How the Jones Act Hurts the U.S. Economy

0:00 Speaker 1 The Jones Act. Most Americans don’t know what it means. Well, we’re going to find out. Now. What is today is Rachel Gresler, and she’s the economist at the Advancement of American Freedoms. And well, Rachel, the Jones Act, what the heck is it?

0:23 Speaker 2 Yeah, you’re right, John, Most Americans don’t know about this law because it was enacted in nineteen twenty. Is an attempt to protect America and actually expand shipbuilding here, and instead it has done the opposite, because what the law does is it requires that any shipments between two US ports, the domestic shipments, they must occur on a US built

0:47 US flag ship that is seventy five percent US owned, seventy five percent US crewed. And so while the intent here was to have a vibrant, you know, shipping industry and a huge fleet in the US, the opposite is a and we only have ninety three Jones Act compliant ships in the US today, and that’s down from well

1:07 over four hundred and nineteen fifty. And so all this is doing is just restricting the ability of US companies to obtain things domestically from one port to another, and instead they’re often going overseas, and we’re importing things that we should be just relying on domestically.

1:22 Speaker 1 Now, Rachel, you said we were down to ninety three. We had four hundred and nineteen fifty when they created the Act in nineteen twenty. How many do you think we had?

1:33 Speaker 2 Oh, I think it was even more than that. The problem here is that when you create this protectionist measure, there’s no competition, and so there’s no incentive for the US to be producing more ships and to be producing them more efficiently. And the few that we have left, you know, the ninety three that we have, they’re ancient

1:53 and so it’s more expensive to ship on those Jones compliant ones and oftentimes there’s just not available supply.

2:02 Speaker 1 Wow. And recently that there’s some examples made. I know I’ve read in one of the newspapers about how it helped get a product of California that had no product.

2:15 Speaker 2 Yes, you see companies. I think Southwest Airlines is one of them that is now able to get you know, fuel coming from the Gulf from Texas and Louisiana up to California on these ships because there’s more supply now available that they don’t have to all be the Jones Act of client ones and beyond just you know, jet fuel,

2:36 it’s crude oil, it’s gasoline, it’s even the things that are going into the inputs for fertilizer, which we know a big causing a big problem for American farmers. So I think the fact that the President has waived the Jones Act is a great thing, absolutely for the moment when we’re seeing these soaring energy costs, but this could

2:53 be a good policy to keep in place for the future as well.

2:57 Speaker 1 I agree one percent. I mean and kind of you work for a great organization, the advancement of American freedom. What else are you guys working on.

3:16 Speaker 2 Oh, we’re working on a lot. You know, our goal here is preserving our constitutional heritage. But we’ve been doing a lot to essentially try to get the problems that government’s creating out of the way and allow Americans or on their own. And one thing we’ve actually released today, and I just came from a hill event, was our

3:35 Index of Economic Freedom. And so we’re looking at life liberty and the pursuit of happiness and the ability of Americans to pursue those things across the US, and also looking at the differences in states, And what we consistently find is that when you have states that are having policies that are letting Americans be more in control than

3:55 the government is through lower taxes, fewer regulations, that’s where you see them thriving. That’s where the jobs are being created and the incomes are rising, and people are more free to pursue those American ideas of white liberty pursue to happiness.

4:09 Speaker 1 Now, the President Trump did this by executive order. I believe what happens at the end of you know, if the Democrats go get in, are they pro Jones ACTO against the Jones Act.

4:26 Speaker 2 I think most of them are pro Jones act. So right now, the waiver that’s in place is set to expire on August sixteenth, and the White House has said that they’re considering another extension of it because I think they see it as helping keep the prices down at what otherwise even higher than they are, you know, But

4:42 there are also some Republicans who support this in Congress, essentially those who are in the districts that have the little ship building that does happen in the US. But certainly I think it’s more of a threat if the Democrats come in that they would want to keep this in place.

5:00 Speaker 1 I don’t even scratch my head. I would I would say, why, Well, what’s the advantage. I mean, you’re protecting ninety three ships.

5:10 Speaker 2 Yeah, protecting a dying industry that’s still dying. Yes, it’s just ironic because if we did open it up, then there would be the incentive to compete more in the US, and we would probably see more jobs in shipbuilding in the US, and we would see better ships that were more efficient and then more ancient. And so it’s the

5:28 opportunity to not only expand the jobs in the shipbuilding, but just think of the costs for Americans and for businesses across the US if they no longer have to import something from Asia, you know that they could instead get from a neighboring state just because of the limited supply of the ships. There’s just huge opportunities here.

5:47 Speaker 1 Well, Rachel Gressler, thank you so much for coming on the Economist for the American the advancement of American freedom, and that’s a great cos And thank you for coming on, and let’s catch up again real soon, my pleasure.

6:04 Speaker 2 Thanks so much. John