I think the Jones Act has similarities to the old sugar protection tariffs. In principle they were to protect domestic production of cane sugar but the acres under sugar cultivation was minuscule comparatively and basically only benefitted a small part of Florida. There was easy access to the Carribbean sugar growing markets who had much lower costs but the tarriffs kept those imports at the margin. Why was this small agricutural interest so powerful? The answer lay in the fact that the price of hydrogenated corn starch that was by far the major sweetener by tonnage in US was pinned to....you guessed, the price of Domestic sugar.
The Jones Act is not protecting shipbuilding as your article demonstrates but what it does protect is the shipping interests who control the shipping to and from Hawaii, Alaska, Guam and Puerto Rico; not to mention the railroad companies that have coast to coast monopolies on freight. There are thousands of TEU of empty containers moving up and down and between the US coasts but due to the cabotage rules supported by the Jones Act they cannot be utilized. Ships sail empty by Hawaii back to Asia and could divert at marginal cost but they cannot and Matson, Pasha and others do very well from their protected domain. The cost of everything to the residents of the States involved reflects the extra rent being taken, thanks to the Jones Act.
I wonder if a similar explanation can explain what is going on in the defense industry. We can't build enough of the stuff we want (missiles, ships, you name it) however the large majors are profitable and divert ~50% of their profit back to shareholders instead of increasing capacity. It's not like the money isn't there.
I'm increasingly of the opinion that if the government is going to step in they do so directly. Enough beating around the bush like the jones act. If you want to increase US shipbuilding through subsidies and regulation then do so. Don't pass regs hoping 2nd order effects end up where you want them.
I don't understand. You're saying we use boats less cuz inconvenient therefore demand doesn't rise therefore it's not worth making a shipyard? If someone made a shipyard wouldn't it be more convenient to use a boat and demand would rise again?
I think the Jones Act has similarities to the old sugar protection tariffs. In principle they were to protect domestic production of cane sugar but the acres under sugar cultivation was minuscule comparatively and basically only benefitted a small part of Florida. There was easy access to the Carribbean sugar growing markets who had much lower costs but the tarriffs kept those imports at the margin. Why was this small agricutural interest so powerful? The answer lay in the fact that the price of hydrogenated corn starch that was by far the major sweetener by tonnage in US was pinned to....you guessed, the price of Domestic sugar.
The Jones Act is not protecting shipbuilding as your article demonstrates but what it does protect is the shipping interests who control the shipping to and from Hawaii, Alaska, Guam and Puerto Rico; not to mention the railroad companies that have coast to coast monopolies on freight. There are thousands of TEU of empty containers moving up and down and between the US coasts but due to the cabotage rules supported by the Jones Act they cannot be utilized. Ships sail empty by Hawaii back to Asia and could divert at marginal cost but they cannot and Matson, Pasha and others do very well from their protected domain. The cost of everything to the residents of the States involved reflects the extra rent being taken, thanks to the Jones Act.
I wonder if a similar explanation can explain what is going on in the defense industry. We can't build enough of the stuff we want (missiles, ships, you name it) however the large majors are profitable and divert ~50% of their profit back to shareholders instead of increasing capacity. It's not like the money isn't there.
I'm increasingly of the opinion that if the government is going to step in they do so directly. Enough beating around the bush like the jones act. If you want to increase US shipbuilding through subsidies and regulation then do so. Don't pass regs hoping 2nd order effects end up where you want them.
I don't understand. You're saying we use boats less cuz inconvenient therefore demand doesn't rise therefore it's not worth making a shipyard? If someone made a shipyard wouldn't it be more convenient to use a boat and demand would rise again?