The numbers behind the Jones Act - Splash247

Let me reply with a solid example: the American Bering Sea fishing industry, and the marine transportation associated with it.

At one time foreign factory ships fished in Alaska up to 12 miles offshore in the lucrative Bering Sea fishing industry. Foreigners caught and processed the fish. They alone had the tech to do this on a massive scale. Moreover, they did so unregulated, fishing whenever they wanted.

Then in the 1980s Alaskan fishermen and fisheries scientists spurred the Federal government to ban foreign fishing within 300 miles of American shores.

The Cato Institute’s thinking would have you believe that this would somehow lead to the loss of American jobs and innovation. In reality, there were few American jobs in the fishery prior to the law, and a few years afterwards there were thousands. We did not have the tech for large scale factory fishing. No problem. We just hired the Norwegians and Japanese to show us how. And the American public did not complain about the cost of seafood. They simply bought more of it.

Here’s the kind of the nuance the absolutist thinkers of the Cato Institute always miss. While the fishing is done by Americans, and the shore plants that process some of the fish are owned by Americans, many of the investors are foreigners. Bering Sea shore plants are often hybrid American /Japanese entities, with some Japanese techs on-site in the factory. The factory trawlers often have Norwegian fishing experts aboard, amidst American officers and crews. Everything is American-owned but some if it is foreign-backed.

All of this is thriving. There are no lack of American living wage jobs. The American public is still eating fillet-o-fish sandwiches. There is an American sector to the trade, and a foreign sector. It is not one or the other. All sorts of nationalities mix on the boats and in the shore plants. All of them thriving because of a Cracker-Jack mix of protectionism and laissez-faire principles. And the fish stocks are absolutely protected against the over-fishing which wiped out the Atlantic Grand Banks. Recall the once immense Canadian cod fishing industry utterly wiped out because the Canadians did not protect their trade.

Now focus on the marine transportation associated with Bering Sea fishing. Four different American shipping companies, as well as a number of foreign shipping companies, service tiny Dutch Harbor, the center of the trade. American vessels carry cargo to the US, and Asia. Foreign companies ship it all around the world. Several years ago a foreign carrier began a complicated dodge to carry Jones Act cargo through a foreign port. This went on for years, siphoning cargo away from American carriers. This hurt my company, which operates freighters. We had just built a new innovative boat to take care of some customers, only to see their cargo siphoned away by foreigners. We lost jobs because of it.

Last year a judge ruled this dodge around the Jones Act was illegal. Jobs flooded back to us, and our American competitors, overnight. We American competitors–freighters, tugs, container ships–still viciously fight between ourselves over the DH trade. Foreign carriers still operate out of DH. All that has happened is that a ratio of American jobs has been carved out for American mariners, as was done for American fishermen.

So I’ve seen over my lifetime how the right mix of protectionism and laissez-faire principles preserves American jobs, fosters commerce, and preserves natural resources. And it exposes to me how backwards in thinking the Cato Institute really is.

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Thanks for your reply. I’m well aware of the Bayside Railway used to avoid the Jones Act. To me, this is another illustration of the law’s madness. Apparently, these guys could send fish all the way to New Brunswick, put it on that dumb railway, then truck it to the U.S. and it still made more financial sense than using Jones Act shipping. Now, from your perspective the Jones Act seems good with more jobs for American mariners. But what about the costs? Where do those enter the equation? Making shipping more expensive means some sacrifices have to be made elsewhere, such as higher prices for seafood. That means less money in people’s pockets to spend or invest elsewhere in the economy. Someone has to pay the Jones Act piper. The key to prosperity is making things as affordable as possible so people can consume more with their labor. The Jones Act does the opposite of that.

And if we’re going to talk about the fishing industry, the Jones Act, and protectionism, let’s also mention AMERICA’S FINEST, the $75 million fishing vessel that required an act of Congress to use because it violated the U.S.-built requirement by having too much steel bent and shaped in the Netherlands. The U.S.-built requirement is absolutely crazy and undermines the fishing industry:

“The fleet I represent – hook-and-line catcher processors and freezer longliners – is aging, with the average vessel between 30 and 40 years old and some dating to before World War II.

…Also complicating efforts are U.S. regulations like the Jones Act, which requires all goods – including seafood – traveling between U.S. ports be transported on ships built in the U.S. with materials sourced domestically. Furthermore, the law requires commercial fishing vessels must be owned and operated by United States citizens or permanent residents. That law results in U.S. companies paying around twice as much to build a new vessel as foreign companies who can build in cheaper places, such as Turkey.

“A Russian longline company can build new boat in Turkey for USD 15 million to USD 20 million [EUR 13.7 million to EUR 18.2 million], while we would have to build that in U.S. at a price of USD 30 to USD 40 million [EUR 27.4 million to 36.5 million],” See said. “That’s the reality, and it makes it more difficult for our fleets to modernize.”

