In Regulation: The Jones Act ' s Bloody Cost

Aftersomesorelyneededscrutiny, the Trump administration has just announced thatit will temporarily suspend an ugly piece of corporate welfare in order to speed aid to hurricane-stricken Puerto Rico.The Merchant Marine Act of 1920, better known as the Jones Act, requires that all people and goods transported by water between U.S. ports be transported on U.S.-built ships, with U.S. owners, registered and sailing under the U.S. flag, and crewed by U.S. citizens or permanent residents. The law originally was justified as ensuring a robust U.S. merchant marine in wartime, but it really is (and probably always has been) a cynical sop to American shipbuilders, shipping companies, and (ostensibly) their employees because it gives them market power that allows them to charge higher prices. Policy analysts have long understood this; for instance, a 1991Regulationarticle by Federal Maritime Commission member Rob Quartel chastised the law for creating “America ’s Welfare Queen Fleet. ”Traditionally, Jones Act criticism has focused on its financial harm to American consumers. One recent estimate is the law results in higher prices totaling $1.8 billion a year, which is about $5.50 for each American man, woman, or child. But now there ’s growing evidence that it also exacts a cost in human lives.In the new issue ofRegulation, North Carolina State University economistThomas Grennes argues that because American-built vessels are significantly more expensive than comparable ships buil...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs