Kill the Jones Act Now!

by on September 27, 2017 at 7:24 am in Current Affairs, Economics | Permalink

The purpose of the 1920 Jones Act was to protect American shipping interests by giving them a monopoly on US port-to-port traffic. The Act requires that all ships transporting goods between U.S. ports have to be constructed in the United States and owned and crewed by U.S. citizens (or permanent residents).

The Act, however, wasn’t enough to save the US industry. As a result, we have the worst possible situation. Extremely expensive US port-to-port shipping and only a tiny US shipping industry to show for it. By one account, there are less than one hundred Jones-Act-eligible ships.

The expense of US water transport pushes shippers to move goods by air and coastal highway which is wasteful but usually not deadly. But as Salim Furth points out the Jones Act could be deadly for Puerto Rico:

Even though Trump granted a brief waiver from the Jones Act following Hurricanes Harvey and Irma, the Department of Homeland Security announced last week that it would not grant a Jones Act waiver to Puerto Rico. It justified its decision on the basis that the Jones Act fleet is sufficient to the task.

But the Jones Act fleet already imposes much higher shipping costs on Puerto Rico than on nearby islands, and it operates near capacity in normal times. To involve mainland American workers and businesses in Puerto Rico’s recovery requires a rapid increase in capacity and speed—something far beyond the ability of America’s moribund crony capitalist shippers.

If the cost to Puerto Rico doesn’t get President Trump’s attention then perhaps this will–The Jones Act benefits socialist Venezuela!

Puerto Rico’s badly damaged energy sector relies on oil imports from Venezuela, a socialist dictatorship that uses its revenue to prop up anti-Americanism in Latin America. If issued a waiver, Puerto Rico could switch to cheaper, cleaner natural gas from sources such as Pennsylvania and Texas.

The Jones Act shouldn’t be temporarily lifted, the Jones Act should be killed.

1 Mikeja September 27, 2017 at 7:33 am

The only reason I can think of not to suspend it for PR would be to build pressure for a full repeal

2 byomtov September 27, 2017 at 10:22 am

You lack imagination.

Trump doesn’t give a tinker’s dam for Puerto Rico.

3 Dick the Butcher September 27, 2017 at 10:45 am

Righto! What are you prepared to do for Puerto Rico?

4 aMichael September 27, 2017 at 12:40 pm

Reality check — most of what citizens can do individually will have almost no impact. But there is this guy who holds an important office that can make unilateral decisions that can have a big impact, like lifting the Jones Act, so maybe people should put pressure on him to do something… Maybe?? I dunno.

5 TMC September 27, 2017 at 10:45 am

The PR governor disagrees

6 ʕ•ᴥ•ʔ September 27, 2017 at 11:54 am

The governor knows how to write a letter, including that a hint of more migration from PR to the mainland might motivate Trump.

7 Thorfinnsson September 27, 2017 at 12:05 pm

Another obvious reason would be not to cause American merchant shipping to forego income.

Disaster relief and reconstruction to Puerto Rico obviously is a major opportunity for our remaining merchant marine.

8 Mark Brophy September 27, 2017 at 12:11 pm

You know your government can’t be fixed when even the worst legislation can’t be repealed after 100 years of failure. This country should be split into many countries, each with population less than 20 million.

9 DJF September 27, 2017 at 2:42 pm

Puerto Rico has much less then 20 million and it was a basket case before the hurricane

10 mulp September 27, 2017 at 2:32 pm

No, the repeal of the Jones act is not sufficient!

Why punish New Hampshire by forcing us to pay American workers to move goods from Texas to NH? (I got an Amazon order less than a week ago from Texas).

We need an opening up of ALL Interstate Transport!

Every corporation needs to be free to hire the cheapest workers from all over the world to move goods Interstate!

Ideally China should be free to use its cash reserves too buy US railroads and then use Chinese engineers employing the cheapest labor they can bring to the construction jobs, whether Mexicans or Philippinoes or Haitians or Vietnamese to reconstruct rail lines to support high speed intermodal freight and high speed rail using imported prefab rail systems to carry Chinese train equipment, containers swapped to Chinese trucks driven by cheap non-US workers for the last hundred miles.

