The Deep End of the Swamp

I f you’ve never heard of the Jones Act, there’s a good reason. It stays mostly hidden in the deepest part of “the swamp” of America’s special-interest groups, avoiding the light of day lest Americans realize how much damage it has inflicted on them — and how much of the government it has corrupted — for generations on end.

The Jones Act requires any ship transporting goods between two American ports to be manufactured, owned, and crewed by Americans. It was enacted after World War I to preserve America’s then-mighty merchant marine, with the stated purpose of encouraging commerce, protecting the nation’s shipbuilding industry, and ensuring that the nation would have enough sailors and ships for times of war and national emergency.

Today, the law only undermines those purposes, and it’s time for Congress and the administration to stop pretending otherwise. The law functions as a massive preference for imports and exports over domestic shipping, by penalizing the latter. It has ruined America’s oceangoing shipbuilding industry, and its meager national-security benefits largely disappeared decades ago.

Many proponents of the Jones Act concede its dire economic consequences, but they argue that the law is important for national-security reasons. Adam Smith himself defended similar laws on similar grounds. “The defense of Great Britain,” he wrote in The Wealth of Nations, “depends very much upon the number of its sailors and shipping.” The Navigation Acts were, therefore, “perhaps, the wisest of all the commercial regulations of England.”

But the Navigation Acts had no significant requirement that British merchant ships be built in Britain. And they severely restricted foreign vessels’ access to British ports for both domestic and international trade, so the Navigation Acts did not penalize domestic commerce as the Jones Act does. The Navigation Acts were terrible — they were among the grievances that sparked the American Revolution — but they were better than the Jones Act.

As for military utility, virtually any 18th-century merchant vessel could be used as a privateer to prey on enemy shipping and serve in other naval roles, so a strong merchant marine was synonymous with a strong navy. But what was true in the age of sail did not last long into the age of battleships. By the time the Jones Act was passed, commercial ships had no military use other than to transport men and matériel, and the divergence in vessel design has only widened since.

America’s merchant marine played a heroic role in World War II, and suffered heavy losses. But since then, its military value has steadily diminished. In 1976, the Ready Reserve Force (RRF) was created so that the U.S. could own and maintain a transport fleet ready to sail at a moment’s notice. Then, during the Reagan administration, the Pentagon elevated “strategic sealift” to a major naval function, in keeping with America’s global interests and the need to project force quickly to potential hot spots all around the world. Accordingly, the Reagan administration invested heavily in fleets of specialized sealift vessels, abandoning the merchant-marine model of the Jones Act for all practical purposes.

Modern U.S. military strategy calls for supply ships that are faster, lighter, and more flexible, while the trend in commercial shipbuilding is toward larger and slower-moving transport vessels that are far less maneuverable and require more depth below the waterline than most ports can provide. For any unexpected surge in sealift needs, defense planners rely on RRF ships, the vast majority of which are foreign built — and on foreign charters.

The special interests that depend on the slow poison of the Jones Act have a well-funded array of lobbyists and advocacy groups. One of these is the Lexington Institute, whose Loren Thompson recently wrote that “the U.S. military relies on U.S.-flagged vessels, both those engaged in domestic and those in international trade, to support overseas military operations in wartime.”

This is false. Since the Reagan administration, only a small handful of U.S.-flagged vessels have been used for any military purpose, and none of them were part of the Jones Act fleet engaged in domestic trade. They are too expensive, take too long to activate, and usually can’t be spared because — under the Jones Act — nobody else is allowed to ply their routes. It’s true that several thousand U.S. merchant mariners have been called to support military transport operations, but the Jones Act is the most costly and destructive possible way to ensure that the military has the mariners it needs.

The 1991 Gulf War revealed the total military obsolescence of the Jones Act. More ships were needed than were available in the RRF, but rather than activating the U.S. merchant marine, which would have taken too long and entailed major commercial disruptions, ships were chartered on the basis of a worldwide request for proposals. Though the Pentagon gave preference to American ships, in the end only about 32 out of 359 transport ships used in the Gulf War were commercial American ships, all of them apparently foreign built and therefore not part of the Jones Act fleet. The wars in Iraq and Afghanistan relied even more heavily on the Pentagon’s own transport ships.

Meanwhile, virtually every time there is a national emergency, the Jones Act needs to be waived so victims can get the supplies they urgently need.

Indeed, the Jones Act arguably undermines national security. Another Jones Act advocate, Bryan Clark of the usually conservative Hudson Institute, recently wrote that “the Jones Act’s U.S.-build requirement sustains shipyards the government depends on for episodic construction of military ships and ensures ship construction capacity is available in the United States to replace wartime losses.”

This, too, is false. The Jones Act has wiped out America’s domestic oceangoing shipbuilding industry. The tiny handful of shipyards that can still make commercial oceangoing vessels in the U.S. are being kept afloat by Defense Department contracts, so the situation is exactly the opposite of what Clark describes. America’s industrial shipbuilding base for oceangoing vessels is maintained almost entirely by the defense budget.

Whatever the degree of specialization in design, naval shipbuilding still requires the cost-effective technological innovations that only a vibrant industrial base can provide. By wiping out America’s commercial shipbuilding industry, the Jones Act has deprived the defense establishment of these cost-saving innovations — one reason why warship procurements consistently run late and far over budget compared to most other procurement programs. This is another way in which the Jones Act benefits China — both commercially and militarily.

Another standard Jones Act talking point is that if we allow competition in America’s coastal trade, the Chinese will take over America’s domestic shipping and shipbuilding. This, too, is false. The most urgently needed reforms of the Jones Act would repeal its restrictions on coastal trade and shipping to Puerto Rico, Hawaii, and Alaska. Fewer than 100 ships are now engaged in that sector, as opposed to the more than 30,000 tugs and barges in the Jones Act fleet plying America’s rivers and great lakes. There is no reason why reforming the Jones Act for oceangoing vessels would open the Mississippi to Chinese tugboats.

Moreover, the Jones Act does not prevent foreign ownership of shipyards even now. In fact most of the few predominantly commercial oceangoing shipyards left in the U.S. are foreign owned. Philly Shipyards is owned by a Norwegian company, and Keppel Shipyard on the Gulf Coast is owned by the government of Singapore.

One must hand it to the Jones Act lobby. With deep pockets and well-rehearsed talking points that are almost entirely false, they have defended the indefensible for 100 years. But reform is inevitable, and it can’t come soon enough. Meantime, history will remember those officials and members of Congress who picked the deep end of “the swamp” over their fellow Americans.