Reblogged:The Jones Act vs. US Shipbuilding

[Gus Van Horn blog]

Veronique de Rugy has written a piece that can double as a short primer on that century-plus old piece of cronyism known as the Jones Act.

It is interesting to compare its remit with its performance:

Image by United States Federal Government, via Wikimedia Commons, public domain.

Since 1920, this statute has been justified as a means of bolstering the U.S. maritime industry for purposes of national security -- we need American ships to fight American wars! However, as Colin Grabow writes in one of his many papers on the act, "A century of evidence supports the conclusion that the Jones Act has failed in its main objectives while imposing substantial economic costs." [bold added]

Most of the remainder of the piece explores these costs -- which are substantial indeed. Most striking to me is just how much it has "bolstered" the American shipbuilding industry:

According to Cato data, U.S. shipbuilding output is less than 1% of that of China and Korea -- a startlingly low number. Grabow again:

The U.S. Maritime Administration (MARAD) last published annual data on U.S. shipyards in 2004 and noted that there were 89 shipyards, including 4 public shipyards, 9 active yards, 15 shipyards with build positions that have not produced a ship in two years, 27 repair yards, and 34 top-side repair yards... This pales in comparison to shipyards in Asia. Japan, for instance, currently has more than 1,000 shipyards, and it is estimated that China has more than 2,000. There are also only 7 active major shipbuilding yards in the United States, as compared to roughly 60 major shipyards in Europe (major shipyards are defined as those producing ships longer than 150 meters).

The Jones Act, and the reduction in demand that it triggered, hasn't prevented -- and in fact probably caused -- the closure of 300 domestic shipyards since the early 1980s. The lack of U.S. shipbuilding has meant a significantly diminished ability to transport military equipment and supplies. [bold added]

This will hardly surprise anyone with a scintilla of economic literacy, given earlier figures showing that building a ship here costs seven times (give or take) than building a similar one does elsewhere. With "bolstering" like this, it is amazing we have a shipbuilding industry at all, and I'd wager most or all of that is subsidized.

The rest is equally eye-opening and I highly recommend it.

-- CAV

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