Great Antidote Archive: Jones Act with Colin Grabow

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Owen Holzbach for AdamSmithWorks
Colin Grabow

Economics clashes with National Security (maybe) in debates about the Jones Act. Find out what the fuss is about The Merchant Marine Act of 1920 is really all about. 
Prices are the result of complex systems and individual decisions. But some government regulations are clearly tied to higher prices for identifiable goods.

A dip into the Great Antidote Archives can help provide detail about a topic hot in the news: The Jones Act. 

The Jones Act (The Merchant Marine Act of 1920) is a federal statute that, among with other things, requires shipping between US ports to be conducted by ships built, owned, and staffed by US citizens or permanent residents. Many economists believe that the Jones Act contributes to higher prices faced by American consumers. Colin Grabow, a policy analyst at the Cato Institute who focuses on trade protectionism, talks with host Juliette Sellgren, in this episode of The Great Antidote from April 2021, about the Jones Act and related questions.

1.            The Jones Act applies to water transport between two ports within the United States. Grabow lists four conditions that vessels must meet under this act. What are the four conditions and which conditions seem the most or least harmful ?

2.            As a result of the Jones Act requirement that vessels be built in the United States, companies are forced to spend more money on vessels. This, in turn, results in less innovation, older products, and more pollution. Are there any other effects that may result?

3.            Special interests and lobbying by domestic travel vessel companies has led to the Jones Act remaining in place. The number of people harmed by the regulation is MUCH larger than the number of people who benefit. How does the principle of concentrated benefits and dispersed costs explain how vessel lobbyists have been successful in maintaining the Jones Act?

4.            The Jones Act, like most regulations, creates a situation in which preferences are distorted. For example, many farmers purchase animal feed from foreign sources even though the distance is further because the Jones Act makes domestic water shipping more expensive. What other unintended consequences might economists look to? 

5.            There is little argument for trade protectionism from an economics perspective. Who much weight should arguments against trade protectionism be considered in the realm of geopolitical politics and national security?

We love learning about ideas and encourage you to contribute to the conversation. What do you think? Feel free to comment.

Related Links:
Jon Murphy, Would Adam Smith Have Supported the Jones Act? at Speaking of Smith
Jon Murphy on the Jones Act and Adam Smith, a Great Antidote podcast
Pierre Lemieux, Jones Act: A Great Protectionist Success, at EconLog