Regarding the Jones Act: there is one argument I keep seeing made in favor of repeal which seems wildly wrong to me. From the cato.org presentation (bolding mine):
One of the main causes of that decline is the onerous domestic‐build requirement of the Jones Act, which prohibits U.S. shippers from operating vessels constructed abroad. American‐built coastal and feeder ships cost between $190 and $250 million, whereas the cost to build a similar vessel in a foreign shipyard is about $30 million.23 Accordingly, U.S. shippers buy fewer ships, U.S. shipyards build fewer ships, and merchant mariners have fewer employment opportunities to serve as crew on those nonexistent ships.
This appears to me to be literally claiming that if companies purchase cheaper foreign-built ships instead of domestic-built ones, this will drive domestic build rates up. By what mechanism is this supposed to occur?
The parts argument is very plausible—analogous to how machine tool manufacturers are beholden to more concentrated machine tool parts suppliers upstream. It seems like it isn’t the case, though:
U.S.-built vessel can be assembled with major foreign components such as engines, propellers, and stern and bow sections. This interpretation has been consistent from the late 1800s.
This is even more hilarious, because it means we used protectionism to preserve ship assembly while using it to devour ship parts manufacturing. We need the ability to make engines and hulls domestically a hell of a lot more than we need people to bolt ’em together, I expect; the traditions of knowledge for all of those are surely harder to redevelop than the final assembly step alone.
I think the monopoly milking is basically right, because of a different article I read on this some years ago, and cannot now relocate. Their central pitch was that the American shipping fleet had greatly declined since the introduction of the Jones Act, and they had a chart of either hulls or displacement over time. At the time I objected to the graphic because it showed a sharp decline starting in the 1960s, which is two generations of ships after the act was passed—this suggests a different cause than the presence of the law. However, in the cato,org piece, they relate this tidbit:
Even the ships themselves have been transformed. Today a 1,300-foot ship with a cargo capacity of more than 18,000 TEU (twenty‐foot equivalent units, roughly equivalent to a shipping container) sails with a crew of 22 and can manage with a mere 13.39 As recently as the mid‐1970s, more than 30 people were required to operate a container ship of a significantly smaller size.
The simplest story I can imagine which is consistent with these details is that American shipping companies were milking the monopoly, and so they skipped the last wave of major design improvements (and probably every one since).
The down side is that it takes 10-15 years for something like a new shipyard to come online; once introduced to 30x more firms to compete with, I expect they will simply die rather than adapt to innovation pressure.
Of course, the old shipyards will still be there for anyone who can make better use of them. Hm.
Regarding the Jones Act: there is one argument I keep seeing made in favor of repeal which seems wildly wrong to me. From the cato.org presentation (bolding mine):
This appears to me to be literally claiming that if companies purchase cheaper foreign-built ships instead of domestic-built ones, this will drive domestic build rates up. By what mechanism is this supposed to occur?
US shipyards not being able to use non-usa components? Or US shipyards milking the monopoly so not being otherwise competitive?
The parts argument is very plausible—analogous to how machine tool manufacturers are beholden to more concentrated machine tool parts suppliers upstream. It seems like it isn’t the case, though:
This is even more hilarious, because it means we used protectionism to preserve ship assembly while using it to devour ship parts manufacturing. We need the ability to make engines and hulls domestically a hell of a lot more than we need people to bolt ’em together, I expect; the traditions of knowledge for all of those are surely harder to redevelop than the final assembly step alone.
I think the monopoly milking is basically right, because of a different article I read on this some years ago, and cannot now relocate. Their central pitch was that the American shipping fleet had greatly declined since the introduction of the Jones Act, and they had a chart of either hulls or displacement over time. At the time I objected to the graphic because it showed a sharp decline starting in the 1960s, which is two generations of ships after the act was passed—this suggests a different cause than the presence of the law. However, in the cato,org piece, they relate this tidbit:
The simplest story I can imagine which is consistent with these details is that American shipping companies were milking the monopoly, and so they skipped the last wave of major design improvements (and probably every one since).
The down side is that it takes 10-15 years for something like a new shipyard to come online; once introduced to 30x more firms to compete with, I expect they will simply die rather than adapt to innovation pressure.
Of course, the old shipyards will still be there for anyone who can make better use of them. Hm.