Except, as far as I'm aware, the Jones Act hasn't prevented the collapse of the merchant marine fleet--in other words, it's failed to do its primary goal, and it has some pretty heft costs for everyone who doesn't live in mainland US.

Seems like this is a case where the "soft touch" approach—set rules and let the market create the outcome you wanted—isn't working, so maybe a more direct approach would be a better idea for the purpose of ensuring a healthy merchant marine fleet, if that's still something we want to do.

Why does US "need" a 100% internally built, owned and operated merchant marine fleet?

Most of US is accessible via freight rail or road freight transport. Ships transport almost exclusively foreign made products, today.

That's the primary reason why the merchant fleet is wasting away - there's no demand for marine transportation between US ports, other than required by Jones Act.

I have 0 interest in building something that has little to no use in a free market.

> Ships transport almost exclusively foreign made products, today.

You understand that this is because the Jones Act makes shipping domestically prohibitively expensive. Which is precisely why ground shippers are insistent that the Jones Act remain on the books.

> I have 0 interest in building something that has little to no use in a free market.

If you see a free market there, you haven't read the article.

> If you see a free market there

That's not what I wrote.

Shipbuilding capacity, especially, is extremely important for being able to project power globally in the most extreme situations. So if that's something we're still interested in doing, it's a very good idea to prevent that capacity from falling under some level.

The problem is, the Jones Act has harmed our shipbuilding capacity as well. According to the artcle our ship building capacity is 1% of China's and US built ships cost 6-8 times as much. That's not helpful.

> The problem is, the Jones Act has harmed our shipbuilding capacity as well. According to the artcle our ship building capacity is 1% of China's and US built ships cost 6-8 times as much. That's not helpful.

So better have ship building capacity at 0% of China's and it be impossible to buy US built ships at any cost?

That, or make it easier to start up domestic shipbuilders.

In a vacuum, the Jones Act should be encouraging the construction of new shipyards and/or freight rail infrastructure. That neither seems to have happened suggests that other barriers exist, and those barriers need addressed, Jones Act or no.

U.S. built things costing 6-8 times as much as Chinese built things is not specific to shipbuilding.

Sure, my point is that there's not no good reason to want to protect US ship-building capacity, not that the Jones Act doesn't suck, which AFAIK it does.

That would be done via planned navy ship replacement. Not by Jone's Act and similar.

Let alone - merchant ships are needed to trade and interact with allies in these extreme situations. And last I checked Maersk is a Danish company, and Danmark is a close ally.

You can't guarantee allies' shipbuilding capacity will remain intact in war, or that they won't redirect their shipping or ship-building capacity for other purposes, and without shipping the US cannot meaningfully act globally. Things are relatively stable now and most major US allies seem to be in pretty secure positions (a tad less so right now, sure, but in general, for some decades) but I don't think the smart money's on us getting through this century without at least one big war, possibly not even caused by or involving any of the powers that seem most-likely to kick something off now, so there's no guarantee the major action would be confined to or even primarily in, say, the Pacific theater, meaning that it'd be a good idea to be prepared for any of our allies to be taken off the table early in a conflict (or even for their being on the other side of it).

I agree that the Jones Act sucks, but I do think there's some valid reason behind trying to do what it tried to do.

If you don't have overseas allies, then you don't need a large merchant fleet at all.

As it stands - merchant fleet of US allied nations is strong enough for US to not need one at all.

Then you’ll get steamrolled when you need to expand or build a merchant navy on short notice against the adversary which builds all your existing merchant fleet cough China cough, not that they don’t ALREADY have us by the balls in a million other ways.

China doesn't dominate shipbuilding in the same way it dominates most industries. Japan and South Korea have active shipbuilders building immense container ships (Ever Given was built in Japan), and Europe dominates the cruise ship industry.

It's still a national security issue that there's little domestic shipbuilding. In the event of a major war, it would be useful to have domestic shipbuilders available to press into service making warships, beyond the peacetime warship builders.

Quite true! Geographically, keep in mind it would be trivial to blockade South Korea from China, and South Korea has been invaded by a Chinese Puppet state in the somewhat recent past (North Korea), with which they are still technically at war.

It’s no ship yard in Seattle.

You can't count on industry in any state that's going to be a direct war participant and on or, these days, even kinda-close to, the front lines, anyway. Look at Ukraine, and they're arguably winning. That's how fucked-up your production capacity gets when you're more-or-less successfully repelling an invasion, let alone when you're plainly losing. The other day they had, what, 30% of their energy infrastructure damaged, by their own government's admission? And the only reason it hadn't happened sooner seems to be that Russia just hadn't decided to do it yet (not to overstate Russia's advantage—part of why they hadn't done it yet was probably that they have limited ability to restock their own weapons, so preferred to hold such weapons in reserve for a time). Plus all the bombed or captured factories, difficulty and danger getting inputs and workers to any surviving factories, et c.

> Japan and South Korea have active shipbuilders building immense container ships (Ever Given was built in Japan), and Europe dominates the cruise ship industry.

Cruise missiles have entered the chat

Besides, it's very nice in these scenarios to build your ships the same place that's sending cargo, so you don't have to risk an empty or low-priority cargo trip the wrong direction before you can load up with the good stuff.

Plus, governments change. The US could well end up on a different side of a conflict from some current allies, or those allies might remain neutral and so avoid behaving too-favorably to the US.

Actually, I think most of the US merchant fleet was built by South Korea, not China.

