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I would love to see a Twitter-style poll with the following options:
A) Keep Jones Act, don't implement Trump tariffs
B) Keep Jones Act, implement Trump tariffs
C) Repeal Jones Act, don't implement Trump tariffs
D) Repeal Jones Act, implement Trump tariffs
I'd love to see not only percentages, but some mental models from the people in different categories. This in inspired by seeing both Zvi's latest on the Jones Act and MR linking one estimate related to possible Trump tariffs.
Zvi doesn't sum it up super nicely, but estimates I see of the value of repealing the Jones Act are \approx 3% reduction in cost of goods (just due to the flagging effect) and a claim that a plausible OOM estimate is \approx 3% GDP increase (I lost the thread the other day on how to put approximately signs in without strikeout). The randomly-linked twitter post estimates price increases due to tariffs mostly around 2-3%, with some specific sectors rising up to 13%.
I suspect that most people just don't mentally look at economic estimates and compare them to each other, but I don't know what else goes on in their heads. If they're trying to justify one or the other position, how do they go about it? Is it at all plausible if we apply their justification to the other question?
Finally, heresthetics. Could an 'omnibus' option (D) bill be pushed, saying, "That old, bad, just banning stuff style protectionism clearly failed; we shot ourselves in the foot and didn't even manage to actually protect an industry in the process. Instead, tariffs will be the way; at the very least, taxes are slightly more pleasing to the economist than specific bans, as they still allow price signals to work somewhat and inspire new solutions, while at least collecting some revenue for a debt-strapped gov't"? Obviously, people would horrifically oppose it, but what would they say when they oppose it? What would the reasoning be? How would that reasoning come across to the people who would respond with a different choice from the list?
I'm going to take a very controversial stance and support keeping the Jones Act. If the goal is to develop US shipbuilding for security reasons, there needs to be an actual shipbuilding industry. US shipbuilding is currently so horrendously inefficient that it will be instantly vaporized by Korea, Japan and... China most of all. US shipbuilding is not 50% less competitive, they're 500% less competitive. Instant loss. And if you nuke your shipbuilding sector who is going to build warships? Why would you want to make your warships within the Chinese missile death zone? Real great powers know how to make their own ships.
It makes zero sense to do all this onshoring and neo-mercantilism in microchips, strategic materials and leave out shipbuilding. There are all kinds of things you could do to introduce efficiencies and market discipline without razing the industry to the ground. Shock therapy is not the answer, there needs to be careful, judicious reform. Import technology and best practices from allies, reform regulations, bring in technical experts, break up cartels or cozy price fixers. Nationalize - China State Shipbuilding is the biggest shipbuilder in the world and is profitable too.
How is it that the US can build rockets, jet fighters and cars but ships are beyond them... because they protected their own market? The Chinese protect their own auto industry - lo and behold they produce huge numbers of cheap cars. The Koreans protected their auto industry for decades and turned it into a competitive export industry. The EU protects its agriculture and isn't a famine-stricken wasteland. Americans aren't some alien race that has an inherent -500% to Shipbuilding, there must be other problems than protection.
We currently have the Jones act. We currently do not have a healthy shipbuilding industry. The Jones act appears to have been passed in 1920. The Jones act is not doing anything to get us a domestic shipbuilding industry. I do not see any prospect of state intervention at the scale necessary to get us a healthy shipbuilding industry. Given that, we should repeal the Jones act.
I would gladly consider supporting the reintroduction of the Jones act as a section of a bill that would, in fact, revitalize US shipbuilding. Until then, all this attitude - and it's an attitude that's shared by many people in GOP policy, it's not just you - does is hurt our economy for precisely no benefit. I do not see any harm in repealing it until that happens.
The US had a healthy shipbuilding industry in 1940, such that it could produce the biggest fleet in the world, fight and win huge wars against rival great powers on the other side of the world. 20 years of Jones Act protection didn't do much harm. I think the Jones Act is a symptom, not a cause. High US wages were already making it difficult to man a large US merchant marine back in the 1920s, hence protection. The problem is not enough protection, not smart enough protection, insufficient and inefficient subsidies, insufficient automation.
Why don't companies move into shipbuilding on the basis that there's huge latent demand? Is a wholly protected US domestic market seriously too small to support shipbuilding? The US has the second longest coastline in the world, a bunch of islands and hundreds of millions of consumers! Does the US lack the capital to build shipyards? Is there a shortage of skilled labour? Is there some huge thicket of laws preventing efficient shipbuilding? Unions? Some combination of these?
I doubt the root causes of the problem will be resolved by killing the Jones Act. All that will happen is political backlash from massive job losses and a modest increase to economic efficiency. But without protection, there is no chance of competing against North East Asia (who have the capital, economies of scale, labour and best practices already established). Without protection, there is no chance of ever revitalizing US shipping since there will be nothing to revitalize.
Shooting the patient in the head does reduce medical costs but it's not really a cure.
As far as I know river and coastal shopping in the US has been in decline for a long time. Particularly the great lakes: we don't move iron ore and coal (and limestone) like we used to. River shipping in the Mississippi is mostly barge these days I think.
We just don't do all the river and coastal hauling of manufactured goods like the Europeans do, not sure whether it's because we have better rail shipping or some other reason.
I do know that the US coast guard has gotten absolutely retarded about crewing requirements, at the same time as crew recruiting and training is going to pieces in the same way it is for air traffic control.
Europe on the other hand has a lot of cheap hulls and crew from eastern Europe.
No, it's literally the Jones act. Look at how energy gets into the northeastern US. A huge part is provided by Canada, just because that bypasses the Jones act (and because they have legacy pipelines and transmission lines - and the blue states up there keep killing any new projects of that kind). Which, by the way, makes energy prices kind of a problem for the Northwestern states when the tariffs come.
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