AMP does not respond to every blog or article about the Jones Act. However, one recent article — “The Jones Act Strikes Again” (July 17, 2015) written by Daniel R. Pearson for Cato — is so jaw-droppingly wrong that it needs to be corrected.
The centerpiece of Pearson’s argument is that because of the Jones Act, the American fleet has shrunk to only 191 vessels. Really? Actually, the correct number is approximately 40,000 vessels. Rather than contracting, as Pearson suggests, the American domestic fleet is thriving, and, in fact, experiencing its greatest renaissance in decades, in part because of domestic crude oil production.
191 vs. 40,000 vessels? How could Pearson have gotten it so wrong? The answer, it appears, is that he confused the American international deep sea fleet, which moves goods globally, with the American domestic fleet, which moves good within the United States. While both are vitally important to U.S. economic and national security interests, the two American fleets are not the same and operate in vastly different markets.
But here’s the key point missed by Pearson: the Jones Act does not govern international commerce. It regulates American domestic commerce — the waterborne movement of merchandise between two points in the United States. So the Jones Act has no impact whatsoever on the American international fleet. For the record, the most recent study by PricewaterhouseCoopers confirms the view that the American domestic fleet is thriving — 39,666 vessels with an annual industry impact of 478,440 related jobs, about $30 billion in worker income, and about $92.5 billion in economic impact.
Pearson carries his erroneous premise of a small domestic fleet throughout his paper. At one point, he argues that there exists “only three U.S.-flagged dry bulk vessels of the type used to haul grains, fertilizers, and coal.” Again, he is completely wrong. There are thousands of self-propelled vessels and barges that move exactly those cargoes every day across America.
Pearson’s blog wildly misses the mark because of his factual errors. Moreover, it completely ignores the substantial economic, national defense, and homeland security benefits to this nation of the American domestic fleet (as well as the American fleet in the global trades).