Repeal the Jones Act

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Here’s a letter to the Wall Street Journal:

Editor:

Arguing that America’s national security requires a vibrant merchant-marine fleet, Seth Cropsey correctly writes that such vessels in the U.S. “are in short supply, as are the mariners that will command and crew them” (Letters, July 3^rd).

Nothing has contributed as much to the decline of America’s merchant-marine fleet than has the 1920 Jones Act, which requires that each vessel carrying goods by water between U.S. ports be 75 percent owned by Americans, 75 percent crewed by Americans, and built (or rebuilt) – and registered – in the U.S. The resulting higher costs of transporting goods within the U.S. by water has had predictable negative effects, as explained by Colin Grabow, Inu Manak, and Dan Ikenson*:

Among oceangoing ships of at least 1,000 gross tons that transport cargo and meet Jones Act requirements, their numbers have declined from 193 to 99 since 2000, and only 78 of those 99 can be deemed militarily useful….

One of the main causes of that decline is the onerous domestic‐​build requirement of the Jones Act, which prohibits U.S. shippers from operating vessels constructed abroad. American‐​built coastal and feeder ships cost between $190 and $250 million, whereas the cost to build a similar vessel in a foreign shipyard is about $30 million. Accordingly, U.S. shippers buy fewer ships, U.S. shipyards build fewer ships, and merchant mariners have fewer employment opportunities to serve as crew on those nonexistent ships.

Meanwhile, facing exorbitant replacement costs, ship owners are compelled to squeeze as much life as possible out of their existing vessels. That means the Jones Act fleet is not only shrinking, but rapidly aging. The typical economically useful life of a ship is 20 years. Yet three of every four U.S. container ships are more than 20 years old and 65 percent are more than 30 years old. Excluding tankers, the ships in the Jones Act fleet currently average 30 years old, fully 11 years older than the average age of a ship in the world merchant fleet of other developed countries.

Politicians genuinely interested in using trade policy to strengthen America’s national defense would start by repealing the protectionist Jones Act.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

* Colin Grabow, Inu Manak, and Daniel J. Ikenson, “The Jones Act: A Burden America Can No Longer Bear” Policy Analysis, Cato Institute, June 18, 2018.

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