By DAN FAGAN
Why would Alaska’s Congressional delegation support the Jones Act when it clearly and indisputably significantly drives up the cost of just about everything in the state?
The Jones Act embodies crony capitalism in its purest form. The 101-year-old federal statute mandates only U.S. owned, flagged, crewed, and built ships can transport cargo between two domestic ports.
The law eliminates most competition for U.S. shipyards and their labor unions. But it is a huge financial burden for the citizens of Alaska.
And yet Rep. Don Young, and Senators Lisa Murkowski and Dan Sullivan are big supporters of the law.
According to a study by the CATO Institute, it costs eight times as much to build a ship in the U.S. than it does to build one on foreign soil.
The Heritage Foundation reports it costs more than $20 thousand per day in 2010 to operate a U.S. flagged ship, compared with less than $8 thousand per day for those foreign flagged.
These higher costs are absorbed by Alaskans pushing up the price of all goods arriving to the state via ships. It’s not difficult to understand the more it costs to ship stuff to Alaska, the higher the price of the goods coming to the state.
“The Jones act is a typical example of political cronyism at work and perverting economic policy,” wrote Patrick Tyrrell with the Heritage Foundation in a 2019 column entitled “The peculiar case of Alaskan senator’s support for the Jones Act.”
“A small group of people lobby extensively to receive a government economic benefit whose cost is spread widely over the entire population,” wrote Tyrrell.
Tyrrell also blames the Jones Act for the price of groceries costing 38 percent more in Juneau, Anchorage, Kodiak, and Fairbanks than the average U.S. city.
There was a day when Alaska state leaders were, unlike Young, Murkowski, and Sullivan, willing to take on the special interests like ship builders and their unions.
In 1955, former Alaska territory Gov. Ernest Gruening described the Jones Act as “ruining business and imposing heavy expense” on the state.
Then in 1969, Sen. Ted Stevens introduced legislation demanding the federal government compensate the state for the extra expenses caused by the Jones Act. His bill failed.
In 1984, Alaskans overwhelmingly passed a ballot measure mandating the governor persuade Congress to repeal the Jones Act and then submit an annual report detailing progress toward this goal. The Alaska Legislature later removed the yearly reporting requirement.
Back in 1982, the Alaska Statehood Commission estimated the Jones Act added $1,000 per year in additional expenses per family in Alaska. The commission also found Alaska’s oil industry suffered an additional $600 million in yearly expenses because of the Jones Act.
But in 1988, a study published by the U.S. Government Accountability Office discovered the Jones act alone imposed a cost equal to 2% of each Alaskan’s personal income.
The Jones Act driving up the cost of just about everything in Alaska has gotten much worse in recent years since fewer U.S. ships are being built. The U.S. shipping industry is in serious decline driving up the cost of the Jones Act limitations to Alaskans even that much more.
The Jones Act also drives up the cost for energy companies operating in Alaska.
Remember the 2007 closing of the Agrium fertilizer plant on the Kenai? Plant officials lobbied Congress for an exemption to the Jones Act. One was not granted. The plant couldn’t compete, in part because of the high cost of shipping and closed, ending the jobs of 400 Alaskans.
“How much more energy exploration would be taking place in Alaska and how many more energy related businesses would be prospering without the Jones Act standing in its way,” asked CATO Institute researcher Colin Grabow in a 2018 report.
Former President Donald Trump was contemplating issuing waivers to the Jones Act to lower the costs of shipping natural gas from U.S. ports.
But according to the Heritage Foundation, Murkowski and Sullivan convinced him otherwise during a 2019 meeting.
“The president’s apparent change of heart may be due in part to the advocacy for the Jones Act at the meeting by Alaska’s two Republican senators, Dan Sullivan and Lisa Murkowski,” wrote Tyrrell with the Heritage Foundation.
“Why would Alaska’s senators be arguing in favor of a law that so clearly raises costs for their constituents? For whatever reason, the vested interest of the sea transport industry have won the day in the competition for the senator’s ears,” wrote Tyrrell.
In a recent newsletter the president of the Sailors Union of the Pacific singled out Sullivan and fellow Sen. Bradley Byrne of Alabama for bragging about their role: “both spoke directly to their influential roles in the recent rejection of a proposed Jones Act LNG waiver.”
