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Why is the Grassroot Institute of Hawaii writing about Alaska?

The Jones Act is a federal law, which means any efforts to reform it will require finding allies and demonstrating how it harms other states

Samuel Johnson reportedly said, “Patriotism is the last refuge of the scoundrel.” He meant, of course, the false and noisy patriotism used to cloak self-interest, not a genuine love of country.

It’s a quote that comes to mind when you study the history of the Jones Act, the maritime law that requires goods shipped between U.S. ports to be on ships flagged and built in the U.S. and mostly owned and crewed by Americans.

The Jones Act lobby likes to highlight the law’s patriotic rationale: that it protects national security by ensuring a strong U.S. merchant marine. What they fail to mention is that there has always been a healthy measure of economic self-interest involved in passing and protecting the Jones Act.

A new report from the Grassroot Institute and the Alaska Policy Forum, Alaska: The Jones Act’s original victim,” exposes the little-known truth behind the act’s origins, including the fact that the law has always favored certain states and industries over others. For the author of the Jones Act, Sen. Wesley Jones, economic disparity was a feature, not a bug, of the law.

In the report, institute research associate Jonathan Helton explains that one of the original goals of the 1920 law was to protect shipping interests in Jones’ home state. A loophole in existing maritime laws had allowed merchandise to be shipped between Alaska and American ports via Canadian railroads and British ships. Jones, a Republican from Washington, introduced language that would bar such land-and-water shipments specifically for Alaska, while leaving that option open for the Great Lakes region.

Alaska was only a territory at the time, and while George Grigsby, Alaska’s nonvoting Congressional representative, spoke out against the Jones Act, he was unable to prevent its passage.

“Senator Jones’ interests are in Washington,” Grigsby told a crowd in Juneau in 1920. “His constituents, a large part of them, reside in Seattle, and Seattle does not want that Canadian competition, of course.”

As intended, the Jones Act had an immediate effect on Alaska’s economy, creating a monopoly for shipping companies from Washington state and keeping prices in Alaska high.

Alaskans didn’t take this lying down; they sued on the basis of the Jones Act’s discriminatory language and effect. However, in 1922, the U.S. Supreme Court ruled that because Alaska was a territory and not a state, the section of the Jones Act that specifically applied to Alaska was constitutional.

The Alaska provision of the Jones Act ended when Alaska became a state, but the damage was done. Alaska had spent nearly four decades under a protectionist shipping scheme that throttled the territory’s economic development.

Moreover, the shipping and supply issues that burden all noncontiguous U.S. states and territories continued to be an issue for Alaska — as they are for Hawaii. Study after study has found that, just as in Hawaii and Puerto Rico, the Jones Act suppresses jobs in Alaska and drains the economy of millions of dollars every year. Even today, Alaskan seafood companies are involved in a Jones Act dispute with U.S. Customs and Border Protection that could have a crippling effect on the industry.

The full history of Alaska and the Jones Act makes for fascinating reading. In case you are wondering why the Grassroot Institute of Hawaii chose to collaborate on a Jones Act report about another state, the short answer is that it is part of our larger strategy to modernize the act.

Because the Jones Act is a federal law, any efforts to amend it must come from Congress. That means finding allies and demonstrating how the act affects other states.

As one of the oldest victims of the Jones Act, Alaskans understand the full effect of the act and are eager for change. The 49th state will be a key part of any effective Jones Act coalition — witness its success earlier this year in pushing for a temporary exemption to the 1886 Passenger Vessel Services Act, which is similar to the Jones Act but applies to passengers instead of merchandise.

Alaska’s experience with the Jones Act reminds us that protectionist laws can have far-reaching effects. Self-interest and economic burdens have been part of the law’s design since the very beginning.

It is also a reminder that Hawaii is not alone in its efforts to promote common sense solutions, like modifying the act’s U.S.-build requirement. Together with allies in Alaska and elsewhere, we are working to update the Jones Act for the 21st century.
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This commentary was Keli’i Akina’s weekly “President’s Corner” column for Dec. 4, 2021. If you would like to have his columns emailed to you on a regular basis, please call 808-864-1776 or email info@grassrootinstitute.org.

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