George Will: Waterways policy is crony capitalism disguised as patriotism
The president has received from one of his employees, Commerce Secretary Wilbur Ross, a report that probably tells Ross’ employer what he wants to hear: that imports of cars — “The Audis are coming! The Audis are coming!” — threaten “national security.” After the president’s yes-man says “Yes” to the national security threat, the president can unilaterally raise taxes (i.e., tariffs which are paid by Americans) to slow the flow of cars to Americans who want them.
Using national security as an excuse for economic foolishness, in the service of cupidity, is nothing new. What is novel nowadays is a legislator standing athwart foolishness, yelling “Stop!” Although it is impossible to imagine Sen. Mike Lee yelling.
The Utah Republican, he of the white shirts, blue suits, subdued ties and measured words softly spoken in stately cadences, lacks the demeanor of a brawler spoiling for a fight. He has, however, just picked one concerning a small sliver of something vast — crony capitalism disguised as patriotism.
The Merchant Marine Act of 1920, aka the Jones Act, was passed after one war and supposedly in anticipation of others. Ninety-nine years later, the nation is in a “national emergency” (presidential disappointment regarding his wall); emergencies and national security crises multiply as the ease of declaring them increases.
Lee’s Open America’s Waters Act of 2019 would repeal the Jones Act’s requirements that cargo transported by water between U.S. ports must travel in ships that are U.S.-built, U.S.-owned, U.S. registered and U.S.-crewed. Colin Grabow, Inu Manak and Daniel Ikenson of Washington’s Cato Institute demonstrate that under — and largely because of — the Jones Act, the following has happened:
One of the nation’s geographic advantages has been minimized by making it off-limits to foreign competition. This increases costs, which ripple through as a significant portion of the costs of goods. Because of the mandates, less cargo is shipped by water, merchant mariners have fewer jobs and more cargo is carried by truck, rail and air, which are more environmentally damaging . Two of America’s most congested highways, I-95 and I-5, are along the Atlantic and Pacific coasts, respectively. Yet the amount of cargo shipped by water along the coasts and on the Great Lakes is about half the volume of 1960. Since then, railroad freight volume has increased about 50%, and volume by intercity trucks has increased more than 200%.
A hog farmer in North Carolina purchases corn feed from Canada rather than Iowa because delivery costs make the Iowa corn uncompetitive. A Hawaiian rancher flies cattle to West Coast feedlots and slaughterhouses to avoid Jones Act shipping costs. Although the United States is the world’s second largest producer of rock salt, Maryland and Virginia buy theirs for winter use from Chile because of Jones Act shipping costs.
The Jones Act illustrates how protectionism creates dependent industries that then squander resources (ingenuity, money) on manipulating the government. The act also illustrates the asymmetry that explains much of what government does — the law of dispersed costs and concentrated benefits.
George Will is a columnist for The Washington Post and can be reached via email.