It hasn't. Jones Act _protects_ the US maritime industry, so it stagnated and died. Nobody wants the US ships unless they have to use them, they're crap compared to ships from other countries.
> and they still can't find builders.
That's because shipyards are basically a defense industry subsidiary. So they receive a fixed amount of orders, and it's known for years in advance. The shipyards are also unionized to hell and back, with VERY cushy contracts. So shipyards can't hire temporary workforce for a given project.
"A federal grand jury in Kansas returned an indictment yesterday charging seven defendants, including five current and former high-level officers of the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmith, Forgers and Helpers (Boilermakers Union) for their alleged roles in a 15-year, $20 million embezzlement scheme."
https://www.justice.gov/opa/pr/two-former-presidents-boilerm...
In other words maybe there's just less corruption in Finland.
US domestic market is much larger. Uncompetitive industries can survive on domestic demand. Especially with some regulations that help. It doesn't even have to be explicitly protectionist regulation. Just regulate things the way Americans consider the best, instead of adopting international standards. That can create sufficient barriers to entry to allow uncompetitive industries and uncooperative unions survive.
I'd bet that's just scratching the surface. The only way any country has been able to develop their productive capacities is through public grants and subsidies. The history of US industry shows the same thing, research in materials, electronics, the internet, etc were all accomplished through publicly funded research.
Somehow the magical thinking here is that, if you allowed everyone to buy ships from anywhere they would buy more American made ships but because it is mandated that you buy American made ships for certain tasks, suddenly the industry is noncompetitive.
The reality of the situation is that the Jones Act is the only thing keeping the last vestigial of the shipbuilding industry alive. There are some inefficiencies in the industry it's self but for the most part, the primary drivers for the increased costs were related to the regulatory environment of the US(environmental, worker protection, etc), now there are even greater costs due to network effects of related industries having shrunk or died out.
Similar to posts about machine tools or electronic design, everyone talks about how in China its so much easier to get stuff done because the Fab shops are all next door and nothing like that exists in the US, you used to have more steel mills, fabricators and machine shops. Now there are fewer and further apart.
Network effects matter.
With these unions ("Boilermakers")? No chance. They can officially give their jobs to their _children_ upon retiring.
There is a waiting list for apprenticeships. You have to complete 8000 hours of apprenticeship, even if you are already qualified.
> By cushy contracts this means that the amount of wealth extraction from workers is not as great as it is in other American industries.
WA is ordering ferries at $1.5B per item. They cost 20 _times_ less if ordered from Turkey. This is not "wealth extraction from workers", this is "sucking on the teat of taxpayers".
It's about 7x.
> 20x discrepancy in salaries
Not salaries. The end-product costs.
[1]: https://www.usatoday.com/money/blueprint/business/hr-payroll...
And cushy contracts mean products that are considerably more expensive. Pretty much the only unionized industries left are those where they are somehow protected from competition. That's because union products cost enough more to drive them out of the market.
Similar with Boeing too.
Every country who isn't just getting exploited for their natural resources or labor has built their industry by protecting it.
In any case, the process really got going under Jimmy Carter. If we're talking about airlines, I guess you could point to the Airline Deregulation Act. The airline industry had been built in the first place by what people in this thread would call "protectionist" policies.
Stock buybacks are a big part of the story as well. These were illegal market manipulation I think from the Great Depression until the 80's under Reagan.
The problem here isn't the unions, it's the fact that we privatized building ships. It's yet another example that privatizing all parts of the government is a fundamentally bad idea. Government goals do not align with private industry goals and private industry, particularly in a well captured market like defense and ship building, gets to command insane prices because they know the US will pony up.
The reason the US was able to make advanced navy ships right up until the 80s is because shipbuilding was done by public industry. Insanely, Clinton and Reagan started the process of privatizing our fleet capabilities and it's landed us exactly where you think it would.
The reason we don't have ice breaker ships being built is because it's a niche market and ship builders are all too happy to say "no" or to charge an exorbitant price so the US military will go away.
But on the other hand, the same stats show a steady decline in the number of companies from 1950 that was only stabilised after the collapse in output, so it is probably arguable that the high-production situation was unsustainable. Economics can be complex.
The most recent classes seem riddled with various problems - see Zumwalt, LCS, Constellation. I suppose the Ford is relatively ok.
But let’s be real, as other countries rise up and we start losing our grip as the top dog, we're gonna feel the pain. It could be a slow burn or maybe a faster crash, but either way, it's gonna suck. We’re gonna have to go through some serious hardship to get back to where we think we should be. Not based on what we think we deserve, but what we actually do.