Of course, China should be free to buy all the ports it wants and free to have its engineers and managers integrate them with their rail network so imported goods are moved rapidly by the most efficient transportation system the Chinese government can create.

And for the last mile, Congress should require Trump to sell the USPS to China, paying China all the money in the worker pension funds, and committing to paying whatever welfare is required for the potentially hundreds of thousands of former US citizen postal workers with no income from work or pensions.

Americans will be so much better off when they can order online from China and from its silk road partners and get the goods delivered within days very cheaply without the high cost of American workers.

11 John B. Chilton September 27, 2017 at 7:36 am
12 lbc September 27, 2017 at 7:52 am

why would expect Trump, the most protectionist and nationalistic US president in history to kill a protectionist regulation !?
also, he clearly does not care about puerto rico…. puerto ricans are not real americans to him.

13 josh September 27, 2017 at 8:07 am

“the most protectionist and nationalistic US president in history”

Do you know how crazy this sounds? You’re talking about the country that birthed the American system and manifest destiny.

14 Nodnarb the Nasty September 27, 2017 at 8:41 am

I don’t know if “crazy” is the right word here. You’d have to go to a thesaurus and find a word kinda like “bad faith” to really describe lbc’s comment…

15 MOFO September 27, 2017 at 9:47 am

mendacity? casuistry? perfidy? thesaurus is fun/amusing/enjoyable.

16 Hazel Meade September 27, 2017 at 9:55 am

Yes, he is not THE MOST protectionist and nationalistic president in US history, just in the last 40 years or so.

17 Dick the Butcher September 27, 2017 at 10:50 am

History, protectionism, nationalism, etc. not only are whatever you want them to be, they are good or bad at your whim, or what you had for breakfast.

18 ʕ•ᴥ•ʔ September 27, 2017 at 11:32 am

Sure. Imagine Tom Price’s jet use being boring in any other situation.

https://twitter.com/kylegriffin1/status/912816439387672576

19 ʕ•ᴥ•ʔ September 27, 2017 at 9:51 am

They might be right, rather than “in history” how about “since Bill Clinton freed trade from the shackles of government?”

20 Hazel Meade September 27, 2017 at 9:56 am

Or since Nixon went to China.
Protectionism is very old school, and we’ve come a long way, fortunately.

21 DJF September 27, 2017 at 2:59 pm

Yes we have come a long way, when Nixon went to China it was a basket case with third rate Soviet weapons. Now its a massive industrial power with weapons that the Pentagon says we should fear.

Congratulations Nixon, you saved communism in China. They should put up a statue.

22 ʕ•ᴥ•ʔ September 27, 2017 at 10:03 am

FWIW

http://www.slate.com/articles/business/the_next_20/2016/09/when_china_joined_the_wto_it_kick_started_the_chinese_economy_and_roused.html

I find this a little funny because a “Rightist” here was hammering Clinton a few days ago for what is essentially deregulation.

I am old enough to remember when free people, free enterprise, and free trade went together

23 Hazel Meade September 27, 2017 at 11:48 am

I am old enough to remember when free people, free enterprise, and free trade went together

That was two years ago.

24 Horton September 27, 2017 at 11:57 am

Right, I’m actually old enough to remember the 1980s, when Reagan forced Japan to open up its markets by threatening protectionist measures in response, and also forced Toyota to manufacture cars in the United States. Libertardians love to rewrite history, but the simple fact is that opposition to protectionism was not considered the only acceptable conservative position until the 1990s. Trump is taking conservatism back to its roots.

25 ʕ•ᴥ•ʔ September 27, 2017 at 12:08 pm

That’s kind of opposite. At least “campaign Trump” wasn’t worried about access to markets. He was directly protectionist, worried about low cost imports. Or too many imports. A direct intervention on balance of trade.

26 Hazel Meade September 27, 2017 at 1:09 pm

NAFTA was Reagan’s idea.

Here’s an article about it from the Heritage foundation from 1993:
http://www.heritage.org/trade/report/the-north-american-free-trade-agreement-ronald-reagans-vision-realized

27 Horton September 27, 2017 at 11:53 am

“freed trade from the shackles of government”

And yet, we’re still hearing about things like the Jones act all the time. It’s almost as if trade isn’t really free…..

28 prior_test3 September 27, 2017 at 12:21 pm

Dean Baker, calling Dean Baker – http://cepr.net/blogs/beat-the-press/

29 Thorfinnsson September 27, 2017 at 12:08 pm

More protectionist than Abraham Lincoln and William McKinley?

More nationalist than Andrew Jackson and Teddy Roosevelt?

For that matter despite all the noise we saw a lot more actual protectionism from the free market saint Ronald Reagan than we have from Trump so far.

You do have a point on one thing–Puerto Ricans are not real Americans. Granting them citizenship was an own goal.

Cut them loose.

30 charlie September 27, 2017 at 7:52 am

Thank god someone is saying this.

This is a massive humanitarian crisis. Removing the Jones Act (1917) would remove the ability of these Puerto Ricans to come to the mainland. I can’t think of a better outcome for the nation-state than removing that option of exit. For too long they have slaved away under unrepresentative government.

Viva Puerto Rico Libre!

31 Dick the Butcher September 27, 2017 at 8:35 am

This is “camp” or farce, right?

Otherwise, I am now even more stupider for reading your comment.

Now, I see how we were made to suffer through eight years of Obama.

Each four years, for I don’t know how long, the people of PR voted in referenda. FYI they voted for continuing the associated commonwealth over both independence and statehood. They don’t have US Congress representation, so they do not pay US/IRS income tax.

The machetero terrorists acted in violent opposition to the will of the Puerto Rican people. I’m old enough to remember when they blew up the PR Air Force (ANG) at the airport.

Being US citizens, Puerto Ricans can come and go to mainland US. In fact, 9% of PR mostly young, educated came to the CONUS in recent years. No need to repeal the Jones for that.

32 charlie September 27, 2017 at 11:08 am

Please review the Jones Act (1917) and report back.

33 mulp September 28, 2017 at 2:37 pm

“Now, I see how we were made to suffer through eight years of Obama”

What did you do, put all your assets in shorting the market and lose everything?

And I keep hearing Trump Tae credit for the fantastic economy he created going back two to five years, depending on the day, since his election. Ie, since his election, the US has been production more oil and exporting more refined petroleum.

34 John Mansfield September 27, 2017 at 8:05 am

Does Japan or Europe have any equivalent to this Jones Act?

35 Axa September 27, 2017 at 10:41 am

Europe has something similar to Jones Act only for countries outside the EU https://en.wikipedia.org/wiki/Cabotage

However, this only applies to the country where the ship is registered. The problem with the Jones Act is that requires American crew and American built ship.

36 ʕ•ᴥ•ʔ September 27, 2017 at 8:28 am

Does the Navy directly own cargo ships for its own supply? If so, or if it can, then sure.

37 Thomas September 27, 2017 at 8:36 pm

Military Sealift Command, USNS ships.

38 Borjigid September 27, 2017 at 8:41 am

Good post.

39 The Other Jim September 27, 2017 at 10:24 am

No, it really isn’t. Rather than give any explanation as why DHS denied the waiver, Alex just goes on a “TRUMP ISN’T PAYING ATTENTION!!!” bender. Typical sophomoric dope behavior.

Does the law restrict when, how often, or for how long the Executive Branch can grant a waiver? I’m betting it does, because Congress does not usually pass laws that say “Feel free to ignore this law at any time.” Alex, of course, could not care less about this.

Is shipping cost a primary obstacle to getting aid to PR? Are their really palettes of water sitting idle on docks in Miami because someone is standing around saying “Gosh, we’re not paying THAT much to send it this complimentary life-saving water”?

Is ship availability a primary obstacle to getting aid to PR? Is food really rotting on the docks because no ships will come?

Alex, as you know, could not care less.

This is a mindless “I want to rip Trump because he isn’t doing something I want him to do,” including killing the Jones Act, which he of course has zero power to do.

Nice work, toadie.

40 Axa September 27, 2017 at 11:05 am

You’re right….this time =)

Last May, Trump’s administration repealed a change that would include the ships that service the oil industry in the Gulf of Mexico into the Jones Act previsions.

41 Clay September 27, 2017 at 11:39 am

The stated reasons for not waiving appear to be that there’s a lack of port capacity (due to storm damage) limiting ability of ships to get in and out, and thus lifting the ban would not help – as offshore barges, etc are the preferred remedy.

I don’t know enough to evaluate the validity of that claim, but there it is.

42 John Thacker September 27, 2017 at 8:57 am

Note that the US Virgin Islands, along with a couple other places, are already exempted, and it makes for a dramatic difference in shipping costs. The costs to ship to the USVI is the same as to the DR, half of that to PR.

The Jones Act should be repealed, but at the very least all outlying islands should be exempt (including Hawai’i), even if the local shippers who benefit from it protest. McCain has been fighting on this for years.

43 John Thacker September 27, 2017 at 8:59 am

What makes the Jones Act so pernicious for outlying islands is that foreign ships are not allowed to come from a foreign port, stop at Puerto Rico or Hawaii and offload some cargo and take on others, and then continue on to a US port. Nor may they stop at PR or HI on their way back. It’s environmentally and in all ways inefficient.

44 Axa September 27, 2017 at 10:56 am

Puerto Rico happens to be 100 miles West of the Virgin Islands. So, why the VI yes and PR no?

45 mulp September 28, 2017 at 2:50 pm

The Jones Act should be repealed because all ships should be built in Asia, and that means China where government funds the most investment in production. The Navy should transfer ship technology to Chinese ship builders and buy aircraft carriers and other military ships and boats from China, saving the US workers money, and ensuring the US maintains military superiority.

Paying American workers costs too much and takes money out of the pockets of American workers in higher taxes and prices. But paying US workers less, or not at all, American workers will have more money in their pockets.

Classic free lunch economics. The way to improve “wage income equals worker spending” is by cutting labor costs so “one half the wage incomes equals twice the worker spending” because in free lunch economics, economies are not zero sum.

46 Damon Edmondson September 27, 2017 at 9:12 am

I’ll trade repeal of the Jones Act for full payment of Federal Income taxes, or “force” independence with a corresponding Mutual Defense Treaty and Trade agreement.

47 Hazel Meade September 27, 2017 at 10:02 am

This is really a perfect example of how stupid protectionist trade policies are. You end up with a domestic industry which can’t compete internationally, is limited to domestic markets, and is consequently (due to economies of scale that the foreign manufactuers benefit from) more expensive than the foreign supplier, which encourages US manufacturers to import use foreign rather than supplier. I mean, it’s probably literally cheaper to ship something from China than from another US port.

I see the same effect with ITAR in aerospace, where it’s easier and less expensive to purchase parts from European manufactuers, and they literally advertise themselves as ‘ITAR Free’. And consequently, what has happened is that the US suppliers end up supplying only the military, so there isn’t even really a commercial market for certain things in the US. The military grade part costs 10x as much as the European manufactured commercial off the shelf part, and comes with a longer lead time, and a heavier regulatory overhead.

48 ʕ•ᴥ•ʔ September 27, 2017 at 10:08 am

Is the Jones Act really protectionist, or is it strategic preparedness paid for with an invisible tax?

It sounds from most of your comment that it is preparedness. I say pay for that directly, and free commerce.

49 adam September 27, 2017 at 10:44 am

If it’s for strategic preparedness, then still it’s an utter failure. Are 100 ships really going to help us in a time of war where we can’t get foreign flagged ships for some reason?

50 ʕ•ᴥ•ʔ September 27, 2017 at 11:11 am

FWIW the Act begins: “It is necessary for the national defense and the development of the domestic and foreign commerce of the United States that the United States have a merchant marine ..”

51 Hazel Meade September 27, 2017 at 11:55 am

Right, because the US military is really going to need to comandeer commercial shipping vessels the next time we get into a war, and there are so many of them, it would really come in handy.

52 JosieB September 27, 2017 at 5:27 pm

It has been said that, at the beginning of the first gulf war (Kuwait), the secretary of defense called the relevant person at the Ports of New York and New Jersey and ordered that, whatever it took, necessary supplies had to be sent to the battlefield. (US-flagged ships transport everything from weapons to refrigerated containers of blood for transfusion to fuel oil to American military installations around the word.)

In the Kuwait case, everything was done. Owners of US-flagged ships made out like war profiteers. Some longshoremen made as much as $450,000 that year. Sounded pretty inefficient to me.

53 NPW September 27, 2017 at 11:17 am

ITAR is much more than protectionist trade policies.

Maintaining a domestic capability for arms is an policy objective due to experience with not having it during war. As cybersecurity becomes an obsessive concern, electronics from others becomes a concern. China is known for embedding security problems into their electronics. If all the factories are elsewhere, the intellectual property is also elsewhere.

It isn’t just military that has ITAR. NASA has ITAR restrictions.

54 Hazel Meade September 27, 2017 at 11:52 am

True, but the problem is ITAR has expanded way beyond it’s initial boundaries.
So today, you have restrictions on anything “dual use” which is defined to include “technical data” about anything “dual use”, which means you can’t transmit information about a commercial US space technology to anyone outside of the US if that commercial technology might have a secondary application as a military technology. Which means you can’t share technical information with non-American suppliers or customers, without getting an export license from the State Department, or a Technical Assistance Agreement, which can take a year.
But, if you buy your parts from a foreign company, you can share all that information with your suppliers and customers, because Europe doesn’t care about exporting dual use commercial technology.

55 ʕ•ᴥ•ʔ September 27, 2017 at 11:56 am

Dual use restrictions should die, make a binary decision about what is military and what is not.

56 Hazel Meade September 27, 2017 at 1:03 pm

That would definitely reduce the amount of mission creep that goes into “dual use” classification.
Right now, it’s sort of like “Is there a remotely conceivable military application for this technology? if yes, then it’s dual use.”

For example, Sony Playstations require an export license, because the US government has decided that the chips in them are too powerful, and has classified them as “dual use” technology.

https://www.ecustoms.com/blog/?p=185

Here are some more examples:
2. Life Jackets

They’re meant to save lives, but according to the Export Administration Regulations (EAR), life jackets are potentially dangerous objects that can’t be taken outside the United States without an export license. Since life jackets have military applications as well as civilian ones, they qualify as “dual use goods,” and it’s illegal to let them be transferred to any restricted parties. As strange as it may sound, there’s enough of a risk that life jackets can be used to harm the foreign policy interests of the U.S. that they need to be meticulously controlled.

57 mulp September 28, 2017 at 3:14 pm

“I see the same effect with ITAR in aerospace, where it’s easier and less expensive to purchase parts from European manufactuers, and they literally advertise themselves as ‘ITAR Free’.”

You believe the US military is prohibited from buying from Russia and China by ITAR because no Russian or Chinese businesses have been certified as complying with the law prohibiting selling of “munitions” to any hostile nation or force?

Interesting idea. Transferring all military technology to Chinese manufacturers would cut costs to US taxpayers buying aircraft carriers, subs, and other naval vessels. Iran and North Korea have shown they can develop ICBMs on the cheap, so renewal of the nuclear triad should consider them as cheaper suppliers. Russian small arms and tanks are cheaper and better than US made, though China makes AK clones cheaper than Russia.

Classic free lunch economics. You see economies as being only the consumer cost aspect. Eliminate American workers and the American workers will have more money put in their pockets from tax and price cuts.

58 Kevin September 27, 2017 at 10:03 am

Europe has natural barriers (Alps, UK, Scandinavia, Pyrenees) which likely incentivize shipping by boat instead of shipping by ever congested rail and road through these choke points. Perhaps the geography of the United States has fewer of these?

Also, sounds like the Jones Act could incentivize developing self-driving boats in the near future.

59 Thorfinnsson September 27, 2017 at 12:21 pm

The main reason for the low modal share of rail in Europe (or rather Europe-West-of-Russia in rail terminology) is the incompatibility of national rail networks.

While Europe-West-of-Russia has a unified gauge (other than the Iberian peninsula), nothing else is unified. In particular electric rail transmission systems are different and signalling systems are different.

This also impacts passenger rail. In theory Europe could have an integrated continental high speed rail system like China, but it doesn’t for the above reasons.

Another major limitation in Europe-West-of-Russia is that the car couplers used in rail are much weaker (and must be manually connected) and thus cargo trains can haul far less freight than equivalents in North America and the former Soviet Union.

Truck freight in Europe is by ton mileage more common than in North America precisely because rail has a limited modal share.

60 Hazel Meade September 27, 2017 at 3:45 pm

What you mean like the rocky mountains?

61 Kevin September 27, 2017 at 4:56 pm

Quite plausible regarding train compatibility. However, the other is given the large intercontinental distances, it would make sense that a significant share of tonnage hauled would take place over rail in the United States vs Europe.

So a fair comparison should really be transport on the East and West Coasts vs Europe (so Rockies are ignored).

62 Thorfinnsson September 28, 2017 at 10:53 am

East Coast has a considerably lower rail modal share, largely because of obsolescent infrastructure. Double-stack container trains can’t go east of the Appalachians, and owing to various decaying bridges and tunnels if you want to send a freight train from the South up to the East Coast it generally has to be routed through Cincinnati.

There’s also relatively less need for freight rail on the East Coast in that all of it is close to the Intracoastal Waterway.

Rail modal share in California is relatively high though obviously lower than in the interior of the country.

63 rayward September 27, 2017 at 11:29 am

Does America need a thriving shipping industry? I don’t know, but the Jones Act doesn’t seem to help (according to Tabarrok’s blog post). It has limited scope: it applies to shipping between US ports whereas the bulk of shipping is between US and foreign ports. Disputes about shipping go back to the earliest days of the country, by far the most significant being the dispute over whether to cede control of the Mississippi River to Spain in return for unfettered trade between the US and Spain, the primary beneficiary of which would have been the northeast region (the center of shipping and commerce) while the southeast would have suffered (due to potential restrictions on migration to the southeast and west). Indeed, the dispute almost resulted in the disintegration of the Union. Likewise, the dispute over the Jones Act is a regional dispute, as shipping interests are concentrated in (drum roll) Blue States.

64 Thorfinnsson September 27, 2017 at 12:22 pm

Five of the top ten American ports are in red or swing states.

That said the top three are all in solidly blue ones.

65 Thorfinnsson September 27, 2017 at 12:14 pm

I agree with Mr. Tabarrok.

Repeal the Jones Act.

And replace it with a modernized version of England’s famous Navigation Acts which birthed the largest merchant marine the world had ever seen.

There are today fewer than 200 ocean-going American-owned and crewed commercial cargo vessels. This has a negative impact on our current account balance, and more importantly it’s a national security risk.

66 celestus September 27, 2017 at 12:20 pm

“there are less than 100 Jones Act-eligible ships”

No.

67 Dath September 27, 2017 at 12:53 pm

Speaking as a former US Merchant Mariner…

The Jones Act is fantastic!

68 bellisaurius September 27, 2017 at 1:32 pm

I wonder what effect it has on the great lakes states. Chicago has all kinds of ports, but I hardly ever see merchant vessels. Given that water is supposed to be cheaper for transport, why should this be?

69 Thorfinnsson September 27, 2017 at 4:36 pm

The impact on the Great Lakes states is practically zero since that’s inland navigation and wouldn’t be conducted by foreign merchant ships in the first place.

There is plenty of merchant shipping on the Great Lakes. The famous Gordon Lightfoot song The Wreck of the Edmund Fitzgerald is about a Great Lakes merchant ship (called “Lakers”) sinking.

You don’t see Laker traffic in Chicago because Chicago-area merchant traffic is routed mostly through the Calumet. There used to be shipping on the Chicago River as well, but to my knowledge there hasn’t been since the 1980s. You can see relics of this with buildings such as the old Montgomery Ward complex (now luxury apartments) and the still-operational Chicago Tribune printing and distribution plant, which was built to accept barge traffic on the river (unfortunately they built the doors too high so they were never used).

It should also be noted that laker traffic is down by half compared to forty years ago owing to the determined effort by our government to destroy industry in the United States. As such less iron ore, coal, steel, limestone, cars, etc. is shipped on the Great Lakes today.

70 Stuart September 27, 2017 at 1:57 pm

Repeal the Jones Act!

Upzone the rich!

Convert to the metric system!

Stop 19th century practices of voting on Tuesday and giving kids three-month summer breaks!

-Some of my unpopular policy agenda that I don’t think there is massive grassroots support for 🙁

71 Harun September 27, 2017 at 3:38 pm

What does upzone mean?

72 Stuart September 27, 2017 at 5:50 pm

Change the zoning ordinances to allow denser development – upzoning. Often affluent neighborhoods use single-family zoning or other low-density zoning to create housing scarcity that are bad for our economy and housing affordability, but helps them get richer by making their property more valuable. They also will use historic preservation as a pretext to block new housing. I think in these affluent blue coastal neighborhoods you would see more passionate activism in fighting proposed upzoning than against Trump’s presidency.

73 Matt2 September 27, 2017 at 3:37 pm

I spent the first 14 years of my career working in what is known as the “Jones Act Trade” part of the maritime industry and the last 10 in other segments.

First as to the “100 eligible ships” number – that doesn’t count tugs and barges. Consider the five – seven person tugs that move oil barges up and down the east coast. A lot of the barges can carry as much as the tankers that used to sail the same routes with crews in the 20s or 30s. The Jones Act didn’t kill those tankers technology did. The development of the Articulated Tug Barge system let them push in a much wider weather envelope with increased safety just to cite one specific tech jump.

People often conflate “Jones Act Fleet” with US Flag fleet, whether intentionally or not I don’t always know. Ships can be built foreign and then registered in the US. This requires a US crew. Those ships can not move cargo in the Cabotage trade (most US ports to most US ports) but can carry cargo to/from US and foreign ports. In fact most of the US ships sailing internationally fall into this group.

Foreign flag ships absolutely can stop in Puerto Rico, drop cargo, pick up cargo, and continue to the mainland just like they call Savannah-Charleston – Norfolk – Newark, loading and discharging each place. They just can’t haul cargo between Charleston and Norfolk or San Juan and Newark.

Then their are the maritime labor elements of the Jones Act that apply to all US flag merchant ships whether eligible for the Cabotage trade or not. That part of the law might be a fun thing for the hosts to look at!

74 mulp September 27, 2017 at 4:23 pm

Yeah, I’d like the explanation for how replacing US workers with non-US workers creates more US jobs.

Why not replace every US worker with illegal immigrant workers to drive down US worker unemployment?

The costly regulations requiring US workers be paid are too costly because paying US workers is too costly. By eliminating those costly regulations, US workers will not be paid, and the cost cuts will put more money in worker pockets than their lost wages so they can drive gdp growth higher by spending more from the labor cost cuts putting money in their pockets.

75 Harun September 27, 2017 at 3:42 pm

What is up with the claims that “Trump doesn’t care?”

The Navy is going there full speed. FEMA is there.

Do we really believe that these efforts require on-the-spot guidance?

76 Harun September 27, 2017 at 3:43 pm

Oh, and if Trump tried to waive this regulation, the left would have a conniption fit about exploiting a crisis to secretly deregulate and let millionaires and billionaires get rich off the backs of the poor.

77 mulp September 27, 2017 at 4:01 pm

I gather you see US labor, especially in PR using the extreme scarcity of labor to extract monopoly rents from global capitalists?

In your view, the problem in PR is too much labor cost from too much labor power driving too much demand by too much worker consumption?

Clearly more workers are needed to serve the PR high spending capacity economy?!?

Or is your plan to bring welfare payments in PR up to the levels in say Alabama where a high percentage of the over 65 population get SSI which are not available to those living in PR. Moving from PR to Florida results in much higher welfare payments for many over age 65. Then PR residents could buy a lot more stuff exported from Alabama not produced with Alabama labor, but instead Asian labor, paid for by higher Federal welfare payments?

78 mulp September 27, 2017 at 3:45 pm

“If issued a waiver, Puerto Rico could switch to cheaper, cleaner natural gas from sources such as Pennsylvania and Texas.”

Growing up, economists were much smarter. But that seems to have changed around an inflection point circa 1980.