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Now the fishing industry is your argument?

I notice you aren’t talking about your oil buddies. Can’t garner any sympathy for them?

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Minimal to the end consumer.

He’s replying to a specific example someone else brought up.

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Thanks for illustrating a point I was making in my first post; the tone-deafness of the Cato Institute, which has set itself the task of convincing the American public that disappearing jobs is a good thing, because they can still afford to buy cheap goods from Asia. Do the CI’s members ever read the news? Do you actually think that sort of logic is going over well with voters?

The CI’s theory: don’t worry about stagnant wages for the last two generations. If we send even more jobs overseas, the price of goods will go down, so you can still afford them, even as your mortgages increase. And if you want more money, become a tech worker. Or a lawyer. Or a commodities broker. Despite the fact that most of you aren’t clever enough to be any of those. Or well-connected enough. In which case, lump it.

The blue-collar voters who are left out have been getting very restive lately. They listen more and more to extremist ideologies, which threatens to tear apart the social fabric. I suppose it’s great for window repairmen and trauma surgeons…

The CI espouses an absolutist ideology: protectionism and subsidies are bad. (Unless of course, it’s the oil industry, in which case we don’t talk about it, Moving along…) When in fact, just as with democracy, for an economy to thrive there has to be a mix of systems and checks-and-balances, arrived at by trial-and-error, government intervention and trade agreements. Or the social fabric will unravel from human factors, and only the rich will thrive.

What the CI is selling reminds me of the the communist/socialist newspapers sold on the streets of most big American cities up to the 1990s, printed by extreme leftists who cut their ideological teeth in the 1930s.They printed those papers for 60 years, promising the revolution was just around the corner. They never got the memo that every year fewer and fewer voters believed what they were selling. They never bothered to actually listen to what voters were saying.

I never saw anyone buy one of those papers, let alone read one, but those old men kept printing them. The difference, of course, is that those old Reds were probably kept afloat from a few shekels from fellow fossils. Whereas the CI has major funding from a few deep pockets. But in each case both groups failed to realize they lost the narrative years ago.

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“Madness”? Yeah, the Congress looked at the impact of the legislation tightening up the protectionism so clearly entrenched in the history of US laws and said, “well, we dont want to screw over the status quo and interfere with existing business we dont have a problem with, so write these few Canadian rail routes out of it”. What a bunch of bastards! Considering you’d be content with repealing an Act that would see pink slips handed to thousands within a year of signing that’s pretty cold. And your rationale? The US maritime industry is a sick dying patient, and we all know that pulling life support is just the spur it needs to grow healthy!?

Sounds like Congress did a good thing, and while the rail routes went out of business, an old provision was abused intentionally and unlawfully, and as for the reason they took the routes to Canada it was to get to New Bedford facilities jointly owned by a Bering Sea catcher company so the math worked out when the whole enterprise is taken into account and probably a good deal of cargo coordination, load Alaska, deliver New Brunswick, pick up New Brunswick (or in the region) deliver to Europe/Asia, pickup in Asia, deliver USWC load USWC and or Bering and begin again. That’s how trade works.

Its like you have no idea how prices get set by markets. You think that if a US transportation company could suddenly get a foreign build oil tanker for 1/5th the cost to construct they’d offer a price wildly divergent from the market forces that set it, or that they’d buy a manned shuttle tanker instead of a second or third hand Asia built tug and barge combo, getting the same price for cargo and affecting the market not one whit. GOM LNG is being put on tankers and some of them are getting to the Netherlands and turning around and head thru the Suez… markets can lead to odd results, but only cause they’re profitable ones.

And as for Hawaii and LPG, the one US West Coast LPG terminal is owned by the Canadian owners of the Canadian terminal… you make it sound like US gas should go to US users or its a waste—an odd “free trader” approach…

But actually, here’s where Jones Act could work over time, enough LNG bunkering starts happening in the states (and why wouldn’t it at this price differential), and then someone will order some barges and some may eventually go for PR. Freeport LNG supposedly started work on a barge loading terminal. Thats a rosy prediction, but its a lot more realistic that the prosperity you think would result from cancelling the Act.

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Yes, let’s mention it. The ship I was mentioning, built by my company to support the Bering Sea fishing industry? It was built in the same shipyard at the same time as America’s Finest. So were other fishing vessels at the same time. Albeit with all-U.S. steel. “Undermining”? Boats are getting built. We intend to build more ships in the same wonderful shipyard. As long as the Jones Act is not subverted again. So your logic is leaky…

Do you read the news? Like the fact that New York rarely buys U.S. fuel via tanker due to the Jones Act and instead imports from Europe? Bloomberg - Are you a robot?

