Podcast #99: Unraveling the Jones Act with Colin Grabow

Episode #99 of the Econ Dev Show Podcast is out.

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Join Dane as he dives deep into the intricacies of the Jones Act with guest Colin Grabow, a research fellow at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies.

In this episode, we discuss the requirements and implications of the Jones Act, and how it affects the cost and efficiency of shipping within the United States. Colin provides an in-depth analysis of the Act's effects on economic development, with a particular focus on its impacts on the coastal regions of Texas. We also explore potential paths forward and solutions to mitigate the negative effects of the Act on the domestic economy.

Takeaways

1. The Jones Act, or Section 27 of the Merchant Marine Act of 1920, mandates that goods transported by water within the U.S. must use a vessel that is U.S. flagged and registered, built in the U.S., at least 75% owned by American citizens, and crewed by Americans.
2. The Act results in expensive and inefficient shipping due to the high costs of building and operating Jones Act-compliant ships.
3. The costs of building a Jones Act ship can be up to five times more than building a similar ship in another country. Similarly, the operating costs of these ships are approximately three times higher than their foreign counterparts.
4. The high shipping costs resulting from the Jones Act can negatively impact economic development, especially in regions that rely heavily on shipping, like coastal Texas.
5. Despite its international export capabilities, Texas sends minimal crude oil to the East Coast, primarily due to the high cost of Jones Act-compliant shipping.

Episode Links

• Colin Grabow | Cato Institute
• Colin Grabow (@cpgrabow) / Twitter
• Colin Grabow | LinkedIn
• Fed up with High Gas Prices and Slow Amazon Deliveries? Blame These 2 Century-Old Laws That Need to Be Repealed. | Cato Institute — To avoid higher costs, many companies are forced to turn to imports.
• Against the Jones Act - Truth on the Market Truth on the Market
• Protectionism and the Development of the U.S. Maritime Industry | The Regulatory Review — U.S. maritime protectionism fails policy and economic goals.
• Adam Smith Would Oppose the Jones Act | Cato Institute — U.S maritime policy, both for the country’s economic prosperity and national security, is crying out for a dramatic overhaul.
• The Jones Act: A Burden America Can No Longer Bear | Cato Institute — How an archaic, burdensome law has been able to withstand scrutiny and persist for almost a century.
• Rust Buckets: How the Jones Act Undermines U.S. Shipbuilding and National Security | Cato Institute — Policymakers must consider either major reform of the law or outright repeal.
• Amazon.com: The Power of Productivity: Wealth, Poverty, and the Threat to Global Stability by William W. Lewis

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