National defense. In peace time a merchant marine fleet may have poor economics but is immensely valuable to have during wartime. You can’t just snap your fingers when that happens and magically get all of the boats and crew and logistics in place so instead we the people have to pay to maintain it.

Let's pretend that there's a global conflict and US is both against "United Asia" and "European Empire" - what would be a need for such a fleet?

If we're talking about US/European allies vs China - then European allies have the ships and capacity to build more.

You have to give a concrete example where US would need to have a merchant fleet, where allies aren't willing to provide.

A more likely scenario is that we'd be supporting allies in those theaters, not fighting united continent-blocs. Either way, you can't fight across an ocean without lots and lots of cargo ships.

> If we're talking about US/European allies vs China - then European allies have the ships and capacity to build more.

Not necessarily enough capacity if you're losing tens of ships a month, and there's no guarantee those would remain intact, or that we'd even be on the same side. It's easy to assume stable, decent-enough, friendly governments will continue to be that way indefinitely, but they may not (for other actors, it's very much worth worrying whether the US will remain so, for instance)

> You have to give a concrete example where US would need to have a merchant fleet, where allies aren't willing to provide.

We literally have a real world example, which is far more valuable than made-up scenarios, that was arguably won primarily by US industrial capacity and the ships to direct that output to the right places, and it's still (barely, admittedly) within living memory. Among the most famous machines of that war is a class of merchant ship, for very good reason.

Unless we suppose that modern great-powers wars will be over so fast that shipping wouldn't have time to play a major role, or we think that anti-shipping weapons would be so effective and have such wide reach that no amount of shipping & protection could keep a meaningful proportion of a shipping fleet afloat for any useful length of time even if we started with a significant upper-hand overall—and I sure wouldn't want to bet on either of those things—it seems like that'd still be highly relevant in any major conflict in, at least, the near- to mid-term future.

> We literally have a real world example

I'm not a mind reader - what is it?

It's harder to bully/manage foreign shipyards than it is domestic ones. Even better if they're on the eastern seaboard within easy drive of D.C.

Central and South America exist too and in your scenario South America would be the only way to get certain resources.

If the US is fighting with (or just in!) Asia and Europe, they still want to trade with Australia, Africa, and South America. And, they likely need to get a lot of materiel to the theater.

In the last World War, the US built a ton of cargo ships (about 6,000) to replace ships that were sunk and to increase shipment capacity in general. Allies weren't able to build ships fast enough. I'd imagine that capacity will be needed in the next world war, too. Having existing shipyards helps get production ramping sooner.

Certainly, ware has changed a lot in 80 years, but all out war is still going to need a lot of shipping, and cargo ships carrying war materiel are going to be fair game for sinking, and need to be replaced (as well as escorted). Industrial capacity and availability of fuel will continue to be necessary but not sufficient for success on the battlefield.

If the US needs naval capacity, it just leases it from foreign providers [0].

[0] https://sgp.fas.org/crs/weapons/RS22454.pdf

The thesis is that there would be, if we allowed foreign ships and to operate in the US.

Water transport is much, much cheaper where there is not a burden, and is generally also more fuel-efficient per ton-mile. It should be possible for a wide variety of goods; the Mississippi alone is the largest river system in the world.

> the Mississippi alone is the largest river system in the world.

Mississippi is only the largest in the world after the Nile, Amazon, & Yangtze.

argh, not had the coffee yet. largest in North America.

It's also good that the Mississippi is so navigable, pretty much all the way north-south through the country up to Minneapolis. The Nile is only really navigable to Aswan High Dam, the Yangtze and Amazon fare better on this metric.

Plus a ton of the Missouri is navigable. IIRC if you were to judge the Missouri the official continuation of the Mississippi, where they meet in St. Louis, the resulting river would be even longer than the Mississippi as currently judged (though, also IIRC, its total flow where it meets the Mississippi is the smaller of the two by a decent margin, so that'd be hard to justify)

The Mississippi River Watershed includes the Missouri and Ohio Rivers, and 59% of all US rivers, draining parts or all of 32 states.[1] It is really an astoundingly massive river system, which is why it is the fourth largest in the world.

[1] https://assets.bwbx.io/images/users/iqjWHBFdfxIU/i9QxpflmIAz...

> I have 0 interest in building something that has little to no use in a free market.

Nation states have goals that the free market doesn’t value like stability or risk mitigation. Keeping an industry that can become critical around in a reduced capacity so that you don’t need to bootstrap from scratch is to governments like purchasing insurance on a car is for an individual who relies on one for their income.

The free market absolutely does value stability and risk mitigation because they have direct implications for the cost of financing which directly tacks onto the cost of any given capital investment.

They value it in the same way that I nebulously value the environment but still buy things wrapped in single use plastics. The free market has shown that they currently value efficiency over stability which has led to the rise of JIT logistics and manufacturers being unable to produce goods after a hiccup of a few months on their supply chain.

There is no equivalent section of the free market that is looking on multi decade long horizons for risk mitigation in the same way that governments do.[1]There are industries that care about risk mitigation on 30-50 year schedules for individual pieces of heavy industrial capital but there aren’t any that will actively run or subsidize factories building parts for a market they don’t participate in for decades on the off chance they might need to spin that up ASAP.

[1]generalizing here. I’m sure you can find a handful of companies who do this but unless they represent double digit percentages of the entire economy I’m not going to be convinced that it’s a sign of the free market valuing stability

There's still shipbuilders up and down both US coasts. They don't build that many ships, but they'd almost certainly disappear if foreign vessels were an option.

If having any local shipbuilding capability is better than none, the act works enough.

