Protect the nation: Reform the Jones Act

When it comes to Jones Act reform, the debate often comes down to costs versus national security.

No one seriously argues that the Act doesn’t raise prices for businesses and consumers: It is basic economics that restricting the transport of goods between U.S. ports to only U.S.-flagged and owned ships with predominantly American crews will increase prices. But Jones Act supporters minimize the costs and say that in any case such costs are well worth it to protect our national security.

But are they really? What if updating the Jones Act would help not just businesses and consumers, but also our shipbuilders, maritime workers and national security?

In a new policy analysis paper for the Cato Institute, Rust Buckets: How the Jones Act Undermines U.S. Shipbuilding and National Security,” author Colin Grabow dismantles the national security argument and reveals the truth: The Jones Act no longer serves its purpose and, in fact, is undermining it.

As the Grassroot Institute of Hawaii has pointed out time and again, the Jones Act was enacted a century ago, when warfare and trade were very different. The justification for the Act, still made today, is that it supports a strong American merchant marine as well as shipbuilding and repair capability that would be important in times of national emergency. But this is not what has happened.

Unable to compete internationally, American shipbuilders have fallen far behind. There are now only four shipyards in the U.S. capable of producing large, ocean-going commercial ships. Shipbuilding employment has fallen from 186,700 in 1981 to 94,000 in 2018. American shipyards are said to be among the least productive in the world and about 20 years behind in technology.

Jones Act ships are so expensive that even the U.S. military cannot afford to purchase domestic-built ships. Focusing only on the Jones Act market has crippled the American shipbuilding industry, to the point where it is dying and not competitive enough to save itself.

If the Jones Act has been a disaster for shipbuilders, it hasn’t been much better for maritime workers. Because of the cost involved, Jones Act ships are kept in service for much longer than the average, earning the label “rust buckets” and becoming safety hazards for their crews. Matson’s cargo ship the SS Matsonia, for example, was constructed in 1973 and suffered a hull failure this year that was likely related to age. At the same time, the Jones Act fleet has been dwindling for years, and that has meant fewer jobs — and fewer people available to respond in a national emergency, the justification for the Act’s existence.

The U.S. military is aware that the merchant marine is unable to meet our national security needs. During Desert Shield/Desert Storm, 269 ships were chartered by Military Sealift Command to assist in the conflict; of those, only eight were Jones Act eligible.

When the call went out for commercial mariners to assist, the United States Maritime Administration had to scramble to find enough qualified mariners to fill its needs. MARAD estimated in 2017 that in a wartime scenario, the U.S. would be about 1,839 mariners short of the 13,607 needed to crew America’s commercial fleet and assist in sustained sealift operations.

Clearly, our merchant marine fleet is weaker, not stronger, because of the Act, and is not sufficient to help in a national emergency.

This doesn’t mean that we must eliminate the Jones Act entirely, but it is time to bring it up to date with modern realities. The only way to have a strong merchant marine is to have a competitive merchant marine. To do so, we need to remove the protectionist elements that have helped destroy the industry.

Removing the Jones Act’s U.S.-build requirement and allowing for the purchase of ships from friendly trading partners, as the U.S. military does, would incentivize needed changes. The merchant marine would grow, and U.S. shipyards would once again be competitive in the global market.

Modernizing the Jones Act is the best way to modernize our merchant marine, reverse the downslide of our shipbuilding industry, and bolster our national security.

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