Wednesday, March 27, 2024
Hawai'i Free Press

Current Articles | Archives

Sunday, January 20, 2013
Storm of Protectionism: It’s time to repeal the Jones Act
By Selected News Articles @ 10:01 PM :: 6209 Views :: Jones Act

Storm of Protectionism: It’s time to repeal the Jones Act

by Steven Malanga, City Journal

New York–area residents facing gasoline shortages in Hurricane Sandy’s aftermath must have wondered about the federal government’s announcement that it would suspend the Jones Act to ease long lines at the pump. Most of them had probably never heard of one of the most onerous pieces of protectionist legislation of the twentieth century. Still in force nearly 100 years after its passage, it exacts a significant toll on the economy.

Officially known as the Merchant Marine Act of 1920, the Jones Act requires that all goods and people moving by water from one American port to another travel on American-built, American-owned, American-manned ships. The act’s original proponents argued that it was essential to national security, since it helped preserve a maritime fleet that could support the country’s armed forces and supply the nation during wars. Over time, American shipping interests and powerful maritime unions also became fierce defenders of the act, believing that it protected American jobs. Their defense has largely succeeded. Only in emergencies like Hurricanes Katrina and Sandy does the federal government occasionally suspend the Jones Act to get goods flowing more quickly and cheaply. Those brief pauses reveal how much better the market would work without the act.

Like most protectionist legislation, the act costs more than it generates in economic activity. In a 1996 article in the Canadian Journal of Economics, four researchers (including two economists at the U.S. International Trade Commission) wrote that the act allowed “domestic shippers to charge rates substantially above comparable world prices,” reducing shipping by water in the United States and increasing the annual cost of goods by about $6 billion (in today’s dollars). Older studies, they recalled, estimated the cost as high as $10 billion (again, in today’s dollars). The act might save 15,000 jobs in the American shipping industry, but at a price that reduced national income by hundreds of thousands of dollars per job saved. The only trade restrictions worse for the American economy, the authors concluded, were limitations on textile and garment imports. Those “multi-fiber agreements,” in effect at the time of the economists’ study, have since expired.

The Jones Act has also long outlived its national-security rationale. In a 1991 article in Regulation, Rob Quartel, a commissioner at the Federal Maritime Commission, described how U.S. armed forces in the Gulf War moved massive amounts of matériel and personnel using their own ships and those controlled by NATO allies. Only six of the 59 ships that the military employed were Jones Act–subsidized vessels. As Quartel noted, the country’s merchant-marine fleet has continued to shrink, largely because the Jones Act has made American shippers globally uncompetitive. With a monopoly at home, why get better?

Growing evidence of the act’s cost and ineffectiveness has led to calls to rescind it. In 2003, Hawaii congressman Ed Case introduced legislation to free his state from the Jones Act, saying that it so limited competition among shippers serving the state that it had produced a “crippling drag on an already-challenged economy and the very quality of life in Hawaii.” The protectionist legislation, Case argued, “is just an anachronism: most of the world’s shipping is by way of an international merchant marine functioning in an open, competitive market. And those few U.S. flag cargo lines that remain have maneuvered the Jones Act to develop virtual monopolies over domestic cargo shipping.” Similarly, in 2010, Arizona senator John McCain introduced legislation to repeal the act, observing that it “hinders free trade and favors labor unions over consumers.”

These efforts have failed, mostly because of the power of maritime unions and shipping interests, which would rather preserve their hold on a narrow but uncompetitive slice of the marketplace than compete more forcefully around the world. Over the years, both Democratic and Republican presidential administrations have pledged their allegiance to the act in return for the support of the shipping cartel that benefits from it. The losers are American consumers and businesses. It shouldn’t take acts of God like Sandy to show us that the Jones Act should go.

---30---

Steven Malanga is the senior editor of City Journal and a senior fellow at the Manhattan Institute. His latest book is Shakedown: The Continuing Conspiracy Against the American Taxpayer.

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Moms for Liberty

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT