The Jones Act Is Deadly

by Don Boudreaux on September 27, 2017

in Crony Capitalism, Politics, Seen and Unseen, Trade

The cronyist Jones Act – which is a special privilege granted by government to American shipbuilders and owners – is the subject of this excellent essay by Tom Grennes in U.S. News & World Report.  A slice:

By prohibiting the use of foreign-flag ships on coastal routes, the nearly 100-year-old Jones Act is an impediment to disaster responders, and for that reason, can only add to the damage done. To transport merchandise from one domestic port to another by water, the act requires the use of a ship that is American-built, American-owned, American-crewed and flies the American flag. This American-flag fleet is small and shrinking, and some of the ships have long-term contracts that prevent them from quickly responding to a disaster.

See also this Wall Street Journal editorial that rightly criticizes Trump’s inexcusable refusal to suspend the Jones Act – a suspension that would greatly speed and make less costly the relief efforts for the victims in Puerto Rico of hurricane Maria.  A slice:

Puerto Ricans pay dearly for this protectionism, which reduces competition and raises costs. A 2012 Federal Reserve Bank of New York report said the Jones Act helps explain why household and commercial goods cost roughly double to ship from the East Coast to Puerto Rico than to the nearby Dominican Republic or Jamaica. Food and energy costs are far higher than on the mainland.

Presidents of both parties have suspended the Jones Act to alleviate fuel shortages and enlist the aid of cheaper, foreign-flagged ships during previous emergencies. George W. Bush did it after Hurricane Katrina, and Barack Obama did so after superstorm Sandy. The Trump Administration followed after Hurricanes Harvey and Irma ripped through Texas and Florida in August and September.

The aftermath of Hurricane Maria is an even more urgent emergency. The Category 4 storm shut down electricity, destroyed crops, and has residents scrambling to obtain food and potable water. Many of the island’s 3.4 million residents may not have power restored for weeks. At least 10 people have died, and rescue operations will be needed for months. Allowing Puerto Ricans to import cheaper petroleum, equipment and bulk supplies would help.

Tim Worstall e-mailed to me this incisive observation:

Not waiving the Jones Act allows American shipowners and crew to continue to price gouge Puerto Rico.

Despite two hurricanes.

Consistency isn’t one of those things which happens in special interest politics, is it?

Special-interest politics – that is to say, nearly all politics – is consistent only in being inconsistent, sometimes fatally so, with the public interest.


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