Sullivan recently claimed he and Murkowski make a good team. They do indeed.
Dan Fagan hosts the number one rated morning drive talk show in Alaska on Newsradio 650 KENI.
This column is just ignorant. Your equating Dan and Don with Lisa is stupid.
Don Young and Dan Sullivan are secret RINOs. Look at their support for Deb Haaland and their votes to certify a rigged 2020 election. Ballot Measure 2 (RINO Protection Act) allowed them to let their true colors fly
I suppose I should be jealous that I cannot hear the little voices Mr. Alderson hears.
All three of them continue to support and vote to extend the Patriot Act that allows the federal NSA and FBI to snoop on all of us. All three of them have supported all the illegal wars that we currently are involved with around the war. Where are they when the Feds are going after some of their own voters and being imprisoned without bail and not able to even get the materials used against them? They’re no where to be found. They only complained when Trump rightly wanted to leave. I’m not even a Trump far nor voter of him, but I supported Trump trying to end wars. I’ve never supported any of these clowns, and until a decent non-establishment runs against them, I’ll continue to vote third party.
Great piece, Dan. Unfortunately, our congressional delegation does not hear Alaska on this issue. Keep up the narrative. Please don’t forget the White Act of 1924. Alaska is sovereign and should control its resources exclusive of federal intrusion. Oh, can I add the Antiquities Act of 1906? For three people to declare their conservatism without opposing these and a myriad of federal intrusions, it certainly strikes a dull bell when they get elected over and over again without constituent consequence.
RINOs RINOs everywhere, and not a SPINE in sight!
“Nice guy” Senator Sullivan has been increasingly exposed for the crony he is, and for sucking up to a RINO of the worst kind like Lisa Murkowski. And after seeing Don Young swear-in Pelosi, I want to puke for ever voting for any of them. Never again.
Very important to maintain the American shipping industry as well as competent and USCG licensed American seamen. A matter of National security !!
Although the rate is up there, and some things could be done to fix this, this article promotes buy Chinese, Mexico, etc etc Not American. You have a cheap Chinese hammer and a more expensive American made hammer. “Same thing.”
That’s what globalism does When countries with uneven economies play together. Keep asking for the globalism, your wages will be right down there with the rest of the worlds wages.
“……..That’s what globalism does When countries with uneven economies play together. Keep asking for the globalism, your wages will be right down there with the rest of the worlds wages.”
Wage pressures aren’t “globalism”. It’s Econ 101, pure and simple, and it will NEVER go away. You simply can’t pay a welder $150K/year in wages, benefits, and payroll taxes and compete with a welder paid $20K/year with a legal declaration. Eventually, economic reality will catch up to you. The Jones Act has failed to change economic law from Day One, and reality is catching up to us……….again. “Uneven economies” seek balance like water seeks its own level, and the lawyer class has a piss poor record of achieving economic balance.
It’s ok when it’s someone else’s job but not yours.
Don Young has been sucking up to maritime unions for years and receiving tons of union campaign contributions that the rest of us are paying for in direct higher freight rates, indirectly through higher goods prices, and lower receipts for oil thanks to the Jones Act.
Excerpt from “Rust Buckets: How the Jones Act Undermines U.S. Shipbuilding and National Security”
“…in the critical early stages of a conflict, a country’s shipbuilding capacity is less important than its ability to mobilize ships and crew—and the Jones Act’s domestic‐build provision results in reductions of both. In addition, it is far from clear that the Jones Act has contributed to a more‐robust shipbuilding capacity than would otherwise be the case … “That a law ostensibly meant to strengthen domestic shipbuilding by stifling foreign competition would have the opposite effect—a weakened industry—should not be a surprise. Some have argued that the rising fortunes of British commercial shipbuilding in the mid‐1800s were due in part to the United Kingdom’s decision to discard its protectionist Navigation Acts.”
Once you’ve read this excerpt, there’s others, both pro and con.
I would suggest allowing foreign built ships, to US specs, with US crews, US flagged. The biggest benefit would be that in case of a passenger ship sinking, an all American crew would do everything possible that they could, to save the passengers. Foreign crewmen almost always save themselves first.
