Saturday, November 3, 2012

The Jones Act. Killing Commerce for almost 100 years.


I have a high degree of conviction a reason the recovery (as measured by employment) from the 2007-09 recession is slower than the recovery from the 2001 recession which was slower than the recovery from the 1990-91 recession is the increased weight of job and commerce limiting policy decisions.

Consider the Jones Act, (officially The Merchant Marine Act of 1920) which mandates all goods transported by water between US ports be carried in US flag ships, constructed in the US, owned by US citizens, and manned by US citizens or permanent residents.

The Jones Act rises to attention periodically, like say, after a major storm strikes the East Coast and people wonder why it is so difficult to transport goods from one part of the country to another part of the country. See below the story from on waiving the Jones Act in order to get  fuel to Northeast ports.

Would fewer people be suffering right now if our policy choice had been to let the market determine the best way to carry goods between US ports? According to the Obama administration the answer is Yes, fewer people would be suffering.

So my question to you, as an unabashed believer in industrial policy, and other job limiting, price distorting measures, if these policies are bad in a crisis, why are they good in normal times?


Obama administration waives shipping rule to get fuel to Northeast ports

By Pete Kasperowicz - 11/02/12 02:04 PM ET
The Department of Homeland Security (DHS) on Friday issued a temporary waiver of the Jones Act, which will let foreign fuel tankers dock in Northeast ports and help get fuel to areas that are seeing fuel shortages in the wake of Hurricane Sandy.

The decision was made just days after reports of gas shortages in New York City and parts of New Jersey, which has led many gas stations to close and also led to reports of violence as people hunt for fuel. 
The Jones Act, part of the Merchant Marine Act, requires all water-borne goods shipped between U.S. ports to be moved on U.S.-flagged and U.S.-made ships, and staffed by U.S. citizens. Homeland Security Secretary Janet Napolitano said Friday that the waiver of this rule would last until Nov. 13 to address shortages caused by Sandy.

"The administration's highest priority is ensuring the health and safety of those impacted by Hurricane Sandy, and this waiver will remove a potential obstacle to bringing additional fuel to the storm damaged region," she said.

Napolitano said the waiver would let any ship carry fuel from the Gulf of Mexico to the Northeastern United States. DHS said officials are "continuing to monitor the situation" and are prepared to take "additional actions as necessary to ensure that the energy needs of the region affected by Hurricane Sandy are met."

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