The Case for Expanded Shipbuilding Subsidies Remains Wanting

Colin GrabowThe United States, warns anew essay inThe Atlantic, is turning its back on the world ’s oceans with deleterious consequences for the country’s national security. While much of the piece focuses on U.S. naval power, author Jerry Hendrix also highlightsde minimis U.S. commercial shipbuilding as symptomatic of American maritime deterioration. To place the industry back on a solid footing, the former Navy captain urges the adoption of a reinvigorated subsidy regime. Past experience, however, suggests that simply throwing more money at U.S. shipbuilders is unlikely to elevate the industry beyond mediocrity. Equally distressing, the offered rationale for doing so rests to a disturbing degree on questionable assertions and logic.The state of U.S. commercial shipbuilding is shambolic. UnderJones Act protectionism the industry ’s competitiveness has collapsed to the point that a tanker produced overseas for$45 million would cost$185 million in the United States, and containerships that cost $225 million in this country can be built abroad forone-fifth that amount. Faced with such prices, international demand for U.S.-built deep-draft merchant ships is non-existent. Domestic ship operators, forced to patronize U.S. shipyards to comply with the Jones Act, are their lone commercial customers. But confronted with astronomical capital costs, these firms cling to their shipsfor years—sometimedecades—longer than their international counterparts before replacing them.Giv...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs