Going Broke With The Jones' — Episode 018
Podcast Notes and Outline.
Jones Act Intro Pre-recorded by Jeff as a Monologue

Have You Ever Split a Cab or an Uber with a friend? If the Jones Act applied to Uber drivers, this would be illegal

Reasons we economists suck — the dismal science

• What the heck is cabotage? 
• Market Distortions
• The Devil Lives at the Margins — “Concentrated Benefits” & “Diffuse Costs”

Merchant Marine Act of 1920 — The Jones Act

100 years ago

Introduced by Wesley Jones — the senior senator from Washington State

Hmmmm … and they build ships where? (hint: Washinton State!)

The Jones Act in a Nutshell

All Ships Used for Cabotage

• US Built
• US Owned
• US Flagged
• US Commanded
• US Staffed

Other Related Issues

• Insurance
• Seaman Rights
• Port Inspections
• Etc.

Often confused with the Passenger Service Act of 1886 — Discuss the difference

Even NPR confused the issue in their podcast.

Jeff Introduces Guest Colin Grabow (GRAY-Bō)

Colin Grabow of the CATO Institute — Policy Analyst, Herbert A. Stiefel Center for Trade Policy Studies. He has a BA in international affairs from James Madison University and an MA in international trade and investment policy from George Washington University. He specializes in things like subsidizing sugar production and The Jones Act.

Welcome to the JeffEffect.

What did the Jones Act Attempt to Do?

• Foster Shipbuilding in the US (Protectionism)
• To Maintain Domestic Fleet and Shipbuilding Capacity (National Security)
• Maintain an experienced Merchant Marine Workforce (Protectionism & National Security)

Did it Succeed …. No, It Did Not — Jeff and Colin Discuss

There are currently less than 100 Jones Act Qualifying ships.

Commerce between states is negatively impacted.

How The Jones Act Got on My Radar

Thinking about opportunity for the local Economy — Why Apple Can’t Build Phones in Puerto Rico

Why Are US-built Ships So Darned Expensive?

• The irony of Asia-Pacific Shipbuilding — Being destroyed in war required that it be rebuilt from scratch. Japanese industrial base was devastated during WWII. The Korean conflict occurred immediately after WWII. Both areas were reindustrialized after the conflicts. This appears to have facilitated the construction and recapitalization of shipbuilding in these two regions.
• Protectionism Breeds Complacency Every Time It’s Tried.
• There is not a single LNG Tanker, Heavy Project Ship, Heavy Cargo Ship, or Cruise Ship built in the US — Zero Qualify for The Jones Act.
• If ZERO qualify, what are we protecting?

Anecdotes

• Flying Cows of Hawaii
• Road Salt in New Jersey
• LNG Triangle Trade — Russia/Massachusetts/Pakistan
• Oil in Houston Can’t Get to Maryland
• Other Ideas and Anecdotes from Colin

Complacency Revisited

Transport companies that were not covered by the Jones Act have become competitive on the world stage.

US Airplane Manufacturers

• Boeing
• Gulfstream/General Dynamics
• Textron (Textron Aviation/Cessna)

US Locomotive Manufacturers

• GE Transportation/Wabtec
• Brookville Equipment Corp.
• Electro-Motive/Caterpillar

US Semi-Truck and Trailer...