And it’s kinda mixed messaging too, right? We somehow believe our labor is more valuable than others, but at the end of the day, it’s gonna come down to working harder. Longer hours, more back-breaking labor, real work, not just sitting in an office chair all day. We’re not entitled to cushy jobs forever, and things are gonna get a lot harder before they get better.
They've created a market in which a US based company cannot compete economically, because the cost of production elsewhere will be less. There is no margin by which any competition can take place, whether or not the government throws a ton of money and stopgap incentives into the mix.
You can't manufacture chips, small household goods, general purpose clothing, electronics, or a whole slew of other things in the US because our legal regime fundamentally disallows any American participation in those markets through economic disincentivization. If you can't make any profit because you have to pay higher wages or taxes if you manufacture in the US, then you're not going to manufacture in the US, even if you're a patriot.
The US doesn't have a rational system designed to maximize value to citizens, it's a hodgepodge of conflicting regulatory grifts designed to maximally benefit the corporations who paid for the lobby.
> they're crap compared to ships from other countries.
That's exactly what "globalizing" is. You literally cannot, under the current regulatory regime, create a ship building company that can compete with other established interests and competition from other countries. You'd have to relax the arbitrary labor and wage constraints, fix taxes and tariffs for sufficiently long term outlooks that anyone would bother investing. To achieve that, you'd need good faith operators throughout the government willing to rock the boat, and if you think that will ever happen, I've got a bridge in Brooklyn for ya - I'll sell it cheap.
Why? Because efficiency is a tradeoff where you give up security and resiliency.
The US imports steel, and the protectionist regime almost killed the US steel: https://reason.com/2024/01/02/protectionism-ruined-u-s-steel...
> Batteries? Protectionism. Solar? Protectionism.
That's relatively new, and it _will_ lead to disaster. The US is already falling behind in battery tech compared to China and South Korea.
> Autos? Protectionism. Aircraft? Protectionism.
Need I remind you of Detroit and its handling of cheap Japanese imports in 70-s and 80-s?
Aircraft are only slightly protectionist, the US companies can (and do) buy foreign aircraft (Airbuses and Embraers are commonplace).
Investment can (and often is) different from protectionism. Typically, investment provides time-limited grants or other forms of support. If a company misuses them, a global (or local) competitor will outpace it.
Protectionism ensures that companies are indefinitely protected from global competition, so they don't feel as pressed to improve.
I am not a terribly smart person, and I don’t have all the answers, but I would argue it’s clear what we’ve done so far isn’t working, based on all available evidence.
Cheap labor cost typically is only a fraction of a high-tech product. If anything, China was not the world's biggest factory, but the world's biggest assembler. It's changing right now, and China is producing more of its own high-tech components.
So a small amount of protectionism (like a 10-15% tariff) might be OK, and it will compensate for this labor cost discrepancy. But not tariffs that simply make the local industry complacent.
If the Pharoah wants a fleet of aircraft carriers, the Pharoah will have a fleet of aircraft carriers.
The West plays nice as much as possible. China is playing to win.
I'm not seeing it. Chinese economic power and tech capacity might exceed US capacity in time, but I give it only p = .25 or so. China's descending into some sort of political chaos seems more likely.
> Our research reveals that China has built the foundations to position itself as the world’s leading science and technology superpower, by establishing a sometimes stunning lead in high-impact research across the majority of critical and emerging technology domains.
> China’s global lead extends to 37 out of 44 technologies that ASPI is now tracking, covering a range of crucial technology fields spanning defence, space, robotics, energy, the environment, biotechnology, artificial intelligence (AI), advanced materials and key quantum technology areas. The Critical Technology Tracker shows that, for some technologies, all of the world’s top 10 leading research institutions are based in China and are collectively generating nine times more high-impact research papers than the second-ranked country (most often the US). Notably, the Chinese Academy of Sciences ranks highly (and often first or second) across many of the 44 technologies included in the Critical Technology Tracker. We also see China’s efforts being bolstered through talent and knowledge import: one-fifth of its high-impact papers are being authored by researchers with postgraduate training in a Five-Eyes country. China’s lead is the product of deliberate design and long-term policy planning, as repeatedly outlined by Xi Jinping and his predecessors.
Emphasis mine.
And the West isn’t? I honestly am not sure whether I prefer Xi Jinping over one of the candidates in the upcoming US elections.
