Repealing antiquated Jones Act would be a boon to all Americans

At a time when more and more policymakers are asking whether it’s time to modernize the Jones Act  — and Puerto Rico is hoping to be exempted from it entirely — Jones Act supporters in Congress have decided to flex their might. But in doing so, they’ve proven that they aren’t really interested in economic realities.

On Jan. 17, the House Subcommittee on Coast Guard and Maritime Transportation held a Jones Act love-in under the guise of examining the “State of the U.S. Flag Maritime Industry.” There to sing the praises of the law that requires goods carried between U.S. ports to do so on ships built and flagged in the U.S. and crewed by mostly Americans were five representatives of the maritime industry and two government witnesses.

All of the witnesses were notable for their support of the Jones Act. And it’s no coincidence that the Subcommittee is chaired by Rep. Duncan Hunter (R-Calif.), whose district includes a shipbuilding yard.

{mosads}Not appearing? Actual shippers or anyone who might pour cold water on the idea that the Jones Act is an unalloyed good for the American economy and necessary to our national defense.

Hunter went so far as to call opposition to the Jones Act “stupid,” and ridiculed the idea of buying less expensive ships from allies like Japan or Korea.

Both Hunter and ranking member John Garamendi (D-Calif.) repeated the pro-Jones Act mantra that the act is the foundation of American naval power.

Without any skeptical voices present, such assertions were left to stand without the intrusion of annoying things like facts. Therefore, it is left to us to point out that if our national security depends upon the Jones Act to ensure shipbuilding (and crewing) infrastructure, then it is a supreme failure.

Currently, the number of Jones Act cargo ships stands at about 99, down from 193 ships in 2000. Those ships are also significantly older than the international average.  In 2016, the average age of a Jones Act ship was 33 years. The average age of a ship in the global fleet is 16 years.

The act hasn’t even been able to protect shipyards from closure. There are only seven active major shipbuilding yards in the U.S., and four of them make only military vessels.

Like everything else touched by advances in technology, the modern shipbuilding industry has changed immensely. And because of the Jones Act, American shipyards haven’t been forced to compete, and have become non-competitive as a result.

Hunter and others at the hearing bemoaned the losses of the maritime industry without considering that the prohibitive costs of the Jones Act are the reason for those reverses. If national security was really the most important benefit of the Act — as opposed to protecting the maritime industry — then the best thing to do would be to focus on how to modernize the act and revitalize American maritime interests.

Instead, the subcommittee’s response was more regulation.

During the hearing, Garamendi announced that he and his colleagues intend to introduce a proposal that would require crude oil to be shipped on Jones Act ships. What’s more, they are exploring the possibility of requiring liquid natural gas (LNG) to be carried on Jones Act ships. This, despite the fact that there are no Jones Act-eligible tankers capable of carrying LNG, as energy consumers in Hawaii and Puerto Rico already are well aware.

As economist Thomas Grennes wrote in a report for the Mercatus Center at George Mason University:

The supply of U.S. natural gas continues to increase since the shale revolution, and the United States recently became a net exporter of natural gas. However, Hawaii and Puerto Rico are unable to benefit from cheaper natural gas. U.S. shipyards have not yet produced a Jones Act–eligible liquefied natural gas tanker that could supply Hawaii or Puerto Rico.

Given the interests at stake in the Jones Act debate, it’s no surprise that Jones Act supporters want the federal government to flex its muscles and extend the protections of an outdated law. But that’s exactly the wrong approach.

If we want to see real economic benefits  — to all industries, not just maritime interests — and if we’re truly concerned about national security, we’ll work to update the Jones Act for the 21st century.

Malia Hill is the policy director of the Grassroot Institute of Hawaii (@GrassrootHawaii), a public policy think tank dedicated to the principles of individual liberty, free markets and limited, accountable government