IMHO, I'd drop Puerto Rico and other island territories from the act. Maybe Hawaii and Alaska too. The inducement to build and operate US based cargo ships for those markets clearly isn't sufficient, and it hurts the economy of the territories for little benefit. But keep it for the mainland --- I think effectively reserving US ports for foreign trade reduces import/export costs which helps the US interface with the global market.

>the act works enough

Does it though, or is this a false sense of security? Regardless of the Jones Act the Navy is paying to modernize shipyards [0]. Meanwhile the small shipping industry propped up by the Jones Act seems to severely outdated, they were using steamships well past when the rest of the world stopped using them and manage to get away with more corruption due to lack of competition [1]. Maybe just drop the act, and have the Navy responsible for shipyards directly & ongoing, or something rather than hope a bunch of old fashioned, inefficient shipyards will be sufficient when we need them most?

https://www.gao.gov/products/gao-22-105993

https://www.freightwaves.com/news/freightwaves-classicsfalle...

US doesn't build non-military ships in any sizeable quantities, to maintain any of those anymore.

Jone's Act doesn't protect any shipbuilding facility, beyond the existing government contracts forwarded to them.

Which then keeps at least BASIC knowledge of shipbuilding available in this country, should we suddenly require grow in that industry (which is crucial). You are either misleading the purpose of this act or are willfully ignorant.

Correct: this is also why we ban importation of foreign food, so they Americans can keep at least BASIC knowledge of agriculture. Similarly, we require that air transportation in US is only done on US made planes, so that US keeps at least basic knowledge of building planes. Without these measures, those industries would be gone.

But is there a better way to subsidize shipbuilding capacity? I agree with your suggestion for focusing the Jones Act on the continental US, at a minimum that would reduce the disproportionate burden that states and territories outside the continental US face.

I'm sure there is. But when the headline is repeal the act, not replace it, it's important to note that it has some of its intended effect, even if it's not very much.

Something that actually resulted in productive shipyards would be much better than what we have that results in shipyards that don't produce much, which is still likely better than no shipyards outside of those producing naval vessels and domestic ferries (although, those would probably be imported too, if that were legal; technically that's prohibited under a different act)

There is a clearer way to subsidize than to require the purchases. One is to literally directly subsidize the industry. Another is cheaply lend or even grant money to the customers buying the product but only when buying domestically made units.

It also strikes me that the percentages mentioned in the article are very high. 75% US crew? 75% US owned? 100% US built? Revising the statute to operators needing 55% of their domestic fleet being US built, and requiring 55% US ownership, and a 55% US crew should be more than sufficient. Give tax incentives for newer, more efficient craft both to the manufacturer and the buyer.

The US uses a lot of military power for non-combat purposes. We move supplies for natural and humanitarian disasters. We have water purification ships, hospital ships, and generator ships. We transport weapons systems as cargo, and even those ships themselves could be mostly protected by a surrounding fleet. If we could get a design made that's fitting for heavy movers suitable for both military and civilian use the US government's purchases could bolster domestic shippers' orders.

One even more unusual option since it's a national security concern is the US government could buy large numbers of newer, more efficient craft and lease them on affordable terms (or lease to own even) to cargo companies.

US shipbuilders get orders mainly from military. Civilian orders is almost zero. The facility and technology for military vs civilian ships are vast, that a shipyard focusing on one cannot efficiently work on the other.

I don’t think that it’s a problem. If a facility is designed for civilian products, and can only work on government contracts inefficiently, that sounds like… all government contracts in recent memory. It is well known that US government overpays on everything anyway.

If we’re going to endure a cost to keep local ship building capacity id rather the government just directly subsidize the construction of ships via credits to purchasers ala evs, or just direct purchases and finding a use for the ships. Limiting the market to try and force the choice ruins the efficiency of the market and doesn’t guarantee a local minimum amount of capacity

There are only 4 US shipbuilders still capable of building large ocean-going commercial ships, and they pretty much exclusively subsist off government contracts. The US used to be the world's leading builder of commercial ships by a wide margin, now it barely produces any.

https://www.freightwaves.com/news/freightwaves-classics-amer....

Man, sounds like we DEFINITELY need to protect that market then doesn't it? It's like having a professional army, you don't have enough soldiers to fight a world war, but you have enough knowledge base to train people up SHOULD a world war happen. Would you argue we should either disband the Army or institute a draft to increase it's size because it can't fight a world war and other nations have a larger army? What a non-serious argument is being made here all in the name of $$$. You understand that a nation exists to fulfill a certain social contract, right? You can't keep just chipping away that contract in the name of 'paying foreign country level wages' and expect a functioning country. That 'social' element WILL turn against this behavior at some point.

It sounds like the current system utterly failed to protect the market. The Jones act encourages US shipping to be done over land, meaning there are fewer orders for ships and less (at this point zero) work for US shipyards. Mandating that US ships be US made only works if there are still US ships. We should instead be reinstating the subsidies that used to be in place to keep American shipbuilders competitive with other countries who subsidize their shipbuilding industries for exactly the same strategic considerations. Keeping in place the same policies that destroyed American shipbuilding is very bad for our future as a naval power.

So why not just push for subsidies since that is the entirety of the argument you just made? Does China have it's own version of the Jones Act? Since China is the 'model of success' as the largest ship builder, do they allow foreign ships and foreign crews?

I very clearly also argued that the Jones act's repeal also helps. Why would you invest in something while at the same time actively harming it? America's shipbuilding industry is a husk of its former self and every effort must be made to revitalize it. Subsidies alone would be a half measure.

China does not have its own version of the Jones act, it's a uniquely American problem. Most countries aren't stupid enough to kill their internal industry.

> Except, as far as I'm aware, the Jones Act hasn't prevented the collapse of the merchant marine fleet--in other words, it's failed to do its primary goal, and it has some pretty heft costs for everyone who doesn't live in mainland US.

Then instead of repeal it, fix it. I wonder if the flaw is that it didn't account for the changes in American sea traffic as foreign imports have undoubtedly increased by orders of magnitude since it was passed 100 years ago.

Can you describe the "fix"? US shippers would rather pay for trucking, rail, pipelines, or air freight rather than pay through the nose for US-built marine vessels.

This is a consequence of math. The economics just don't make sense. I'm not sure what you can do to "fix it".

The US merchant marine fleet has declined (in terms of ship numbers) from 16.7% of the global fleet in 1960 (3000 ships) to 0.4% in 2019 (180 ships).

> it's basically been disproven at this point that simply lowering cost does not necessarily lead to better outcomes for the country

This is a pretty squishy claim, but there's a mountain of work in economics showing that the Jones Act punishes Puerto Rico, Hawaii, and Guam.

> lowering costs by offshoring labor had hollowed out the middle class in America

Again this isn't a settled claim. Automation probably had more to do with the shift in workforce. Moreover all advanced economies have shifted to more service work, without necessarily experiencing some of the same difficulties as the US.

The Jones Act has actually been shown to have made US ship building and ports less competitive by shielding them from competition. US ships and ports are basically 3rd rate at this point.

> Again this isn't a settled claim. Automation probably had more to do with the shift in workforce. Moreover all advanced economies have shifted to more service work, without necessarily experiencing some of the same difficulties as the US.

I don't buy it - US manufacturing simply wasn't competitive with overseas prices. If it was just automation, it would still be here - only automated. It's not.

On a dollar-of-stuff-produced basis, US manufacturing has continued to grow and remains only a fraction behind China:

https://www.brookings.edu/research/global-manufacturing-scor...

It’s the jobs that went away, not the manufacturing sector or the dollars.

From the article: "Manufacturing is enjoying a resurgence in the United States. After years of falling output and a diminishing percentage of the labor force, the last few years have seen renewed growth."

Resurgence implies it was not great for a long time.

These numbers are more in my favor than yours. It's rapidly shrinking in terms of GDP. Sure, the world economy is growing, thus the rising tide lifts all boats - but compared to competitors, the US is doing quite poorly and losing global share quite rapidly.

If your automation argument was true, this would not have happened - output would have increased exponentially and we wouldn't have lost share. Automation is making it more economical now - but that's a recent development, after the decimation of the American middle class.

American manufacturing is very much “still here”, not unlike, say, American agriculture, despite also being crowded out of GDP by other growing sectors. So I’m not sure which claim we’re arguing about.

Still waiting for you to explain global share. Still waiting for you to realize your time scales are 30 years off.

I'll always be waiting. Best of luck!

You moved the goalpost here, buddy.

American manufacturing grew in the last 20 years.(and probably before that)

Automation didn't produce the increase in jobs, to match population growth... But a claim that US manufacturing shrunk is false. No one in this thread made a claim, including you, that this is about "global scale". You just threw in this argument to avoid accepting the fact that you're wrong.

"If it was just automation, it would still be here - only automated. It's not."

It is though. The U.S. steel industry which everyone thinks is dead, for example, is producing at about 70% of its all-time peak. It's just doing it with 15% or less of the peak workforce. And the current numbers represent about 5% of world steel production - which is consistent with our population, just not with the fact that we once produced the majority of the world's steel.

https://blog.boydmetals.com/the-past-present-and-future-of-t...

Bold claims, bold citations?

The "mountains of work" "proving" that the JA is a negative suffer from a free-market neo-liberal bias.

The Jones Act hasn’t even done that though. So what’s the point?

What "hollowed out middle class" in America are things like "The Jones Act".

The major problem in America is not foreign competition. The barrier to industry is not opening up relations with China.

The major problem in America, and has been since at least the 1970s is a managerial crisis. It is a crisis imposed on the working class by incompetent monolithic bureaucracies in government and in corporate culture.

The problem is exactly the sort of problems imposed on the public by things like the "Jones Act". It is that incompetent buffoons attempt to impose rules on the country to accomplish one thing, which fails utterly, and then has a whole host of undesirable side effects that are aggressively ignored and/or downplayed by apologists like yourself.

It is this managerial crisis that saw the rise of massive conglomerates in the 60s and 70s that ate up industry all over the midwest, liquidated them, and leveraged the assets to purchase more small and medium business. This was considered marvels of efficiency then... which in actually has turned out to be a series of accountancy scams and pyramid schemes that all hinged on exploiting incompentely design regulation.

It is the protectionism and subsidies and cronyism in this country that has destroyed it's competitiveness.

It has never been, and probably never will be, the willingness of the American worker to compete with foreign labor.

Advocating for more protectionism and cronyism and regulatory capture is going to make the problem worse, not better.

IF you need proof of this look no further to what the Federal government has done to the semiconductor industry in the past year.

This is just opinion spewing.

That said, the comment you are replying to didn't provide any sources, but if you google, for example, "china outsourcing effect on middle class", it's easy to find research supporting the conclusion that outsourcing had a real negative effect on large swaths of Americans.

Also, as a counterpoint, lots of other countries that have had a more robust middle class in the past 2 decades have stricter regulations than the US does.

