Updating the Jones Act for the 21st Century: Why We Should Stop Calling for “Repeal” of This Time‐​worn Law

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In a perfect world, there would be no Jones Act.

Ships from any nation would be able to transport goods and people freely between American ports, and U.S. consumers would be able to enjoy an abundance of products from around the world at significantly lower prices.

Unfortunately, we don't live in a perfect world.

In our frustratingly imperfect existence, free trade is obstructed by protectionist cabotage laws, and the Jones Act is among the worst offenders. The restrictions imposed by the Jones Act cost the American economy billions of dollars. The Act itself is propped up by special interests and specious arguments.

As free market advocates, we justifiably take pride in our pursuit of the perfect, a world without the Jones Act. The philosopher Plato would have commended our virtue and encouraged us that somewhere in the great beyond there is a world of perfect free markets. But he would also have urged us to recognize that we currently live in a dark cave of sorts, and the best we can attain is a reflection or limited version of the perfect. It would take Plato's student Aristotle to drive home the point that in this imperfect existence we can still do good.

To keep our vision of the perfect from becoming the enemy of the good, we must immerse ourselves in the world at hand and engage with the way the public sees the Jones Act. That necessarily involves reframing the issue in a way that is sympathetic to their perspective. This is how we can position our reform proposals for practical success.

Because the Jones Act affects the non-contiguous territories in a more immediate and obvious way, Hawaii has been at the forefront of the Jones Act debate for years. Even in simple awareness, the average Hawaii citizen is likely to know more about what the Jones Act is — and why it matters — than most other Americans.

The good news is that education and awareness have led to a shift in popular opinion toward reform. For example, the state's largest daily newspaper, the Honolulu Star-Advertiser, hardly a crusader for free market reform, has conducted two unscientific public online polls on the Jones Act in the past eight years. In 2012, only 18 percent of newspaper subscribers voting in the poll wanted to keep the Jones Act. The remainder were split between repeal, 37 percent, and creating an exemption for Hawaii, 45 percent. In 2017, opposition to the status quo was even stronger. Only about 12 percent of readers who responded wanted to keep the Act. About 50 percent favored outright repeal of the "archaic" law and 34 percent said the Act was outdated and needed to be modified.

Keep in mind that Hawaii is effectively a one-party state, dominated by Democrats and strongly influenced by unions. On paper, Hawaii residents should be Jones Act defenders and apologists.

But years of education and advocacy from the Grassroot Institute of Hawaii and other groups championing economic freedom have helped change the way the public sees the Jones Act. In the recent general election, we even saw both major party candidates for Hawaii's 1st Congressional District campaign in favor of Jones Act reform.

What can we learn from this? First, that states matter. Jones Act reform is usually seen as a federal issue, divorced from grassroots efforts in the states. The deep pockets of the Jones Act lobby don't have to defend the Act on a state-by-state basis. They rely on support at the federal level — from pro-military associations, shipbuilding companies, ocean cargo transport companies and various unions — to persuade Congress that the Act should be retained.

Reformers do not have the same luxury. The think tanks, activist groups, businesses, and private citizens who oppose the Jones Act will have to change hearts and minds in every state. That's the only way to break the pro-Jones Act consensus in Congress that has frustrated reform for decades. We must drive the demand for change from the ground, by persuading voters at the state level. This will require help from state groups and think tanks that understand local politics and know how to make the Jones Act a local issue.

From that comes the second important lesson: Know what works and what doesn't.

Over the years, the Grassroot Institute of Hawaii has learned which messages resonate and which ones fall flat when it comes to the Jones Act. Ask Hawaii residents what's wrong with the Act and they will tell you, "It raises the cost of living." They might add, "It's bad for business" or, "It makes our groceries more expensive." What you won't hear are some of the points that we reformers are most fond of discussing — things like the dwindling number of ships in the Jones Act fleet, or the cost of the Act to specific industries. As is the case with so many economic issues, the most persuasive argument comes down to the individual's own wallet.