There are still thankfully some checks and balances in place, but if the loudest elements of one of the two major US parties has everything their way, I’d honestly prefer to live in the PRC.
Please, tell us how you came to this conclusion
American movies, however, are still quite popular abroad. Offhand, I'd say it's one of America's biggest exports. "Microcode" is the other one, if you mean things like CPU design: all the biggest CPU makers are in America: Intel, AMD, Apple, Qualcomm, etc. (Many of the CPUs are manufactured elsewhere, usually by TSMC, but all the design work is done in the US.)
That's just not true. As long as you are able to get an original ticket and not a resold one. But ticketmaster and live nation should be regulated because they're a middleman monopoly in all of it.
According to the 1st paragraph of the linked article, it is.
>As long as you are able to get an original ticket and not a resold one.
That's pretty useless if they all get bought up by resellers.
I'm not talking about original ticket prices, but rather the prices that normal people actually pay. According to the article, it's huge because of scalpers. Maybe that isn't true in your experience, but it seems to be true for enough people that they're writing articles complaining about this.
If you want to be able to build and retain the capability, you have to protect the machine that does the building: people, institutional knowledge and domain expertise, equipment, etc. Otherwise, you forget how to build, the machine evaporates. And here we are.
The American shipbuilding industry has been allowed to atrophy in an idea that protectionism would lead to good commercial the results.
What little gets built in the US is way behind the global peers in terms of economics and quality.
As usual the end results are that the entire shipping industry works around the Jones act, for example cruise ships from Florida docking in the Bahamas, and for the regions that can’t do it they are tough out of luck.
Why can’t the US build offshore wind? Because there are no jones act compliant vessels and the proposed workaround is staging all the materials in Canada and adding an enormous time waste to the projects.
[1]: https://en.m.wikipedia.org/wiki/Merchant_Marine_Act_of_1920
We could talk about modify it maybe allowing purchase of specialized ships from overseas friendly countries, like icebreakers from Finland.
What starts with good intentions ends with a bandaid that someday will have to be ripped off at the cost of the people who made a subsidized living based on it.
If you want to be a global power, you require great navy, both civilian and military. That's been true since 1500s and will likely remain true for many years to come.
So question is, do we throw out Jones Act and slowly stop being World Superpower or leave it and pay higher upfront costs in certain places? That's political answer obviously.
It can, however, make us much better off, by for example allowing US companies to buy foreign ships to do tasks that currently are covered by Jones Act, and as a result are not done at all.
For example, we’d be able to ship gas from American oil fields in the South to consumers in the North, where there missing or insufficient pipeline capacity. Right now, Jones Act forces US consumers in the North to buy foreign gas.
Couple years back, before the Russia-Ukraine war, Russian Gazprom was making nice profit on the following run: 1) sail to Northeastern US, sell it Russian LNG 2) sail to Gulf of Mexico to buy American LNG for cheaper than it sold Russian gas to Americans in the North 3) sail elsewhere in the world to sell them American gas, eg to Europe or Africa.
This was only possible because Jones Act makes it impossible to ship LNG from Southern US to North. There are literally no vessels that can do it. It already cripples our ability to move things around.
Jones Act is not what killed the US Merchant Marine Fleet. Globalization is what killed it.
The Jones Act made sense when it was implemented in the 1920s while America was the world's leading ship builder, the shipping industry was heavily subsidized, and there was no alternative to shipping things by water. But after the subsidies stopped, and shipbuilding in america started to lose its competitiveness, and we built a massive interstate highway system that made transport by truck economical, the Jones Act proved far too restrictive. The more expensive domestic water shipping got, the less demand there was for ships, the less demand there was for ships, the more it cost to build ships domestically, the more it cost to build ships domestically, the more expensive domestic water shipping got.
There are alternative and better ways to keep the us merchant fleet alive, and even make it thrive, than keeping the current status quo which is obviously not working.
"Protectionism isn't what killed the US industry. Having any overseas competition whatsoever is what killed the US industry." This is farcical.
If globalisation is when the market lacks protectionism and as a result the manufacturing all moves to cheaper shores, then this was not globalisation by dint of US shipbuilding having abundant protectionism.
The entire US Jones act compliant fleet comprises 60 vessels. It is not a great civilian navy.
https://www.maritime.dot.gov/sites/marad.dot.gov/files/2021-...