> if you google, for example, "china outsourcing effect on middle class", it's easy to find research supporting the conclusion

If your topic is broad enough, you can abuse napkin math any way you want to reach any sort of conclusion.

Virtually all instances of protectionism has caused the industry being protected to stagnate. If Intel weren't facing competition from TSMC and Samsung, they would happily milk their 14mm process for who knows how long.

The only time when protectionism is a unequivocally a good thing is with services with no obvious societal benefit. I don't think China loses out from not having Instagram or Facebook. Even if their domestic alternatives are worse, they aren't missing out on much. Likewise, I don't think we'd lose out much if everyone was forced to use Youtube Shorts instead of TikTok.

If entity A can create something(labor/product) cheaper (more efficiently) than entity B, then B can purchase that something for cheaper than what it would cost B to do/produce it. Now B has extra resources to devote to what B is efficient at creating and A purchases products that B is efficient at producing at less than what it would cost A. The net result is each entity has spent less time and resources for goods and services, and can use the savings (capital) to devote to future endeavors.

This basic idea scales up to the country level provided all the rules and regulations do not interfere. The problem with the shrinking status of the lower classes in the USA is not division of labor throughout the world. The imbalance of worldwide division of labor is primarily a symptom of disastrous monetary policy by the Federal Reserve bank and Congress and ill conceived regulations.

unfortunate that you're getting downvoted for explaining comparative advantage; none of these "we could face unfair competition from other countries" comments seem to understand this basic concept

To be fair, I did tarnish the simple explanation with an opinion on why the lower classes are worse off. I knew the risk I was taking when I added that.

I don't disagree that private equity has, historically, not been great at adding value. Sometimes they're good at cutting waste such as private jets and fat management perks. They're finance people, not product people, and that shows up in what they do to companies. More leverage than innovation.

But it's wrong to ignore the impact of competition from very low wage countries. China truly has hollowed out a lot of industrial operations, especially those that ship easily and are not super high tech.

(One might object and say that we don't care about industries that are not bleeding edge. It's true, degreed engineers don't have to care. Tell that to someone without a college degree.)

I'm here to tell you that it is extremely difficult to compete against low-cost country labor if you're doing basic to mid-level industrial manufacturing, because I'm a partner in a company that does that. I spend a lot of time thinking about how to avoid making things they make, because I pay people a reasonable wage, I have to pay their health benefits, I have to pay skilled machinists and engineers, and all of it is 6-20x the hourly costs of their equivalents overseas.

Some just say, well, automate all of it! And anyone who has experience in manufacturing knows that's not a great answer. "Lights-out manufacturing" is a bullshit myth propagated by people who know nothing about manufacturing except watching a couple YouTube videos. Because the labor that can be automated is already fairly limited. It's already mostly automated! It's the mechanics, machinists, tool and die makers, electricians, mechatronics specialists, production managers, procurement, quality managers, mechanical engineers who are most of your cost. Team leads whose jobs are mostly to monitor the machines and tweak the dials. They're good jobs and they pay quite well. A lot more than their equivalents in China. It's not the automatable direct labor that gets you - it's the skilled overhead labor costs inherent to manufacturing.

So, this business does quite well against its domestic competition. But what can I do when the Chinese competition reliably comes over and offers a product for half the cost? Mostly the answer is to avoid making that stuff, and specialize in smaller, higher margin niches. Which works, and is an answer for the business. But it means much less production happening domestically, because the niche stuff is usually a fraction of the volume. And that has lots of knock-on effects throughout the economy.

Go to Germany and talk to people in their industrial sector, like I have. You hear the same story. Factories shutting down because of low cost labor country competition. Magazines catering to Americans talk about how Germany has beaten this, but you'll find the reality when you talk with people in depressed German towns that have had yet another factory move away. This isn't only an American story.

But sure. Let's just blame the accountants and their "pyramid schemes." There's our villain. Investigation complete!

I'm curious about a tangent topic, if you don't mind. What are your thoughts (or have you thought much about) the feasibility of modern industrial manufacturing workspaces/processes designed with the goal of being easy to shutdown & restart?

Edit to clarify what I mean by this: It seems that a significant danger to small or upstart manufacturers is that once they become big enough to achieve stability, their product is likely worthwhile for amazon to copy. At which point amazon will contract a large scale factory and leverage efficiency of scale to outcompete on price.

The only ways to avoid losing out to the bigger fish seem to be "Scale Harder" and "Diversify". I am wondering if there are any good ideas about (essentially) diversifying without scaling for physical manufacturing.

You said a lot of words there, but I'm having a real trouble understanding just what you think it is that this "managerial crisis" actually involves.

not the OP, but there is a whole lot of failure to build infrastructure (housing, roads, public transit) quickly, cheaply, and/or in adequate quantity that results from governance issues (and not say a concrete shortage).

In this case the "managerial class" would repeal the Jones Act and marvel at the resulting efficiency?

> ...incompetent buffoons attempt to impose rules on the country to accomplish one thing, which fails utterly"

This is NOT what the Jones Act is.

The Jones Act is a very successful attempt by certain special interests to make money by instituting a law sending tons of money their way.

If we believe this model, one way to repeal the Jones Act is to somehow pay off those interests.

> It's basically been disproven at this point that simply lowering cost does not necessarily lead to better outcomes for the country.

After untangling the double-negative, this is equivalent to saying: "It's basically been proven at this point that simply lowering cost necessarily leads to better outcomes for the country."

Is this in fact what you meant? The rest of your comment suggests you may believe the opposite.

