On the tarmac at a Hawaiian airport an entirely cattle class flight is preparing for take-off.
That’s right, this flight isn’t for humans, it’s carrying livestock from Hawaii to California.
Meanwhile, at a nearby port, older cattle are loaded onto a ship, and their final destination
is also California, but this ship will first take its cargo to Canada,
before the cattle are trucked south.
Why would a Hawaiian Rancher take on these additional expenses over direct shipping?
This comes down to the Merchant Marine Act of 1920, more commonly known as the Jones Act
The Jones Act is a United States federal statute that regulates maritime commerce in U.S. waters
and between U.S. ports.
This law places protectionist limits on what ships can engage in domestic transport.
To be allowed to work Jones act routes, these ships must be built in the United States;
such vessels might cost four times what an imported ship costs.
Furthermore these ships must be crewed by American residents, whose cost of living,
and therefore required income exceeds that of sailors from the major players in international shipping.
In addition, these ships must fly the U.S. Flag and be owed by Americans, subjecting
these companies to more stringent regulations.
All of these requirements increase the operational costs of the ships involved,
resulting in it making economic sense for some Hawaiian Ranchers to put cattle on planes.
So there’s your answer, case closed, end of video.
But wait, if this law is so inefficient why is it even on the books?
During the First World War, the Imperial German Navy had used their U boat fleet to sink numerous
allied supply ships in the Atlantic.
With this backdrop it was abundantly apparent that ensuring a robust merchant fleet was
vital to any future war effort.
So in the unlikely event diplomacy failed and a war with a power like Germany would occur again
America would need shipyards to build warships, and skilled sailors to man them.
Restricting domestic shipping to American built vessels ensured the American ship building
industry would remain strong, and on call for any military construction the nation required.
But perhaps more importantly, while the navy can mothball extra transport ships during peace time,
sailors cannot be trained instantaneously.
Therefore, Requiring domestic shipping to be manned by American residents
ensures a supply of trained sailors that can be called upon in the event of war to supply the troops.
So in the aftermath of the war Senator Wesley Jones of Washington State introduced legislation to congress,
to provide for the promotion and maintenance of the American merchant marine,
resulting in the Act that would come to bear his name.
It’s worth noting that this wasn’t a new idea.
The First Congress enacted laws which limited domestic trades to American ships
these in turn were based on England’s Navigation Acts
that were first enacted in 1651.
Nevertheless, if the goal of the Jones Act is to support a robust maritime industry,
arguably it has failed.
America’s shipping fleet accounted for 17% of the global total in 1960, but today just 0.4%.
In part due to international competition, but also the abolishment of subsidies for
for the construction of ships in 1981 left the market to decide the industries fate.
On the other hand, many countries aggressively support their shipping industries
to the point that international shipping is effectively a tax-free industry.
The result is American shipping simply cannot compete on the international stage
and has been relegated to protected Jones act routes;
and the inflated costs of maritime shipping has shifted freight onto other,
often more expensive and polluting options.
So while 40% of Europe’s domestic freight travels by water, just 2% does in America.
However, this number might be someone deceitful
given Europe’s well developed canel and river infrastructure
And even when disaster strikes, the Jones Act can become a hindrance,
therefore the legislation allows waivers to granted based on interest of national defence.
This has happened on several occasions,
such as in the aftermath of Hurricane Maria wreaking havoc in the American territory of Puerto Rico.
However, reportedly few ships make use of these waivers;
presumably many ships are committed elsewhere and can’t make use of a temporary waiver.
In the end, the reason this Act remains is the benefits are felt by a relatively small group,
those involved in the industry,
and these people are heavily invested in the continuation of the protection of their industry.
The do so by sending lobbyists to Washington
to promote their view that the benefits to national security outweigh the costs.
And just as how the costs of penny manufacturing are spread across all Americans,
so too is the increase in shipping cost brought on by the Jones Act.
Companies naturally pass these costs onto the consumer
So given this lobbying of special interest groups at play here,
and without a concentrated effort on the other side it seems the Jones act is here to stay
at least until not only cows, but also pigs fly.
This video was made possible with the support of great people on Pateron,
who got to see this video early.
The theme tune is by Richard Jones
and whether by patronizing, sharing, or just watching thanks to everyone who supports the channel.