How could PR use natural gas. It has no pipelines to distribute NG anywhere. It has no LNG port, storage, and gas expansion facility. It has very little, if any, coaling port capacity so PR burns bunker oil using power generation built prior to the central planners directive to favor coal power by banning the use of oil or natural gas in most power generation in the US to make the US energy independent, passed in the 70s.

It’s ironic that the laws supposed to make the US energy independent by using coal were used by Reagan to kill US oil and gas production growth, with imports growing rapidly from 1985 to 2005. Meanwhile, Reagan policies drove rapid job loss in the coal sector with pollution increased above the Clean Air Acts intended levels, done to kill jobs in the energy sector. Huge job losses across the entire energy sector under Reagan policies.

Further, under Reagan, the killing of US jobs in energy and shipping by policy has made it impossible for the US to engage in a WWII type of war. If there were an extended conflict in the Pacific, the US would need to win quickly by nuclear war. A war that played out like the past quarter century of Mideast war of lingering conflict would likely render the US with no ability to supply Hawaii, much less other likely allies. All the ship building capacity of WWII is long gone. With Greece shipping slowly being taken over by China, Greece isn’t likely to be a source of ship building capacity for a US Pacific war effort.

Note, the effective dismantling of the US Army railroad Corp made supplying the Afghan war a major problem. In a WWII back to Civil War era, Afghanistan would have had a pretty good rail system by now.

Free lunch economists believe capitalism is based on money, not on paying lots of workers to build capital assets, as in building so much capital assets that competitors either fail, or must also pay lots of workers to build capital assets.

To sell LNG in PR, my guess is the initial labor costs would be ten billion dollars building LNG and NG pipeline capital and all the supporting capital assets to make doing this possible during the process, and then after to consume the natural gas.

Of course, the same economists argue the price of the NG needs to be low enough for workers making $10K to pay for a lot of NG given the scale of cost efficient LNG capacity.

LPG would make much more sense. And Autogas (like propane but a greater mix of volatile petroleum chemicals). Capital investment is in much smaller increments and it can be delivered by truck almost anywhere.

79 MyName September 27, 2017 at 10:03 pm

I think you have some good points about costs of expansion, but need to do more research on what actually exists. I don’t believe it would be nearly as costly as you are stating.

A LNG terminal and regasification facility does exist in Guayanilla Bay. Most of the LNG is currently imported from Trinidad and Tobago to supply an existing 500 MW power plant (https://www.eia.gov/state/analysis.php?sid=RQ) in the same area. If they wanted to expand it other parts of the island, they would need to add another pipeline to get it to San Juan, and probably expand the terminal’s capacity in order to serve other customers. The problem with expansion is that all of this is currently ran by PREPA which has alot of debt and other financing issues, and also the fact that customers would have to buy new gas stoves, water heaters, etc. if they wanted to make use of this directly. There were still plans to expand the capacity, according to the EIA site, but who knows how that will go after the hurricane.

80 Anon7 September 27, 2017 at 4:00 pm

It should be eliminated if for no other reason than it will remove the Jones Act as the first excuse people use to blame something other than the public officials (and their electors) of Puerto Rico for its rotten governance.

81 Clay B September 27, 2017 at 5:19 pm

The law is bad enough in that it forces (fairly prosperous, in contrast) mainland Americans to pay more for shipping to benefit a small group. But its a travesty to make (relatively poor, and now devastated) Puerto Rico bear that extra burden.

82 Doug September 27, 2017 at 5:42 pm

The Jones Act is a wasteful make-work program that is matched only by sugar tarriffs and ethanol blending quotas in terms of horrible policies.

However…

In this instance, the bottleneck isn’t shipping capacity, but port facilities and trucks/roads. You could bring in 1,000 Panamanian-flagged container ships and they would just sit at anchor while the crippled port struggles to unload cargo.

Better to use the Navy/USNS/Seabees to create temporary infrastructure to regain the logistics capacity.

83 Matt2 September 28, 2017 at 1:32 am

http://gcaptain.com/american-maritime-industry-fights-back-false-claims-regarding-jones-act-relief-efforts-puerto-rico/

Not necessarily “unbiased” but based on what I know also not wrong.

My brother is on his way down on a survey vessel to check some of the harbors and channels in ports down there. Looking forward to what he has to tell me.

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