There is no double negative; "does not" is the only negative in the statement. "Disproven" is not a grammatical negative.

> It's basically been disproven at this point that simply lowering cost does not necessarily lead to better outcomes for the country.

Huh? When did this happen?

Neoliberal orthodoxy still reigns supreme.

> So if you take dollars and send them elsewhere, [...]

The US can print as many dollars as they need. In fact, when dollars go overseas, a inflation targeting central bank will automatically print more.

A disproven orthodoxy can still reign supreme. Take the Catholic Church post-enlightenment to the mid 20th-century for example. Just because an orthodoxy fails and falters doesn't mean that it will fade away. There isn't an equivalent of atheism for economics - there are no "aneoliberals" or "aeconomicists".

Anyone who declared themselves "aeconomicist" would be ridiculed. That reaction should give anyone pause though. Ridicule is a powerful reality-maintenance mechanism. Economics is an extremely powerful reality-creating assemblage. Attempts beyond descriptive are met with intense skepticism and cynicism. Even here, in purported a bastion of competing ideas, normative economics are routinely lambasted.

The most common reality-maintenance mechanism is the reflexive "come up with a better idea then" response. It serves as a means of shutting down all discourse which ends up being antithetical and ultimately hypocritical to the mingling of ideas and curious questioning we claim to adhere to. The end result is implicit support for the status quo. Even if that isn't what is typically intended, it is functionally equivalent.

All my friends who think neoliberalism = "placing one's head in one's ass" call themselves "socialists". You are correct that they're ridiculed, though.

This is actually a really good example of re-enforcing the normalcy of ridicule in that it licenses others to do the same to the same groups of people. It's precisely this reality-enforcing mechanism that I'm attempting to point out. It's endlessly both funny and sad that even giving folks the ability to recognize it doesn't actually change anything.

TrickardRixx's reply is kind of perfect in that regard.

Exactly. I can imagine the response to having such a statement pointed out - "Well, it's true, though!" Which of course is a welcomed retort; we're talking about the social construction of reality[1] after all. Indeed, it is this very process of weaving truths by way of social interactions that is being examined.

1. Berger, P. L., & Luckmann, T. (1991). The social construction of reality. Penguin Books.

> Attempts beyond descriptive are met with intense skepticism and cynicism. Even here, in purported a bastion of competing ideas, normative economics are routinely lambasted.

Which universe do you live in?

Normal people call for statism all the time.

For example pointing out that Germany manages to do just fine without a government snail mail provider, and that the US ain't so different and perhaps could do without, too, gets ridiculed.

Obviously there are winners and losers, but overall, the benefits to society favor repealing the Jones Act.

No, they don't actually.

> Each dollar spent is received by someone who then goes on to spend a part of that dollar and so on. So if you take dollars and send them elsewhere, that multiplyer effect is dampened. Things may be cheaper, but the economy is worse overall.

What? You're basically arguing for trickle-down economics here. No - subsidizing small special interest groups is not in our collective best interest.

Making shipping cheaper absolutely leads to better outcomes. And if you are worried about offshoring labor, the Jones Act makes it specifically more expensive to ship domestically than internationally.

I'm not arguing trickle-down economics. The concept I'm talking about is called the "money multiplier" [0].

Think about it like this: You go to the store and buy some bread for $1. GDP has increased by $1. Now the store owner saves 20% of the store's income and spends the other 80%. So after your purchase, the store owner goes to the bakery supply store and buys $0.80 of flour. Now GDP has increased by $1.80 from your initial $1 purchase. Trickle-down economics is more about how income is distributed in a society.

[0]: https://en.wikipedia.org/wiki/Money_multiplier

You're thinking of a "fiscal multiplier" - which is only applicable when you are distributing from a central source like a government or a bank. https://en.wikipedia.org/wiki/Fiscal_multiplier

Otherwise this is a common Broken Window fallacy - your example forgets that that dollar you spent would have been spent elsewhere. So all of those multipliers would have happened regardless of who gets the dollar (a key problem with Trickle-Down economics).

If you have to pay $5 more per loaf because of the Jones Act, we don't generate greater than $5 of economic activity because I will be buying less bread and you will be selling less of it. So there will be somewhere between $1 and $5 in economic deadweight loss.

Yes, I linked to the wrong Wikipedia page. Thanks. But no, it's not an instance of the broken window fallacy.

Let's say the store owner buys the bread directly from China, and by doing so can offer bread at 20% less than before.

So, I pay $0.80 for bread. The store owner saves 20%, which is $0.16. And let's say pay $0.40 for the bread from the Chinese supplier, leaving the baker with $0.24 to spend. I also have an additional $0.20 to spend. If I spend it, the merchant I spent it with saves 20% and spends the other $0.16, then the total GDP contribution is 0.80 + 0.20 + 0.24 + 0.16 = 1.4. I spent $1, but only only received a multiplier of 1.4 instead of 1.8 in the original case. This should be pretty obvious because any money sent overseas stops being multiplied, even if you end up spending the same amount of money total. This, of course, assumes there is a trade deficit with the overseas country.

So... firstly I think you are confused about the nature of the Jones Act. It only affects the domestic shipping industry. There is no overseas country to deal with. And to the extent that the Jones Act creates deadweight loss, it only penalizes the deal with the local baker.

>This should be pretty obvious because any money sent overseas stops being multiplied, even if you end up spending the same amount of money total.