This is a law that tilts the playing field in favor of imports and against American products. Want more jobs? Then make the United States a more attractive place to do business. Make it easier and less expensive for Americans to buy American products. That starts with addressing laws like the Jones Act, which by every conceivable metric is a total failure.

The phrase “Colonial Pipeline” is conspicuously absent from your reasoning. European imports fell at a time of high demand so they used some US ships. Wow!

The real takeaway is that this old Act is a passive agent and markets and development worked around it. Pipelines are pretty cheap, reliable, you think they only exist to defeat cabotage or because of those factors?

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Congress didn’t do anything. It was CBP that intervened and stopped it.

The US maritime industry is a sick dying patient, and we all know that pulling life support is just the spur it needs to grow healthy!?

Do you actually believe that forcing Americans to pay 4-5x the world price for new ships is some kind of tonic?

You think that if a US transportation company could suddenly get a foreign build oil tanker for 1/5th the cost to construct they’d offer a price wildly divergent from the market forces that set it, or that they’d buy a manned shuttle tanker instead of a second or third hand Asia built tug and barge combo,

Yes, I think capital costs matter, and if Americans could get tankers (for example) for $40 million instead of $150+ million that it would make domestic shipping more attractive. As for tug/barge combos—I assume this is a reference to ATBs—the majority are used here in the U.S. Folks abroad tend to prefer self-propelled ships. But to avoid U.S. capital and labor costs we use ATBs, which don’t require unlimited tonnage licenses and provide basically zilch for U.S. sealift needs. How ridiculous.

And as for Hawaii and LPG, the one US West Coast LPG terminal is owned by the Canadian owners of the Canadian terminal… you make it sound like US gas should go to US users or its a waste—an odd “free trader” approach…

I think Hawaii should have the ability to buy U.S. LPG instead of getting it from West Africa: Dislocations in the US Propane Market and the Jones Act

But actually, here’s where Jones Act could work over time, enough LNG bunkering starts happening in the states (and why wouldn’t it at this price differential), and then someone will order some barges and some may eventually go for PR.

Moving bulk LNG by barge is silly. Even the biggest LNG bunkering vessels in the world (which outside of the US are like 90% self-propelled while all US LNG bunkering vessels are all barges) have only a fraction the capacity of an actual LNG tanker.

Yes, they worked around it by resorting to the pipeline and imports. That we import instead of buying domestic is not a point in the law’s favor.

Pretty sure the so called “third proviso” was in the Jones Act, an Act of Congress and not a creation of an agency, Colin….

More extremist rhetoric. I and my fellow Alaskan mariners live lives of relative prosperity due to the Jones Act. Therefore, your categorical statement is untrue. Which disinclines us, and the average voter, to believe any of your rhetoric. Which is how you lose the narrative.

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Think my logic is pretty sound. We have a less modern fleet because we make it so expensive to buy new fishing vessels. Which is counterproductive. And as I recall that shipyard, Dakota Creek Industries, said they would have gone out of business had the Jones Act actually been enforced and no waiver granted.

Stated purpose of the Merchant Marine Act of 1920, which contains the JA:

It is necessary for the national defense and for the proper growth of its foreign and domestic commerce that the United States shall have a merchant marine of the best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval or military auxiliary in time of war or national emergency, ultimately to be owned and operated privately by citizens of the United States…

Have we succeeded or failed in realizing that?

I mean, if you want to make the case the law is a success so long as even a single mariner is making a good living off of it, go for it. But I don’t find that a really honest accounting of the law.

“Resorting to the pipeline”?!? Like it was an out of the ordinary movement of product? Hmmm… well guess the EIA in 2016 is out of touch with it being only an occasional, extraordinary delivery method…

Sorry, I misread your original comment. You are correct and I was wrong in my statement. As I recall the proviso was included due to some transport taking place over the Great Lakes from the Midwest to New England that used Canadian rail in some places.

The Jones Act was enforced. That is the purpose of a waiver: to minimize the penalties of the enforcement for first-time (or well-connected) offender. The fact that a traffic judge might dismiss a speeding ticket for a first time offender does not mean traffic laws are not enforced.

More absolutism from the CI. Rhetoric without realism. We would not have a fishing fleet at all if the protectionism of the Magnuson Act was not enforced. I’d rather have an older fleet due to the Jones Act than none at all.

Just keeping it real… :wink:

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And the Second Amendment was designed to prevent a standing Army… doubt mixed results in achieving objectives matters so much as what would be the impacts of changing the status quo. It clearly didn’t hence all the subsidies they brought in over the years—which says a lot about letting capitalism and free markets handle it…but today, Its the change that has to be examined not whether or not “it worked as intended” to Colin’s satisfaction.

It is incontrovertible that tens of thousands of jobs would be lost, that improved costs to consumers is specious wishcasting, and ship owner operators would simply and clearly benefit. Sounds like we should keep Americans employed just in case you’re wrong about the paradise you see opening in front of repeal.