Research surveys Jones Act costs and effects

Jones Act distorts U.S. economy, endangers military

News Release from Grassroot Institute

HONOLULU, HAWAII--April 10, 2017--The Grassroot Institute of Hawaii has issued a new report showing that the Jones Act distorts the U.S. economy and endangers the U.S. merchant fleet. According to the analysis, the Jones Act costs the nation billions of dollars, at the expense of both consumers and select industries.

Keli’i Akina, Ph.D., President of the Grassroot Institute, said, “A review of the economic literature devoted to the Jones Act shows that its justifications are slight. Whatever the Jones Act achieves comes at a steep cost to consumers across the nation.”

The Jones Act, officially known as the Merchant Marine Act of 1920, prevents waterborne merchandise from being transported between two points in the United States, unless it’s done on American-built ships. The ships also must fly the American flag, be 75 percent owned by Americans, and be 75 percent crewed by Americans.

Akina said, “The Jones Act is not just a Hawaii problem, it’s a national problem. The tendrils of the Act have worked their way across every state, affecting many industries.”

The Grassroot Institute report uncovered five significant points to consider when assessing the impact of the Jones Act on the nation:

• The Jones Act costs Hawaii, Puerto Rico and Alaska between $5 billion and $15 billion annually.
• The Jones Act affects the entire nation, costing millions of dollars in the water, petroleum, chemicals, air transportation, steel, plastics and lumber industries.
• The U.S. Jones Act fleet has shrunk, threatening the military’s readiness.
• The national security goals of the Jones Act can be achieved through other and more effective means.
• The Jones Act hurts American jobs.

Akina said, “The Jones Act has backfired on all of its goals. It has hurt American shipping, hurt our military, and hurt families who struggle to pay for the high price of protectionism. The Jones Act costs Hawaii, Alaska, Puerto Rico and Guam billions of dollars, but it’s likely that the nation as a whole suffers even higher costs.”

He continued, “The Jones Act has has raised prices for American consumers and distorted the U.S. economy for almost 100 years. It’s time to fix the problems associated with this outdated law and welcome a new era of economic prosperity and trade.”

The full report can be found at: “The Jones Act in Perspective.”

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The Hill: How the Jones Act drives up the cost of food and gasoline for millions of Americans