On this episode Ron and Ed welcomed Colin Grabow of the CATO Institute's Herbert A. Stiefel Center for Trade Policy Studies to talk about the Jones Act (aka Merchant Marine Act of 1920) which regulates maritime commerce in U.S. waters and between U.S. ports, oh, and, makes stuff more expensive for all of us while benefitting a select few. You will learn the main reason why food and other sundry items are more expensive in Hawaii and Puerto Rico; why the Northeast US imports natural gas from Russia instead of getting it from the US; and many more insanities.

[Snarky Editor’s Note] Some day, this episode will be obsolete because Congress will take action and repeal the Jones Act. You can check if Congress has taken action by visiting HasCongressRepealedTheJonesAct.com

Use these show notes to follow along with the audio:

Segment one

What is the Jones Act? Term used to refer to section 27 of the Merchant Marine Act of 1920. It has four major components and you can read them here: https://en.wikipedia.org/wiki/Merchant_Marine_Act_of_1920
Here is a slightly older podcast from Cato that Colin did that discusses the case against the Jones Act: https://www.cato.org/multimedia/cato-daily-podcast/case-against-jones-act
One of the more outrageous examples of the Jones Act: two hundred and fifty kegs of nails were loaded onto a foreign ship in New York that went to Belgium, and then the nails were placed on another foreign ship and taken to Los Angeles
Another outrageous example of the Jones Act: a 200-foot long railway in Canada that ships Alaskan seafood to the East Coast. More here: https://www.cato.org/blog/east-coast-seafood-supply-chain-faces-uncertainty-amidst-heavy-fines-alleged-jones-act
The Jones Act causes a LACK of oil and petroleum shipping from the Gulf Coast to the East Coast. Instead, most is imported to the East Coast. Why? Details at this link: https://www.cato.org/blog/new-study-estimates-jones-act-costs-east-coast-energy-consumers
The Jones Act ENCOURAGES Puerto Rico’s use of Russian energy. This is well documented by Colin and his colleague, Alfredo Carrillo Obregon. More here: https://www.cato.org/blog/jones-acts-role-encouraging-puerto-ricos-use-russian-energy

Segment two

“It was like watching Physicists debate flat earthers.” —Ron Baker when talking about Colin’s recent appearance on Maritime TV in which he debated supporters of the Jones Act. https://www.cato.org/multimedia/media-highlights-tv/colin-grabow-discusses-jones-act-maritime-tv
Colin revealed today that there are easily 10-12 lobbyist groups whose top (or top 3) priority is maintaining the Jones Act. That is the start of the answer to, “Why has the Jones Act not been repealed or significantly changed?”
“In 1984 Alaskans overwhelmingly passed a ballot measure mandating the state’s governor attempt to persuade Congress to repeal the Jones Act” — yet, all 3 Congressional reps support it today https://www.cato.org/commentary/alaska-lawmakers-must-get-serious-about-jones-act-repeal
If you look into the statistics and pull back the emotion, “We are a manufacturing superpower. I don’t know any other way to say it.” —Colin Grabow; More here: https://www.cato.org/publications/reality-american-deindustrialization

Segment three

“I’m gonna go to China, and I’m gonna get these jobs from China and bring ‘em back to America. For what, so iPhones can be $9,000? Leave that job in China where it belongs … I wanna wear Nikes, I don’t wanna make those things. Stop trying to give us Chinese jobs.” —Dave Chappelle
Here’s probably the MOST absurd outcome due to the Jones Act: Cattle fly first class to Hawaii. Folks, I couldn’t make that up if I tried and Colin wrote a piece on it: https://www.cato.org/blog/jones-act-fleet-high-costs-limited-capabilities
The Jones Act was waived for 10 days after Hurricane Maria hit Puerto Rico. That’s the most positive development we can provide in an attempt to #EndTheJonesAct https://www.nytimes.com/2017/09/28/us/jones-act-waived.html
So if the Jones Act is so ridiculous then why is it not being challenged? “Concentrated benefits and diffused costs.” —Colin Grabow

Segment four

“The premium placed by policymakers on manufacturing employment is misplaced. Unlike most of the post–World War II era, jobs in this sector now provide lower compensation than similar roles elsewhere in the economy […]” https://www.cato.org/publications/reality-american-deindustrialization
On episode #187, Ron and Ed interview Donald Boudreaux and asked him if we should we do away from trade statistics? “Absolutely”, was Don’s answer https://www.thesoulofenterprise.com/187
Here is a seminal piece from Coin Grabow called “The Jones Act: A Burden America Can No Longer Bear” https://www.cato.org/publications/policy-analysis/jones-act-burden-america-can-no-longer-bear
A big THANK YOU to Colin Grabow for joining us today. Here is a link to his work at Cato including how the Jones Act undermines National Security https://www.cato.org/people/colin-grabow

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