Jones Act Adds 30% To Price of Paradise

by Chuck Arnett, Kona TEA Party

When asked about the high price of living in Hawaii, people often retort with the fatalistic, “That’s the price of living in paradise.”  Dr. Keli’i Akina does not agree.  He claims that one of the biggest reasons living in Hawaii is so expensive is a 93 year-old federal law known as the Jones Act adding perhaps as much as 30% to the price of goods shipped into Hawaii.

Dr. Keli’i Akina, CEO and President of Grassroot Institute of Hawaii addressed the Kona Tea Party Tuesday, June 4, about the Jones Act and it’s detrimental effect on the Hawaiian economy.

"Unfortunately, we've seen that this law has restricted the shipping industry. And as a result, our shipping industry has shrunk and prices in places surrounded by water, like Hawaii and Puerto Rico, have gone through the roof," Akina said.

Dr. Akina explained that The Jones Act regulates shipping between ports in the United States.  The Act has four requirements:

1. Any shipping of cargo between ports in the United States must be done on a ship   built in the United States,

2. The ship must be owned by a United States company,

3. The ship must be manned by a crew at least 75% US citizens

4. The ship must be registered in the United States.

While some good comes from these restrictions, consider the downside. In a podcast interview on the Grassroot Institute's website, grassrootinstitute.org, Michael Hansen of the Hawaii Shippers Council points to a 2012 New York Federal Reserve study showing that shipping rates from the U.S.A. to Puerto Rico were twice as expensive as rates for Jamaica and the Dominican Republic since those other ports are not restricted by the Jones Act.

Hansen also points out that ship construction in the U.S. is 4-5 times more expensive than in other countries. Since the mid-1980s, the U.S. has built on average less than three large, ocean-going vessels per year. Japan, smallest of three major ship-building countries (South Korea, China), produces approximately 200 such ships per year. The high cost of construction in the U.S. limits the number of ships available for domestic trade and kills ship-building jobs because of the Jones Act.

Currently, there are only 98 Jones Act compliant ships. Since so many of these are old and in need of replacement, eliminating just the domestic-built-only provision for ships serving Hawaii could help bring down the cost of shipping.

Akina noted that parties both public and private exercise power thanks to the monies generated from the Jones Act.

"In its present form [the Jones Act] perpetuates a limited number of companies able to operate in Hawaii in the shipping industry, and anyone who may politically be connected with them. While that may accomplish some level of good, we have to realize that times change. And in order to change the Jones Act we may need to have people who are courageous and surround [or] come to new centers of influence and power,” Akina said.

Voters need to be aware of the broader power issue and support those who will fight for changing the Jones Act.