Even given the above, I have no idea why you would assume this to be true. If someone in a foreign country is paid in US Dollars, the most likely thing to do with it is buy US goods or assets. (In the case of China, that is most likely US securities, but it's still not lost to the US economy).

Again, the multiplier effect is only applicable when dealing with an external input to a system. Otherwise, you are arguing that simply raising prices creates economic growth which is clearly not true.

>There is no overseas country to deal with.

There would be if you ended the act and all local shipping manufacturers shutdown so the country had to buy all their ships from Norway.

More likely South Korea, where most of Europe's ships already come from.

> Again, the multiplier effect is only applicable when dealing with an external input to a system. Otherwise, you are arguing that simply raising prices creates economic growth which is clearly not true.

No, that's not what I'm arguing. I'm arguing that the multiplier of a single dollar is based on the percentage of that dollar that stays in the local economy.

> Even given the above, I have no idea why you would assume this to be true. If someone in a foreign country is paid in US Dollars, the most likely thing to do with it is buy US goods or assets. (In the case of China, that is most likely US securities, but it's still not lost to the US economy).

Yes, that's why I mentioned that my argument is predicated on there being a trade deficit. The U.S. runs a massive trade deficit, so clearly not all the dollars end up back in the U.S. economy. Buying treasuries isn't really relevant because each dollar the government takes in in exchange for a treasury needs to be paid back out.

What if you could buy the bread for $0.12 and spend the rest of your dollar on other things? Your quality of life and standard of living has massively improved. You send paper overseas and get actual goods in return, and you still have $0.88 to spend on other things.

I use $0.12 because as the article points out, local shipyards cost 8x as much as foreign shipyards.

not an example of the money multiplier

Neo-liberalism that literally pulled half of the planet out of permanent poverty?

>goals of the act can be met in other ways

American merchant fleet is all but gone by now. Yet you're suggesting that we keep this act, pretending that doing the same thing would yield a radically opposite result?

PS: PATRIOT Act has a few goals, that have nothing to do with a lot of the content.

China pulled half of the planet out of permanent poverty, no neo-liberalism there (no freedom either, so no love lost on them from my side).

China (and Chinese people) was one of the major beneficiaries of your detested "neo-liberalism".

By largely adopting anti neoliberal policies…

Right out of poverty and into a new kind of servitude, maybe. OP really should've used "capitalism" entirely but I suppose that would go down even worse.

> Neo-liberalism that literally pulled half of the planet out of permanent poverty?

My original quote said "better outcomes for the country." Yes, a lot of people were pulled out of poverty, but their gains came and the expense of middle-class Americans.

Maybe you're a globalist and you think this is a good outcome. I just hope you never have a nation state-level problem, e.g. unfair competition in the market place. The help you receive from the Chinese government, despite all of their gains, is likely to be quite minimal if you're not a Chinese citizen.

> you're a globalist

If I were a nationalist and tech world was, I would probably be working in a low paid job. Because I'm not from "the default country"... and there are plenty of annoyed IT specialists in US that would kick me out(and blame me for driving down salaries), to "spite their face".

Being anything other than a globalist on a tech forum - is schizophrenic. Meritocracy is by nature globalist.

Historically the US has favored protectionism over subsidies, but my understanding is that subsidies are almost always a more economically optimal way of ensuring that strategically-important domestic industries are able to survive.

Then the "free market" zealots would just be crying about subsidies instead of tariffs and regulatory barriers. There's really no winning this battle.

I love how the only reply to this is to mash the down arrow. Never change, HN, never change.

Eternally subsidizing massive shipbuilding infrastructure as an insurance policy against WW3 seems beyond silly in my view. And remember, it has to be massive shipbuilding infrastructure or you're not doing any good. Having one or two shipyards that aren't very good at shipbuilding does zero if you need to suddenly build a lot of ships locally for "national security" which seems to be the argument of the pro-jones act commenters.

I suggest re-reading the article.

It has almost nothing to do with "lowering costs"; the fact that it costs 8x more to build a ship in the US is one of many pieces of evidence supporting the argument that the Jones Act has failed to protect the US shipbuilding industry.

> It's basically been disproven at this point that simply lowering cost does not necessarily lead to better outcomes for the country

Citation needed.

Every year we get more powerful or cheaper computers, phones, faster internet and mobile data connectivity, more efficient cars, wide access to a variety of foods and that's just a handful that come to mind, hard to deny these things aren't "better outcomes".

In fact a few of the major losses in terms of outcome recently have to be increasing costs of food and housing, where yes, lowering costs would in fact improve things.

Of course, you could also look internationally where this becomes even more obvious.

The major issue with the Jones act is that it prevents domestic transport of goods on water unless it is a built/flagged US ship. This accounts for a tiny fraction of transport within the US (3%):

https://data.bts.gov/stories/s/Moving-Goods-in-the-United-St...

Getting rid of this single part of the Jones Act would help a lot, and I don't see it hurting, as it accounts for such a tiny fraction of our transport today.

At what point was it alluded that the Jones Act was to make things cheaper? This is the first I hear of this. (I am actually asking, not rhetorical.)

It's not about simply "making things cheaper". It's that the costs imposed by the Jones Act are so imbalanced that they lead to effects like this:

>Significant opportunity costs also can be observed in the loss of revenues experienced when, for example, a hog farmer in North Carolina purchases corn feed from Canada instead of from a farmer in Iowa because exorbitant delivery costs make the latter’s price uncompetitive.

Clearly, this is not effectively protecting American business from foreign competition. Even if that is considered a reasonable goal, it should actually, you know, be met.

