Peter Zeihan, American geopolitical analyst and author, devotes one of his latest video posts to the 1920 shipping law known as the Jones Act, which he claims has cost Americans trillions of dollars in lost economic opportunities over the course of the last century.
Zeihan’s books include “The End of the World is Just the Beginning,” published this year; “The Disunited Nations,” from 2020; and “The Absent Super Power,” from 2016. You can see his YouTube channel here.
In his brief video posted several days ago, Zeihan points out that transporting goods by water is about one-tenth the cost of moving them by land. However, the Jones Act restricts shipping between U.S. ports to only vessels that are “American crewed, captained, built and owned.”
This, he said, has “reduced the amount of traffic that we use our waterways for by in excess of 90% over the course of the ensuing century. And so now we pretty … move about half of our products — almost two-thirds of our products —by truck, and then the remainder is a mix of everything else; trucks being the most expensive way to move things over a distance, by far.
“Basically,” he continues, “if your state is on a navigable river or an external coast, especially if it’s got a good bay, like the Chesapeake or New York Sound or San Francisco, you have been missing out on massive amounts of economic activity for decades.”
He concluded that “the best way that the United States could re-industrialize, protect its secondary cities, expand the port infrastructure, reduce its carbon footprint for transport and, ultimately, make the United States a much stronger place moving forward” would be to “severely reform” the Jones Act.
See the video below. A transcript follows.
10-21-22, Peter Zeihan on “The Jones Act and American Economic Development”
Peter Zeihan: Hey, everyone. Peter Zeihan here, coming to you from Richmond, Virginia, the Jefferson Hotel, which is, like, ridiculously glorious.
Anyway, I wanted to talk about economic development in the United States today, something that’s getting a little bit of play because we finally have an industrial policy. Well, I shouldn’t say “we finally”; we have an industrial policy for the first time since World War II that’s guiding things like semiconductors.
And not that that’s not important, and not that I don’t support that, but there are a lot of really baseline things the United States could do if the goal is more stable and reliable economic growth at all levels.
So, specifically: waterways.
Now, moving things by water is less than one-tenth the cost of moving them by land. You can move things at bulk; you can move things at speed over large distances. It really is the way to go.
However, the United States adopted a law about a century ago called the Jones Act, or the [Merchant Marine Act]* if you want to use the technical term.
And what it does is it makes it illegal to ship any cargo between two American ports on any vessel that is not American crewed, captained, built and owned.
And what this has done is reduced the amount of traffic that we use our waterways for by in excess of 90% over the course of the ensuing century.
And so now we pretty so much move about half of our products — almost two-thirds of our products — by truck, and then the remainder is a mix of everything else; trucks being the most expensive way to move things over a distance, by far.
Now, for a state like Virginia that is on the Chesapeake, I don’t want to say that this has been the kiss of death, but, wow, has it ground down their economic opportunities.
The Chesapeake Bay is the best, world-class best bay in the world, has the most frontage in terms of areas for port-siding.
My home state of Iowa is bracketed by two navigable rivers — the Mississippi and the Missouri — putting Iowa in a position where it has passed up massive economic opportunities. And then for 19 years, I lived in Texas, which has one of the best coastlines in the world and more deep-water potential than the entire West Coast combined.
Basically, if your state is on a navigable river or an external coast, especially if it’s got a good bay, like the Chesapeake or New York Sound or San Francisco, you have been missing out on massive amounts of economic activity for decades.
The single best thing that the United States could do, if the goal was to salvage the status of its second-tier cities and build out manufacturing, would be to severely reform the Jones Act.
Now, there’s an obstacle there: As you know from some of my previous presentations, the United States is going through a period of political reshuffling, and the factions that make up the parties are moving around.
The faction that is most in motion is organized labor, and the two issues that organized labor is most concerned about are union membership and immigration.
And on the union membership issue, all of the jobs that maintain those Jones Act vessels — those old, slow, inefficient ones that are the only ones allowed to operate — they’re all union jobs.
And so the unions see this as a job preservation act, despite the fact that it has cost the rest of the United States tens of trillions of dollars over the course of the last century.
So, if you want to get mad about something, get mad about Jones. If you want to call your congresspeople about something, call them about Jones.
That is the best way that the United States could re-industrialize, protect its secondary cities, expand the port infrastructure, reduce its carbon footprint for transport and, ultimately, make the United States a much stronger place moving forward.
Easy fix.
That’s it for me. Until next time.
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* Peter Zeihan erroneously said “Interstate Commerce Act.”
