Imagine if Congress passed a law that said only American-built cars could be driven in the United States.
That’d be great for American car manufacturers and horrible for the rest of us. Protecting the auto industry in that manner would let it survive with less innovation and, undoubtedly, higher car prices for us all. We’d rebel at this obvious pandering to a business group.
Yet the exact same thing is happening in our seaways. It’s not new, though, it’s over 100 years old. It’s called the “Jones Act”, and requires that all goods shipped from a U.S. port to a U.S. port must be via American ships, crewed by Americans.
Ostensibly, it’s to protect the shipping industry in peaceful times, and the country in times of war. But you probably won’t be surprised to learn that it’s one giant government boondoggle.
It not only quashes innovation but drives prices up for all of us. The average family in Hawaii, for instance, pays an extra $1,800 a year because everything shipped there from the mainland must be sent on U.S. ships.
And, as with many government programs meant to solve a problem, it actually accomplishes the opposite, resulting in fewer ships. As shipping prices get higher, it drives down demand. Businesses look for other ways to send their products and need fewer ships.
How has that worked out? American ships represent just 0.2% of the world's fleet. There were once over 450 American shipyards, now there are only 150. The ships we do build cost four to five times more than those built in Japan or Korea.
High government regulation and taxes make it harder for U.S. ships to compete against the world, and the protection of our now-smaller fleet by the Jones Act keeps them muddling along like a 30-year-old living in his parents’ basement.
After 100 years, it’s not easy to get this act overturned. By now, plenty of government regulators, special interest groups, and politicians get money or job security from the Jones Act. It also benefits unions with lobbying groups who won’t let their golden goose go without a fight.
The Jones Act itself is a pain. But the bigger problem is that there are countless acts and laws like this. They might be well-intentioned, but they lead to special interest groups and others jumping in to benefit. And once the act is in place, we need offices and employees to regulate it, lobbying groups to protect it … and the list goes on.
And, of course, once all those people and offices are in place, it becomes almost impossible to get rid of them all, or the original act.
– Ken
A few pearls of wisdom from The Great Communicator, Ronaldus Magnus …
“Nothing lasts longer than a temporary government program.”
― Ronald Reagan
Reference: https://www.goodreads.com/quotes/540552-nothing-lasts-longer-than-a-temporary-government-program
“Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
― Ronald Reagan
Reference: https://www.goodreads.com/quotes/92283-government-s-view-of-the-economy-could-be-summed-up-in
“Government's first duty is to protect the people, not run their lives”
― Ronald Reagan
Reference: https://www.goodreads.com/quotes/187125-government-s-first-duty-is-to-protect-the-people-not-run
This is an interesting one. Protecting the domestic shipping industry vs. lower prices for consumers, especially in Hawaii and Puerto Rico.
I'm not a big fan of protectionism, so I'm inclined to let the free market rule. It sounds like the economic effects could be unpredictable though. Maybe suspend it for a few years and then, assuming nothing goes haywire, repeal it.