The three all have made terrible decissions effecting Alaska and our people. Don is to old, Murkowski is a leftist democrat and Sullivan is connected to the deep state some how. I believe Alaska needs new blood that is informed and will fight like Ted did
It’s simple. All three are doing an excellent job representing their constituents.
Alaskans are not their constituents.
We’re not governed. We’re ruled. Really is just that simple
It always costs We The People more when commies are in power, and we get nothing in return. Nations that don’t put a stop to power hungry tyrants usually end up paying with their lives.
Breathtaking ignorance on display here. The Jones Act is part of American cabotage laws that ensure barely adequate maritime resources will be available to resupply America’s armed forces around the globe. The cabotage laws enacted by Congress have had the support of all administrations, Republican and Democrat, for decades because they work to protect America’s national interests efficiently. If war breaks out on the Korean Peninsula, do you really think the heavy goods used by the Marine Corps and US Army are going to get delivered on vessels chartered from the Chicoms?
Get a grip and get educated before you whip out this kind of spew.
Excerpt from “Rust Buckets: How the Jones Act Undermines U.S. Shipbuilding and National Security”
“In the early 1990s the Jones Act was put to the test. Following Iraq’s invasion of Kuwait, the United States rushed soldiers, military equipment, and supplies to Saudi Arabia. Although this military build‐up was highly successful, the Jones Act’s ship contributions were marginal at most. Of the 281 Ready Reserve Force (RRF) and commercial ships chartered by the Military Sealift Command during the conflict, a mere 8 were Jones Act–eligible, consisting of one roll‐on/roll‐off (RO/RO) ship, one heavy‐lift ship, and six tankers. Of these eight, just five entered the Persian Gulf and only the lone RO/RO, a dilapidated ship called the Ponce, transported equipment from the United States to Saudi Arabia … Rather than the Jones Act ensuring even an adequate supply of U.S.-flagged ships, the United States found itself dependent on foreign‐flagged vessels to transport the needed equipment and supplies. No fewer than 177 foreign‐flagged commercial ships were chartered by the United States for the Persian Gulf War. Those ships transported 21.2 percent of total dry cargo and 26.6 percent of total unit cargo (U.S.-flagged commercial ships carried 12.7 percent of total unit cargo—cargo specific to particular military units—with the balance transported by U.S. government‐owned vessels). So pressed was the United States for sealift capacity that it twice requested the use of Soviet‐flagged cargo ships, but was rejected by Moscow both times.”
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Current Military Sealift Command ships. The fleet includes about 130 ships in eight programs: Fleet Oiler (PM1), Special Mission (PM2), Strategic Sealift (PM3), Tow, Salvage, Tender, and Hospital Ship (PM4), Sealift (PM5), Combat Logistics Force (PM6), Expeditionary Mobile Base, Amphibious Command Ship, and Cable Layer (PM7) and Expeditionary Fast Transport (PM8).
Using your metrics, the vast amount of goods delivered to the war zone came in on US flagged vessels or were shifted by US government ships crewed by US merchant mariners. The Jones Act and other cabotage laws are not just props for the US shipbuilding enterprises. The cabotage laws of our country promote keeping a minimal number of American merchant mariners around to crew up government ships for operations when needed. It worked, barely, in the conflict you point to but the entire structure of ship building and maintenance, in our country, vessels built and operated in our nation, and having American crews ready to assist America’s sea, air and land forces, when needed is rickety.
I get that a number of folks would like their shoes made in China delivered on Chinese made vessels so they can save a few pennies they can spend on more Chinese made stuff at Wal-Mart.
The national interest of America requires cabotage laws if we are going to remain a maritime power. Getting rid of the Jones Act and other cabotage laws is as dumb as advocating for elimination of the United States Navy. The navy and US merchant marine work together 24/7 around the globe. Pull the plug on the cabotage laws of America and you play havoc with our navy and the interests of our nation.
And did you actually research who funded the source you find so compelling? The money to gin up this report came from offshore.
The real question is does it stand up to fact checking?
Besides, these excerpts leads one to a whole bunch of other pro and con articles.
No reason for anyone to take our word for it.
I’ve been reading both pro and con on the Jones Act.
My take is that the Jones Act doesn’t go far enough, to accomplish all the security requirements.
