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More the job-stifling, anti-consumer, price-gouging protectionism known as the Jones Act – Publications – AEI

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AEI More the job-stifling, anti-consumer, price-gouging protectionism known as the Jones Act Writing in the Washington Post, George Will explains how “This 99-year-old federal law is stifling jobs and shifting higher costs to consumers“: One of the nation’s geographic advantages — tens of thousands of miles of coastline and inland waterways — has been minimized by making it off-limits to foreign competition in transportation. This increases transportation costs, which ripple through the production process as a significant portion of the costs of goods. Because of the Jones Act’s costly mandates, less cargo is shipped by water, merchant mariners have fewer jobs, and more cargo is carried by truck, rail and air, which are more environmentally damaging than water transportation. Two of

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More the job-stifling, anti-consumer, price-gouging protectionism known as the Jones Act

Writing in the Washington Post, George Will explains how “This 99-year-old federal law is stifling jobs and shifting higher costs to consumers“:

One of the nation’s geographic advantages — tens of thousands of miles of coastline and inland waterways — has been minimized by making it off-limits to foreign competition in transportation. This increases transportation costs, which ripple through the production process as a significant portion of the costs of goods. Because of the Jones Act’s costly mandates, less cargo is shipped by water, merchant mariners have fewer jobs, and more cargo is carried by truck, rail and air, which are more environmentally damaging than water transportation. Two of America’s most congested highways, Interstate 95 and Interstate 5, are along the Atlantic and Pacific coasts, respectively. Yet the amount of cargo shipped by water along the coasts and on the Great Lakes is about half the volume of 1960. Since then, railroad freight volume has increased about 50 percent, and volume by intercity trucks — responsible for more than 75 percent of federal highway maintenance costs — has increased more than 200 percent.

A hog farmer in North Carolina purchases corn feed from Canada rather than Iowa because delivery costs make the Iowa corn uncompetitive. A Hawaiian rancher flies cattle to West Coast feedlots and slaughterhouses to avoid Jones Act shipping costs. Although the United States is the world’s second-largest producer of rock salt, Maryland and Virginia buy theirs for winter use from Chile because of Jones Act shipping costs.

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The Jones Act illustrates how protectionism creates dependent industries that then squander resources (ingenuity, money) on manipulating the government. The act also illustrates the asymmetry that explains much of what government does — the law of dispersed costs and concentrated benefits. The act’s likely annual costs to the economy (tens of billions) are too widely distributed to be much noticed; its benefits enrich a relative few, who use their ill-gotten profits to finance the defense of the government’s favoritism.

More the job-stifling, anti-consumer, price-gouging protectionism known as the Jones Act
Mark Perry

Mark Perry
Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan’s Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

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