Jones Act waiver helps hurricane-ravaged Puerto Rico, but full repeal needed

We support the removal of governmental impediments to free trade.

Until a waiver to the Jones Act was granted on the morning of Sept. 28, emergency hurricane relief to Puerto Rico had been artificially scarce and far more expensive than it needed to be, thanks in large part to that piece of protectionist shipping legislation left over from nearly a century ago. The Jones Act raises shipping costs sky-high and, before the waiver, kept essential supplies from reaching the more than 3 million U.S. citizens who live in Puerto Rico.

“The denial of a waiver to the Jones Act in Puerto Rico was literally killing Americans suffering from the worst hurricane in 90 years, in order to protect corporate cronies in the shipping industry,” said Libertarian National Committee Chair Nicholas Sarwark. “Interestingly, the Department of Homeland Security waived the Jones Act for Hurricanes Harvey and Irma. Why did it take so long for Hurricane Maria?”

The Jones Act was passed in 1920 and signed by President Woodrow Wilson. It requires all goods shipped between American ports to be carried by vessels that are flagged, owned, built, and crewed by Americans. Puerto Rico is an American territory, so all goods shipped to and from Puerto Rico — including hurricane disaster relief supplies — must be shipped by more expensive American ships, which may sometimes be unavailable because of previous bookings.

“We want a full repeal of this protectionist law to allow Puerto Rico’s infrastructure, economy, and people to rebuild,” Sarwark said. “Case-by-case waivers subject to political whims just aren’t enough. It’s time for a full repeal.”

Like most protectionist legislation, the Jones Act was passed by stirring up fears — in this case, long-outdated fears of German U-boat attacks. The legislation has been kept in force through aggressive lobbying by the U.S. maritime industry, which would otherwise have a difficult time competing against foreign shipping companies.

Protectionist legislation like the Jones Act is a classic example of crony capitalism. It produces a win-lose deal. Protected American shipping companies win. They get to charge prices much higher than market shipping rates. Their customers lose. American drivers also lose, because expensive port traffic is diverted to cheaper trucking on the interstate highway system, where more semi-trailers than ever are clogging the roadways.

Libertarians prefer win-win deals. Shipping customers in the American territory of Puerto Rico, and American shipping customers all over the country, should be able to agree on price and terms with any shipping company they choose throughout the world — without waiting for a political pronouncement in the wake of a horrifying disaster. That’s a win-win deal.

Given Puerto Rico’s economic difficulties even before Hurricane Maria devastated the island, it is particularly intolerable that the island’s exports have been subject to the government-backed artificial price gouging of crony capitalists. Although Puerto Rico can benefit from the Jones Act waiver today, that legislation remains the law of the land for the United States in almost all cases and places. It’s time for a full repeal so that everyone can benefit from the lower prices and greater efficiency of free trade on an ongoing basis, not only during the aftermath of a crisis.

While Democrats and Republicans play footsy with the K Street lobbyists and use the force of law to protect favored industries from more-efficient competition, Libertarians advocate the common-sense solution of ending crony capitalism across the board.