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How the Jones Act Harms America

Summary:
Why can’t you take a cruise on a major cruise line from New York to Miami or from San Francisco to Honolulu or even from Los Angeles to Seattle? What law contributes to the congestion that we see on major U.S. highways, especially on both coasts? What law not only raises the cost of shipping goods within the United States but also creates extra carbon dioxide? The answer to the first question is the Passenger Vessel Services Act of 1886. It prohibits foreign ships from transporting passengers between two places in the United States. There is a stiff fine per passenger, currently 2, for every breach of this law. The answer to the second two questions is the Jones Act. The law, whose official title is the Merchant Marine Act of 1920, is named after Wesley Jones,

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How the Jones Act Harms America

Why can’t you take a cruise on a major cruise line from New York to Miami or from San Francisco to Honolulu or even from Los Angeles to Seattle? What law contributes to the congestion that we see on major U.S. highways, especially on both coasts? What law not only raises the cost of shipping goods within the United States but also creates extra carbon dioxide?

The answer to the first question is the Passenger Vessel Services Act of 1886. It prohibits foreign ships from transporting passengers between two places in the United States. There is a stiff fine per passenger, currently $762, for every breach of this law. The answer to the second two questions is the Jones Act. The law, whose official title is the Merchant Marine Act of 1920, is named after Wesley Jones, the Republican Senator from Washington who introduced the law that year. It does for cargo what the Passenger Vessel Services Act does to passengers. Specifically, it imposes a four-part test for cargo to be shipped by water between two U.S. ports. The ships must be (1) U.S.-owned, (2) crewed by Americans, (3) registered in the United States, and (4) built in the United States.

This is from my latest Defining Ideas article at Hoover, “How the Jones Act Harms America,” October 7, 2019. In the article, I take on the rationale given by Senator Wesley Jones for his act and point out, as other authors have also, some unintended, but completely predictable, consequences of the Jones Act.

By the way, comments on the Hoover site on my Defining Ideas articles are rarely useful, but in this case I get some civil pushback that is worth looking at.

HT2 Peter Goettler, President and CEO of the Cato Institute, for reminding me, in a talk at Palo Alto last month, that the Jones Act is a live issue.

P.S. Whenever I think about the Jones Act, I think about this song that I heard on the radio at a very early age. My mother and I used to sing it together.

David Henderson
David Henderson is a British economist. He was the Head of the Economics and Statistics Department at the OECD in 1984–1992. Before that he worked as an academic economist in Britain, first at Oxford (Fellow of Lincoln College) and later at University College London (Professor of Economics, 1975–1983); as a British civil servant (first as an Economic Advisor in HM Treasury, and later as Chief Economist in the Ministry of Aviation); and as a staff member of the World Bank (1969–1975). In 1985 he gave the BBC Reith Lectures, which were published in the book Innocence and Design: The Influence of Economic Ideas on Policy (Blackwell, 1986).

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