

So it comes with a cost. You want to win a Democratic primary in Hawaii, having union support’s pretty helpful in the most unionized state in the country. 

So when politicians pay attention to things like that, and if they see groups saying, “You should support the Jones Act,” and they don’t hear from other people, well, that’s the way they’re probably going to lean. 

Like you said, the good news here is that Hawaii is a relatively small place. I don’t think it would take a tremendous number of people to have a great impact and to perhaps alter the thinking on this law a bit.

Spencer: Right. Because the general population has no idea what the heck is a Jones Act — until today, right?

Edmonds: Now, everybody knows.

Helton: I’d like to add one thing, maybe on a more positive note. It’s a local government level, things can change. 

The Maui County Council, for example, just in the past couple of months, they passed a resolution calling for Jones Act reform. So even at the county and the local level, if people and politicians at that level are speaking up and asking for change, you’re pushing down another domino in favor of change.

Spencer: We do have a caller on the line.

Graff: All right, let’s close out our section here with a final caller. Caller, you’re on the air.

Feena Bonoan: Aloha, my name is Feena Bonoan. I’m actually running for office, and I’m trying to get a grasp of what the Jones Act is. 

So my question is — because you guys were talking about it and I was listening — so if the shipping that goes from, like, Japan, and it goes all the way to California, then it comes back to Oahu, if everything that goes from Oahu to Kauai, that’s under the Jones Act, correct?

Helton: Yes. If it’s moved between two U.S. ports, even two U.S. ports within the same state, in this case, it would be subject to the Jones Act requirements.

Bonoan: It would definitely affect Hawaii, specifically, because of how we get a lot of our goods between each island, correct?

Helton: Yes. I believe Young Brothers is the main carrier of goods between islands in Hawaii, and they’re subject to the Jones Act. They’re subject to a similar law called the Towing Act, which is like the Jones Act that applies to tugboats. The Towing Act has the same requirements as the Jones Act, and it would apply, yes.

Bonoan: OK, thank you.

Spencer: Because we are on a time crunch here, I’d like you to tell how you all can be contacted for people who will obviously have more questions and things. Can you announce that about Grassroot over here or however you can be contacted?

Helton: Yes. You can text me personally as jhelton@grassrootinstitute.org. Or if you want to call the institute, the number is 808-864-1776. 

Grabow: Anyone that wants to reach out to me, feel free to shoot me an email at cgrabow@cato.org. I’m on Twitter @ctgrabow. Also I invite all your listeners that want to learn more to visit our website, cato.org/jonesact. We’ve got a ton of resources there that I think people would find interesting.

Graff: All right. I think we might have time for one more call.

Edmonds: We have somebody on line. Let’s wait and see what they want to do. I just asked you guys, I mean, normally, our last question with any interview is, can you offer a ray of hope? You guys have already offered some information. We’re living in tight times for people on a little island. We’re always trying to figure out how we can help people. Anybody want to offer anything?

Grabow: Yeah, sure. So, a ray of hope. This speaks to what your first caller said. I don’t always agree with the Cato Institute, but on this issue, I can definitely see where they’re coming from, and there’s some alignment here. 

I think that’s one of the great things about the Jones Act, is it actually brings people together from many different political perspectives. It’s this issue that people with all kinds of different backgrounds and political orientations can agree on. 

I think there’s definitely a coalition waiting to be built there. It’s people like me that are libertarian free-market minded. It’s people in non-contiguous states and territories. It’s environmentalists. We should have more things going by ship in this country and less stuff going on trucks that pollute. 

A lot of people could benefit from this. And I think the coalition to reform or repeal the Jones Act goes across party lines and different political orientations, and I find that an exciting and encouraging aspect of this law.

Edmonds: Awesome.

Helton: I would add if listeners want to reach out personally, on the Grassroot Institute website, we have a template that they can customize. They can send the template itself. They have a letter that they can send to the U.S. senators and U.S. representatives reaching out and just telling them that, “Hey, I support Jones Act reform.”

Graff: That is so wonderful. Gentlemen, we want to thank you so much for being on the show today. We’ve got to close out your segment, and we want to thank you. We want to thank you for leaving the contact information. I would like to see if we can get that on our website, Jim?

Edmonds: We will work on that.

Graff: We will work on that. Once again, thank you for appearing on the show. Listeners, if you have any follow-up questions, you can contact us, and we can always get a hold of both Jonathan and Colin. Thank you very much, gentlemen. You have a great rest of your evening.

Edmonds: Let me just tell you before you go, we’ve had more calls during this segment than we’ve had for months on any show. Most of them happen when we go on the air, which is often the case. You’ve generated a lot of interest, and we really appreciate the work. Thank you.

Grabow: The people have spoken.

Edmonds: The people have spoken, including you two. Thank you for speaking.

Graff: Aloha.

Grabow: Thank you.

Graff: Oh, I’m sorry.

Spencer: Thanks. Oh, he muted me again. He likes to be able to do that.

Graff: [crosstalk] You were on the phone. He’s just trying to be respectful.

Edmonds: [crosstalk] control issue.

Graff: I’m going to mute you both right now. No, I have to.

Edmonds: You’re a very short distance away.

Graff: Not really striking distance.

Spencer: Thank you both so much for coming to the show, and we’ll probably want you to come back again, because this is a big topic.

Edmonds: Once you solve this issue. No, I’m kidding.

Graff: Aloha.

Spencer: You have to visit Hawaii.

Edmonds: Yes, that’s before you can be on the show.

Spencer: All right. You’re listening to PAL Kauai Radio on KKCR Hanalei and KAQA Kilauea.