A new video produced by the popular Economics Explained website gives the Jones Act a well-deserved whupping for contributing to the exodus of lower-income residents from Hawaii.
The Jones Act is the 104-year-old federal maritime law that restricts the shipping of goods between U.S. ports to only ships that are U.S built and flagged, and mostly owned and crewed by Americans.
The law causes higher prices throughout the nation, especially in states and territories such as Hawaii, Alaska, Puerto Rico and Guam, but persists thanks to the powerful and well-heeled special interests.
The Economics Explained video is titled “Why Hawaii became a State for The Rich Only,” and can be seen on YouTube here. Since being posted almost two weeks ago, it has been viewed more than 330,000 times.
Last week, the Grassroot Institute excerpted the portion of the video that focuses solely on the Jones Act and posted that online too, under the title “The role of the Jones Act in squeezing Hawaii residents out of Hawaii,” which you can see by clicking on the video below. A complete transcript of the excerpt follows.
Transcript of the video excerpt:
Narrator: For quick clarification, keeping the listed low income in mind, the median income for Hawaiian residents is $41, 850 — less than half the minimum most analysts say is required for basic needs.
To make matters even worse is a piece of legislation known as the Jones Act. or the Merchant Marine Act, which legally requires that goods be transported between places within the U.S. using only U.S.-owned, -built and -crewed ships.
The law has led to far higher shipping costs, causing many mainland states, even those along the coast where ocean shipping would be the cheapest option, to invest exorbitant amounts of money for trucking, rail and pipeline services — all alternatives that are impossible for Hawaii given the nature of its location.
The vast majority of the world’s shipping fleet does not comply with Jones standards because U.S. ships and crew are more expensive than what most ships sail under, which is a flag of convenience.
Registering a ship in a country like Panama lets shipping companies pay fuel registration costs and hire crews from whatever low-cost labor force they like.
Basically, the flag of convenience allows for the state of Hawaii to receive goods from East Asia using normal ships, but if they wish to receive goods from the mainland, they end up paying a hefty premium, about $1.2 billion annually.
The Jones Act also has an enormous trickle-down effect on productivity. It just makes any local industries uncompetitive which has resulted in 9,100 fewer jobs representing $404 million in wages.
Adding insult to injury, this has all been made even worse by insurance costs increasing due to risk of natural disasters that have been hitting the island with relative frequency.
This might go without saying, but the rapid rise in living costs, climate instability and the regulations that come with it are aggressively pricing out the indigenous population, as they are many of the lowest paid family households in the state.