>Any earnest proposal to repeal the Jones act should address how the [military] goals of the act can be met in other ways. [brackets mine]

The Jones Act was passed in 1920. At that time, US military spending was a tiny fraction of what it is today, and the idea that the Navy would borrow commercial ships instead of simply using its own was a lot more sensible. Today, the US Navy is by far the largest in the world, focuses primarily on blue-water power projection rather than defense of the homeland, and naval battles are primarily fought by aircraft, which was unimaginable in 1920.

If the Jones Act continues to bring military benefits, the onus, in my opinion, rests on its supporters to show what they are, because modern naval warfare looks almost nothing like it did in 1920.

Just to respond to a few of your more landlubberly comments:

Naval battles are fought by aircraft carried on ships.

Modern naval warfare is still about global power projected by ships. That hasn't changed since 1920. Global power projection has always been the focus of the US Navy since its inception.

North Carolina and Iowa are far from each other separated by mountains. Until the advent of giant cargo airships, it will always be cheaper to move bulk goods by sea.

>Naval battles are fought by aircraft carried on ships.

In other words, there's a whole new cost and technology center. Modern naval warfare was unimaginable in 1920. The fact that "there is a boat involved" is not sufficient justification.

>Global power projection has always been the focus of the US Navy since its inception.

The US Navy was founded in 1794. So no.

>North Carolina and Iowa are far from each other separated by mountains.

Iowa is on the Mississippi, the Chicago Portage exists, the Erie canal exists, etc. I was quoting the author who had studied the issue: you should give your opponents more credit than that.

Origins of the US Navy as a blue-water force:

https://en.wikipedia.org/wiki/First_Barbary_War

https://en.wikipedia.org/wiki/Naval_Act_of_1794

https://en.wikipedia.org/wiki/Quasi-War

A Mahanian would argue that sea power endures regardless of the technological limitations of the contemporary weapon delivery mechanism, i.e. shell, aircraft, torpedo, or missile. The USS Langley (first US aircraft carrier) dates to 1921 and Billy Mitchel sank the SMS Ostfriesland in the same year, the first sinking of a major warship by aircraft. Of course, submarines had already came close to starving Britian in WWI. These are all the elements of "modern naval warfare."

This is also why the free market trumpeteers are wrong.

Companies charge the most they can, any lowering of internal costs will only change the external costs under 1 circumstance. When lowering the external cost will increase volume enough to make up for the lower cost.

Tech has changed the game so it's much easier for a winner to take most. The free market idea has always assumed local competition, that's no longer the case. When Apple and Google can collaborate on how much to charge for a phone it becomes more difficult to associate lower costs of production with lower cost to consumers.

There is another reason why companies lower cost, and it's because of competition. We have seen company after company in all sorts of sectors lose revenues because of competition, so your theory that they only lower costs to increase volume doesn't hold water.

Please read my post again, lowering of internal costs does not lower external costs unless doing so increases profit due to volume changes.

You're arguing that a company with competition may choose to lower its price whether or not internal costs have lowered (or not). That's a different question entirely.

If lower internal costs are achieved there is more flexibility to competitively price your product, i.e. reduce prices.

This is taken into account with the volume change point.

internal cost sets the lowest bar possible without a profit, it does not set what the price will be in the face of competition because companies charge as much as they can to maximize profit. That maximization either comes in the form of per-unit profit or volume profit.

Right. Companies are compelled to competitively price their product. They still seek profit, but are not at will to price whatever they want. I'm not sure then how you arrive at the conclusion that "the free market trumpeteers are wrong."

I don't think anyone disagrees that companies must price their product competitively and that they seek profit, those are uncontroversial facts.

I'm going to repeat myself here.

read the post again.

It's there, that you cannot see it is neither a damnation of the point, nor a refutation of it. If you cannot find a way to respond to the actual point being made there is no discussion to be had here.

Your entire premise is that "free market trumpeters" are wrong because we don't have a free market.

And as absurd as that sounds, you are right. I've heard more times than I can count from Libertarian ideologues that we could totally avoid these problems by just leaving the market alone.

So many people in the US stubbornly believe that a totally unregulated market would be a totally competitive one.

Back over here in reality, we see corporations taking every opportunity they have to be anti-competitive, and no amount of deregulation would change their motives.

The liberation we need is not for the market itself (as a whole), but for any new marketers who wish to compete against the giant incumbents that regulate them out of business. And the only option I'm aware of with enough leverage to intervene is government.

> It's basically been disproven at this point that simply lowering cost does not necessarily lead to better outcomes for the country. This was basically neo-liberal orthodoxy until the mid 2010s, by which point it was clear that lowering costs by offshoring labor had hollowed out the middle class in America. Money has a multiplyer effect. Each dollar spent is received by someone who then goes on to spend a part of that dollar and so on. So if you take dollars and send them elsewhere, that multiplyer effect is dampened. Things may be cheaper, but the economy is worse overall.

Literal gibberish.

What you are describing is a fiscal multiplier which is the change in national income via government spending.

What actually happens is deadweight loss. People buy less goods, suppliers make less money.

>What actually happens is deadweight loss. People buy less goods, suppliers make less money.

Literal gibberish.

Let's not imply things in a vacuum that don't have second-order effects. Where does this magical margin come from? Oh look, it's wages for that same worker who would be buying these goods!

> Any earnest proposal to repeal the Jones act should address how the goals of the act can be met in other ways.

Spend money directly on the thing you are trying to support rather than trying to bank shot private money into it by restrictions.

this is what googling and reading economics on wikipedia gets