Jones Act 'treason' scandal acts as reality check for maritime interests

Even traditional supporters of the protectionist federal law are admitting America's shipping industry could be better served

from Grassroot Institute

The revelation earlier this month that an advisory panel to the U.S. Maritime Administration recommended charging Jones Act critics with treason — a felony punishable by death — sparked a wave of media attention last week that is still rippling through the U.S. maritime industry.

Notable is the comprehensive and thoughtful article by Capt. John Konrad, "Shots Fired in Jones Act Debate," in gCaptain, a prominent maritime publication not known for crusading against the Jones Act.

Konrad seemed to lament that neither current Transportation Secretary Pete Buttigieg nor his predecessor Elaine Chau "have done much to address the threat from [the] Cato [Institute]," which was one of the targets of the treason allegation. 

However, he said, based on a "source inside the Maritime Administration" that's probably because they think "Cato's efforts have not been very effective."

He said a "Jones Act lobbyist" told him: “We haven’t worried too much about Cato because they have spent a lot of time focusing on the shipment of goods to Puerto Rico and Hawaii. Frankly, the majority of American voters don’t care about our distant islands."

Konrad, however, seemed to think the Jones Act actually is vulnerable to significant change.

"What Americans do care about very much," he said, "is the escalating price of energy, the price of food, traffic congestion, highway deaths from large trucks, and … decarbonization. All problems that — according to MARAD’s own Marine Highway initiative documents — could be solved by moving cargo via ships and barges which can move a significantly larger amount of cargo at roughly 1/10th the amount of energy and carbon emissions compared to trucks" — the implication being that the Jones Act has hindered this transition.

Thus, "in recent months," Konrad said, "gCaptain has become aware of several new efforts to reform the Jones Act, and increasingly these groups are focusing on swing states and voters in the heartland and politically powerful places that could benefit most from increased short-sea shipping. Places like New York, Texas, Florida, California and Virginia, as well as the states connected to inland waterways.

"Most of these groups are still in the exploratory phase," he said, "but the reframing of concerns from distant islands like Puerto Rico to the heart of America, could, if left unchecked (and in concert with the U.S. Navy’s increased frustration over the lack of DOT support for shipyard expansion and sealift), be a stake in the heart of Senator Wesley Jones."

Konrad noted the success of a week-old YouTube video posted by "the wildly popular geopolitical strategist" and author Peter Zeihan that calls for Jones Act reform. It has been viewed more than 130,000 times and generated more than 1,300 comments.

Konrad added: "Before exposing Zeihan to the fury of gCaptain’s American readers, it’s important to note that he suggests reforming the Jones Act, not replacing it, a view that some of the act’s most ardent supporters … agree with." 

In the view of the Grassroot Institute of Hawaii, the most politically feasible reform probably would be elimination of the law's U.S.-build requirement. 

This would allow American carriers to buy less expensive foreign-built ships, expand their fleets, add more maritime jobs, increase competition, bring down consumer prices, make more ships available to the military in times of crisis and better serve America's economic needs in general.

To read the entire gCaptain article, go here.

‘If you want to get mad about something, get mad about [the] Jones [Act]’

from Grassroot Institute of Hawaii, October 24, 2022

Peter Zeihan, American geopolitical analyst and author, devotes one of his latest video posts to the 1920 shipping law known as the Jones Act, which he claims has cost Americans trillions of dollars in lost economic opportunities over the course of the last century.

Zeihan’s books include “The End of the World is Just the Beginning,” published this year; “The Disunited Nations,” from 2020; and “The Absent Super Power,” from 2016. You can see his YouTube channel here.

In his brief video posted several days ago, Zeihan points out that transporting goods by water is about one-tenth the cost of moving them by land. However, the Jones Act restricts shipping between U.S. ports to only vessels that are “American crewed, captained, built and owned.”

This, he said, has “reduced the amount of traffic that we use our waterways for by in excess of 90% over the course of the ensuing century. And so now we pretty … move about half of our products — almost two-thirds of our products —by truck, and then the remainder is a mix of everything else; trucks being the most expensive way to move things over a distance, by far.

“Basically,” he continues, “if your state is on a navigable river or an external coast, especially if it’s got a good bay, like the Chesapeake or New York Sound or San Francisco, you have been missing out on massive amounts of economic activity for decades.”

He concluded that “the best way that the United States could re-industrialize, protect its secondary cities, expand the port infrastructure, reduce its carbon footprint for transport and, ultimately, make the United States a much stronger place moving forward” would be to “severely reform” the Jones Act.

TRANSCRIPT

10-21-22, Peter Zeihan on “The Jones Act and American Economic Development”

Peter Zeihan: Hey, everyone. Peter Zeihan here, coming to you from Richmond, Virginia, the Jefferson Hotel, which is, like, ridiculously glorious. 

Anyway, I wanted to talk about economic development in the United States today, something that’s getting a little bit of play because we finally have an industrial policy. Well, I shouldn’t say “we finally”; we have an industrial policy for the first time since World War II that’s guiding things like semiconductors. 

And not that that’s not important, and not that I don’t support that, but there are a lot of really baseline things the United States could do if the goal is more stable and reliable economic growth at all levels. 

So, specifically: waterways. 

Now, moving things by water is less than one-tenth the cost of moving them by land. You can move things at bulk; you can move things at speed over large distances. It really is the way to go.

However, the United States adopted a law about a century ago called the Jones Act, or the [Merchant Marine Act]* if you want to use the technical term. 

And what it does is it makes it illegal to ship any cargo between two American ports on any vessel that is not American crewed, captained, built and owned. 

And what this has done is reduced the amount of traffic that we use our waterways for by in excess of 90% over the course of the ensuing century.

And so now we pretty so much move about half of our products — almost two-thirds of our products — by truck, and then the remainder is a mix of everything else; trucks being the most expensive way to move things over a distance, by far. 

Now, for a state like Virginia that is on the Chesapeake, I don’t want to say that this has been the kiss of death, but, wow, has it ground down their economic opportunities.

The Chesapeake Bay is the best, world-class best bay in the world, has the most frontage in terms of areas for port-siding. 

My home state of Iowa is bracketed by two navigable rivers — the Mississippi and the Missouri — putting Iowa in a position where it has passed up massive economic opportunities. And then for 19 years, I lived in Texas, which has one of the best coastlines in the world and more deep-water potential than the entire West Coast combined. 

Basically, if your state is on a navigable river or an external coast, especially if it’s got a good bay, like the Chesapeake or New York Sound or San Francisco, you have been missing out on massive amounts of economic activity for decades.

The single best thing that the United States could do, if the goal was to salvage the status of its second-tier cities and build out manufacturing, would be to severely reform the Jones Act. 

Now, there’s an obstacle there: As you know from some of my previous presentations, the United States is going through a period of political reshuffling, and the factions that make up the parties are moving around.

The faction that is most in motion is organized labor, and the two issues that organized labor is most concerned about are union membership and immigration. 

And on the union membership issue, all of the jobs that maintain those Jones Act vessels — those old, slow, inefficient ones that are the only ones allowed to operate — they’re all union jobs.

And so the unions see this as a job preservation act, despite the fact that it has cost the rest of the United States tens of trillions of dollars over the course of the last century. 

So, if you want to get mad about something, get mad about Jones. If you want to call your congresspeople about something, call them about Jones. 

That is the best way that the United States could re-industrialize, protect its secondary cities, expand the port infrastructure, reduce its carbon footprint for transport and, ultimately, make the United States a much stronger place moving forward.

Easy fix. 

That’s it for me. Until next time.

___________

* Peter Zeihan erroneously said “Interstate Commerce Act.”