The True Costs of Repealing the Jones Act
A new study has reignited the debate around the costs and benefits of the Jones Act. Released as we headed into the holiday travel season, the authors assert that the nominal increase to fuel costs they allege is caused by the law is enough to justify its repeal.
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.
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.
Unlike America, China heavily subsidizes its domestic shipping industry to the tune of $130 billion annually and has embarked on a very aggressive military shipping build up over the last decade. Today 96% of world’s shipping containers are produced by China. Analysts argue that the value of economic and espionage alone would be enough for the Chinese government to heavily subsidize shipping in the U.S. market in such a way as to collapse the American shipping industry.
The revelation earlier this year that the Chinese government sent spy balloons with a wide array of high-tech sensors over and through the United States from coast to coast should have served as a wake-up call that China’s goals to expand its control across the globe includes America. 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.
The Jones Act also ensures that American companies can thrive without taxpayer subsidies. Without a vibrant US maritime industry that we can tap into when needed, our defense budget would need to grow substantially to offset this threat. In fact, if the military were to build, maintain and man its own cargo ship fleet for carrying all the supplies that our troops need around the world, it would cost $65 billion, plus additional annual costs for crews, operations and maintenance.
Conversely, the savings on fuel costs the author argues would be realized from repealing the Jones Act, pale in comparison to the economic and national security benefits and savings to the Pentagon budget the law helps promote. There are 40,000 Jones Act vessels operating in the domestic trades and they support nearly 650,000 American jobs and at least $150 billion in annual economic impact. Additionally, as a result of the Jones Act, nearly 75% of the domestic maritime industry’s vessels are available for use in supporting the U.S. military.
Once one understands the stark realities, it becomes clear that the United States must have a robust shipping industry free from foreign influence or pressure to ensure it has a backstop to support its military needs in an emergency. Weakening or discarding the Jones Act would merely give China and other enemies of America a strategic and economic advantage over the U.S. right here at home, something that should give all Americans pause.
George Landrith is the President of the Frontiers of Freedom Institute.