Which leads us to the national security paradox.

Over and over, reformers have effectively demonstrated that the Jones Act has not helped our military readiness or national defense. Despite the fact that national security is its raison d'etre, the Jones Act has proven to be ineffective in maintaining a strong merchant marine.

The problem is that, failure or not, the national defense argument so far has been sufficient to convince Congress to preserve the Jones Act. On paper, critics defeat the argument. But the defense rationale is so strong, and the interests behind it so influential, that we are unlikely to make any headway against the idea that the Act is fundamental to our national security.

So what do we do? We practice the martial art of judo. We move out of the way of our opponent's strength and momentum and use it to achieve real progress toward a modernized Jones Act.

The two most politically powerful arguments put forth to defend the Jones Act are national security and jobs. We have invested untold time and energy confronting these arguments head-

on, with little effect. While we have successfully proved that they are fallacious and unsupported by data, we have not broken their power to stymie repeal efforts.

Instead of pushing for total repeal or an ideal "pure" road toward eliminating the Jones Act, we should consider embracing a strategy that allows small successes to lead us to a meaningful victory.

Let us start with proposals that would sidestep the national defense and jobs rationales. For example, a modification of the build requirement which would allow U.S. ocean transportation companies to buy ships from American allies such as Japan and Korea. This would take much of the strength out of the national security argument — especially since the American crew requirement would remain. In fact, one could claim that this reform would strengthen military readiness and response. It also would fracture union opposition, as a change to the build requirement would not pose a substantial threat to crews and dockworkers.

In short, by only removing the Jones Act's U.S.-build requirement, and not tampering with the U.S.-crewed, U.S.-flagged, and U.S.-owned provisions, we would leave intact the other side's values of national defense and protection of most union jobs. This would allow many Jones Act loyalists to embrace a measure of reform — not abandoning, but updating the Jones Act for the 21st century.

Supporters of the Jones Act have tried to downplay its impact on consumers by producing absurdities such as the American Maritime Partnership's notorious report earlier this year which claimed that on two days in March 2018, prices of a highly curated assortment of goods at a Walmart store in San Juan, Puerto Rico happened to be less than at one of the retailer's stores in Jacksonville, Florida.i That study was a futile attempt to negate the cost-of-living argument before it catches on beyond the shores of Hawaii and Puerto Rico.

Ultimately, the arguments for the Jones Act are based largely on jobs and national defense. We take those away not by forcing its supporters to defend them, but by refusing to challenge them. This leaves Jones Act supporters with nowhere left to go.

The economic impact of moderate initial reforms will help us demonstrate the benefits of a complete overhaul of the Act. In this way, we will continue to grow momentum and a grassroots movement that understands how removing the Jones Act's protectionist restrictions will benefit Americans in a very tangible way.

To be clear, we must remain committed to the Platonic vision of a world without the Jones Act. It is still before us, just like the ideal of abolishing other barriers to free international trade. But we cannot achieve that goal in one leap. Instead, we must work within political reality and craft a strategy based on reforms that can achieve consensus. That means defusing the national security and jobs arguments by offering reforms that takes them off the table as a concern. And it means working with state organizations to educate voters on what the Jones Act is and why they should care.

In a perfect world, there would be no Jones Act. But we are not in a perfect world. So let us embrace the Aristotelian approach and find the virtue within the merely good rather than frustrating ourselves with the elusiveness of the perfect. Rather than calling for repeal, let's rally together different interests who can all embrace updating the Jones Act for the 21st century.

Notes

i John Reeve, “Impact of the U.S. Jones Act on Puerto Rico,” Reeve & Associates and Estudios Técnicos Inc., July 2018, p. 6, https://tinyurl.com/y77scv5y.

The opinions expressed here are solely those of the author and do not necessarily reflect the views of the Cato Institute. This essay was prepared as part of a special Cato online forum on The Jones Act: Charting a New Course after a Century of Failure.

Keliʻi Akina

Keli‘i Akina is President and CEO of the Grassroot Institute of Hawaii.