IMO there should be no foreign built or flagged commercial vessels of any type allowed in US waters, nor allowed to transfer cargo to a US flagged ship.
Foreign nations may think to reciprocate in kind, but as America is the biggest consumer, they couldn’t take the hit to their economy.
Only US built, flagged, and crewed commercial vessels allowed in US ports … no exceptions by landing at a Canadian port, as currently allowed by the Jones act.
The rest of the foreign‐flagged commercial ships that hauled cargo to the Gulf were chartered by the many allies who’s troops fought alongside of ours.
All the swamp people need to be flushed, but Lisa Murkowski is the top priority right now.
Tshibaka isn’t the answer. She’s just another deep state operative out of Washington D.C. replacing one RINO with another
Therapy warranted for Mr. Alderson. Either that or med check time for this guy.
She’s a lot cuter … and I really want a ride on the Millennium Falcon.
After reading the comments above two things seem clear. One, from an economic Laissez-faire perspective the Jones act is costly to Alaskans and Americans in general. The other point made by my friend Joe Geldhof instructs us of the longstanding acceptance of such protective acts which grants them historical and legal precedent. I wish to offer another view from my perspective as a recovering “Free Market” junkie. Their isn’t a ‘Free” market in international terms. Countries like the U.S.A. value such things as , Clean Air and Water, Worker Safety , Worker Retirement and Health Care etc. , China is not concerned with any of the above and can produce at a lower cost because it is not straddled with regulation. Therefore in recognition of this fact, we (USA) should place a tariff upon all goods and services from foreign counties equal to what these items listed above cost U.S. interests to produce. This would then allow our markets to freely compete with foreign markets.
Such an action would then reveal the real costs of goods and services to the consumer. Free Trade works only when it is Fair Trade. So, my “conservative” friends , chew on that for awhile and consider that the cheaper products of which you speak do come at a cost. The cost is the heavy metal pollution even now falling into our Alaskan Watersheds from belching Chi-Com smoke stacks.
The cost in Human lives trapped in Chi-Com Slave Labor factories and the resulting Chi-Com military profits reaped from this mockery of “free trade” which are used to make weapons designed to be used against you… There is not a free Lunch, anywhere and at anytime…
Don’t forget that when it comes to the rare earths needed for electronics, China has us over a barrel. Our military has about thirty days of modern munitions, and then it’s back to unguided iron bombs and shells.
JJOSEPHDJ, and never forget that we have a large deposit of Rare Earths right here in Alaska on Prince of Wales Island., Didn’t China Joe just try to reinstate the Roadless Rule in the Tongass? Treason? If the above is correct… do the math
Alaska needs to start contributing to the nation instead of sucking it dry in federal welfare funds… until then we really don’t deserve to say squat about what happens in this country. We are it’s anchor holding it in a swamp of &@$
Robert, your point is well made and understood. However, there is a valid inverse view. The regulations and requirements burdening US industry are actually serve as a tactical mechanism for crony capitalist corporations to stifle the Ma & Pa sector of industry. That is, the big corporations collaborate with big government to limit competition from the little guy via regulations. The big guys have platoons of lawyers to manage the burdens and pass the costs to consumers.
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In another viewpoint, ask why is the ship-building industry so special?…. and worthy of government protection?…. that is not provided to other industries such as tools, equipment, clothing, dry goods, building supplies, etc? Given the monopolistic nature of crony capitalists in league with government, the only relief consumers can hope for is from overseas.
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I realize my views contravene the tenets of Freidman and Sowell, but when you shop at Home Depot, Walmart or Costco, you are shopping in China, Korea or Taiwan. However, when having your goods transported on water, your government is prohibiting you from shopping in China or Korea. Make no mistake, this is a big corporate-big union-big government agenda.
Robert, please excuse my cognitive lapse. I did not mean to say my points contravene the theories of Friedmann and Sowell. Rather, they conform to said theories.
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As to Joe Geldhof’s points, they apply primarily to a very exclusive segment of industry protected by cabotage laws while the majority of US industry must compete without such exclusive regulatory benefits. This entire narrative makes more sense to any reader if they fully understand the insidious nature of the lobbyist network exerting its influence upon government.
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