I keep reading/hearing about the Jones Act in my news and data upkeep. It’s an interesting bit of American protectionism. Peter Zeihan had something to say about it a few weeks back, he was for getting rid of it which would explode the domestic shipping in the US, supercharge the economy and lead to great things.
This guy doesn’t like it because he thinks China will use it as an extension of the belt and road initiative and then explode a bomb on the Mississippi and take over the country or some shit.
I’m quite pro-business, as you know, but I’d like to learn more, thus I present to you
The Jones Act Thread.
The True Costs of Repealing the Jones Act | RealClearPolicy
But contrary to its critics’ claims, the Jones Act is as needed today as it was 100 years ago when it was adopted. Numerous studies, including one conducted by U.S. Government Accountability Office, have not found any increase in consumer costs related to the law. Not only that, but it has also proven to be a critical tool that protects America’s national security while promoting a strong domestic maritime base.
So, what is it?
The Jones Act – which requires that any shipping or transportation services going between two or more U.S. ports must be on American built, American crewed, and on American owned and flagged ships – was passed after World War I in an attempt to make sure that our shipbuilding and ship repairing industries were capable of supporting our military and commerce needs in a time of crisis. At the start of the war the U.S. had been caught flat footed and American policymakers didn’t want the country to be in such a position again.
Today, the Jones Act is a crucial arrow in America’s quiver that continues to protect against foreign threats to the homeland – particularly Chinese economic and military predation. Repealing the law and effectively allowing the communist country to dominate shipping within our own borders would be more than foolish. It would be disastrous and would bring the U.S. within the ambit of China’s Belt and Road initiative, which has seen the country invest some $20 billion in foreign seaports all across the globe and has allowed it to dominate seven of the world’s busiest ports.
So, what’s this guy worried about?
Without the Jones Act nothing would prevent Chinese ships from sailing up and down our more than 12,000 miles of inland waterways pretending to be shipping goods while actually spying on America and collecting sensitive private information or transporting special operators and military equipment deep into our heartland.
OK, and here’s the government report (working paper) I haven’t read the whole thing yet, dunno if you have to pay or not, or can DL it, which I don’t like to do:
We study how the Jones Act — a 100-year-old U.S. regulation that constrains domestic waterborne shipping — affects U.S. markets for crude oil and petroleum products. We collect data on U.S. Gulf Coast and East Coast fuel prices, movements, and consumption, and we estimate domestic non-Jones shipping costs using freight rates for Gulf Coast exports. We then model counterfactual prices and product movements absent the Jones Act, allowing shippers to arbitrage price differences between the Gulf and East Coasts when they exceed transport costs. Eliminating the Jones Act would have reduced average East Coast gasoline, jet fuel, and diesel prices by $0.63, $0.80, and $0.82 per barrel, respectively, during 2018–2019, with the largest price decreases occurring in the Lower Atlantic. The Gulf Coast gasoline price would increase by $0.30 per barrel. U.S. consumers’ surplus would increase by $769 million per year, and producers’ surplus would decrease by $367 million per year.
With all the oil and NG coming out of the US now, one thinks that getting rid of it would result in a shipping boom.
Here’s the Zeihan video explained by some other guy:
The original video:
And another one on Port of Savanah
Given that the US is revamping their domestic supply chain, it seems reasonable that relaxing the Jones Act would quicken the pace a bit. Shipping alone could bring in way more say, rare earth elements, which would spur the separating and magnet producing capabilities that the US wants to do in-house as opposed to relying on China.
Anyway, it’s a niche nerd thread. Enjoy!