The United States has had an industrial policy aimed at boosting its domestic shipbuilding industry since the passage of the Merchant Marine Act of 1920, commonly known as the Jones Act. Whatever the arguments for the passage of the bill a century ago, it has over time been a disaster for the US maritime industry, and continues to impose significant costs on other parts of the US economy. Colin Grabow goes through the arguments in “Protectionism on Steroids: The Scandal of the Jones Act” (Milken Institute Review, Second Quarter 2024, pp. 44-53).
The Jones Act “requires that vessels engaged in domestic transportation be registered and built in the United States as well as crewed and at least 75 percent owned by U.S. citizens.” However, the underlying rule goes back to an 1817 law “prohibiting foreign vessels from transporting goods within the U.S.”
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Supporters of industrial policy have a tendency to brush aside examples like the Jones Act: “Sure, that’s a foolish way to implement industrial policy, but my plan is a smart way to do so.” “Yes, the Jones Act is a problem, but the way to fix it is with much bigger government subsidies to expand US shipbuilding.” But the Jones Act is a classic example of a special interest law that benefits a small and very vocal group, while imposing large but diffuse costs. The problems of the Jones Act have been well-known for decades, and nothing has changed. Every proposal for industrial policy faces similar political economy dynamics.
Thus, it seems to me that the challenge for supporters of industry policy is not just to pick some alluring industries and then to hand out government favors like Halloween candy, but to specify in advance how they intend to measure success or failure of these subsidies–perhaps with a series of goals that must be met over time or else the subsidies get turned off. In South Korea, for example, which is often cited as an example of successful industry policy, the government subsidies for certain industries were often made contingent on the industries expanding their export sales at prevailing prices in international markets. When industrial policy goes poorly, as in the Jones Act, the costs are broadly felt across an array of related industries.
No bureaucratic worries. The FTC pulls the old antitrust trick of redefining the luxury market to discover competitive harm. The agency claims the merger will harm competition in the “accessible luxury” and “affordable” handbag market. The agency describes handbags that retail for several hundred dollars as “affordable,” which they may be for antitrust attorneys in Washington. Most middle-class Americans would consider them a genuine luxury.
The FTC excludes from its market definition brands that don’t sell handbags through multiple channels such as online websites and outlets. “Chanel and Hermes even go so far as to never sell certain handbags online—a customer must go into a store to purchase a Chanel or certain Hermes bag,” the FTC explains. But they’re still competitive luxury brands.
Media progressives provide rationalizations. In March, former Wikimedia Foundation head Katherine Maher began as CEO of National Public Radio. Bad choice. Her principles seem to include redefining the truth to fit any principles.
In a 2022 TED talk, she said: “For our most tricky disagreements, seeking the truth and seeking to convince others of the truth might not be the right place to start. In fact, our reverence for the truth might be a distraction that’s getting in the way of finding common ground and getting things done.”
From the same speech: “Part of the reason we have such glorious chronicles to the human experience in all forms of culture is that we acknowledge there are many different truths.” My truth: I don’t listen to NPR.
Changing principles and truth-bending will never die. Which reminds me of Groucho’s supposed last words, “Die my dear? Why that’s the last thing I’ll do.”
Elite colleges are supposed to separate the wheat from the chaff in their application process. They are, however, increasingly selecting students for traits that many employers don’t want, such as a passion for progressive activism.
Most of the 1960s anti-war protesters were not pro-Vietcong. They were upset with the sacrifices Americans were making and the casualties on both sides in a war that seemingly had no end. They wanted American policy to aim toward peace, even if this meant conceding that the war would not be won.
Much of mainstream America came to agree that the war was a terrible mess. They were tired of being lied to by President Johnson. They were tired of watching what was happening to their young men in a far-off jungle land. They were tired of South Vietnamese generals whose prowess was at staging coups rather than fighting the enemy. They were tired of the nightly television news that made the war seem grotesque and hopeless. Even Richard Nixon, the candidate of the more hawkish Republican Party, campaigned on a slogan of “Peace with Honor.”
In 2024, my sense is that the protesters are limited to the fringe that supports the bad guys. There is no broader peace movement, as far as I can tell. I could be wrong, but I suspect that the anti-Israel movement on campus is not as popular with the student body as the anti-war movement in 1968. For most people, sympathy for Hamas is too much of a stretch.
I also suspect that the anti-Israel movement is not going to gain a large following in the general public, the way that the anti-war movement gained a following in the Vietnam era. American lives are not being lost in the Middle East. Many Americans admire Israel and view it as a stalwart ally, which was not their perception of South Vietnam.
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The social justice activists strike me as closer to being a cult than a movement. I think that the cult attracts people who are unhealthy psychologically. They have a lot of negative emotions, and the social justice ideology serves to validate and reinforce those emotions.
Jim Bacchus wonders: “Is President Joe Biden more interested in fighting climate change or in sheltering domestic industries from foreign competition?” [DBx: Perhaps I’m too cynical, but I have no such wonder. I’m as certain that Mr. Biden will put his own political welfare above any asserted interest in ‘fighting climate change’ as I am that cows will moo, dogs will bark, and cats will meow.]
It’s been four months since Mr. Milei took the oath of office, promising to free the nation from the strictures of Peronism. With a passion for liberty and irreverence for the establishment, he’s generated excitement among long-suffering Argentines tired of a century of government modeled on Mussolini’s Italy. He rails against socialism and endorses Western civilization. He backs Israel, a welcome foreign policy in a region that increasingly bows to Tehran.
Yet Mr. Milei’s talk of freedom is at odds with exchange, capital, and lingering price controls. Monthly inflation for March was below market expectations but still high at 11%. “On an annual basis, headline inflation accelerated to 287.9% [year over year],” Goldman Sachs reported April 12. “Core inflation printed at a lower but still high 9.4% [month over month] in March, reaching 300.0% [year over year].”
Nick Gillespie talks with Justin Amash about Congressional dysfunction.