I'm not super sympathetic to arguments that presuppose the absolute requirement that US hegemony continue indefinitely, but certainly if you are trying to make sure your shipbuilders will be roughly as good as foreign ones or better (a reasonable policy goal, even leaving out military reasoning), cutting them off from competition with those foreign shipyards is not going to result in what you want. If there is a ready market for expensive, poor quality ships that take years longer to build than they do abroad, why would I as a shipbuilding executive invest to improve on any of those metrics? It would be wasted money, because my existing capital and workforce are already 100% utilized in high-margin activities, with orders stretching out years into the future.
You'd instead see all domestic shipping be entirely dependant on third-party international operators paying third-world wages to third-world crews, and you'd have next to zero recourse against them if they, say, run one of their ships into a bridge, or spill a few million litres of oil.
There are a few good reasons to repeal the Jones Act (reduce shipping and trade costs in Hawaii, Alaska, and Puerto Rico) and a lot of really bad ones (the domestic shipping industry will be completely killed, and you're inviting unbounded liability from unregulated, fly-by-night international actors who don't give two craps about our laws.)
The way ocean shipping currently works is entirely incompatible with any national rule of law. Flags of convenience and corporations with non-existent liability mean that nobody in the international industry is actually following any of the rules.
The domestic industry has to follow them, which is the reason why it's not cost competitive.
The problem stemming from flags of convenience is well known and the Port State Control system [1] was created to manage it.
In other words: live up to our requirements or we will detain your vessel.
The US is not a signatory to any international port state control scheme but as is usual the US runs its own nearly equivalent scheme through the coast guard. [2]
[1]: https://en.wikipedia.org/wiki/Port_state_control
[2]: https://www.dco.uscg.mil/Our-Organization/Assistant-Commanda...
The problem is that there is too much to check, too many incentives and reasons to break the rules, and too few consequences for people who do.
You know that the Jones Act only applies to domestic shipping, right? So our ports are still full of ships dependent on third-party international operators paying third-world wages to third -world crews who occasionally run their ships into a bridge.
Of course there have to be considerations to maintain the capability to build warships. But other than that the Jones Act seems to do a lot of damage for very little benefit. Though ripping off the bandaid would be painful in that moment
But isn't it the case that national security concerns are being reached, presently, under the effect of the Jones Act? We just don't have the capacity to build the naval vessels that we need for national security.
It's not being fully met. Likely with elimination of Jones Act, it would disappear entirely. So it's one of those, it's bad now, do you want to eliminate it completely?
Only way I could see Jones Act disappearing but Merchant Marine Fleet to remain intact is announce that US is done playing world Navy Police. If it's not US Flagged, US is done giving a shit. Economic worldwide collapse to follow.
I read "economists and other types" as people who understand basic economics. People oppose the Jones Act because it has devastated the US shipping industry, which is obviously bad for national security. It's not just about cheap shipping.
This is most people? National defense and the domestic shipbuilding industry are important, but the value of cheap shipping should not be underestimated. Plus, giving credit to the Jones Act for the current state of US civilian and military shipbuilding is, in my opinion, perhaps the strongest possible argument for repealing the Jones Act. The current state of American shipbuilding is disgraceful.
So if we haven’t lost capacity but have lost capability doesn’t that imply something about the industries we’ve lost?
I’m not a ship industry expert but the US can make as much stuff as anyone in the world besides China and on a per person basis we are top tier. If ship building is a problem it’s not because of some generalized failing.
if you built and registered a ship in the US, wouldn't taxes be much more than say a ship registered in a small tax-advantageous country? (for a ship that basically wasn't in US 99.9% of the time)
Retirees do this with motorhomes - why register in california and pay all those taxes when you will be out of the state traveling all the time. Register in North Dakota or something and still drive the same route. (note taxes could be state income taxes because of residency, or vehicle registration taxes which are a % of vehicle value)
I’d say the “where to register your ship” question is the category of “complicated” - since obviously if we lowered our taxes to be as low as Panama then we’d get more registrations which sounds good - and “low tax” is better than the “zero” taxes we get from them now, but then the other country would just undercut that, and so on, and now nobody can get any tax revenue anymore.
It’s why the global economy doesn’t lend itself to simple sound bite answers like “just build American ships” or “just raise/lower tariffs” etc.
It’s too bad no one on any ballot seems to do anything but useless grandstanding, when it comes to actual problems like this.
It is a lot of pain for reset of economy for protecting a small industry. If US wants more naval shipyards, then should incentivize building them. I get the impression that there has been much reason for yards to improve protected from competition.
Basically the US wasn’t great at shipbuilding post civil war due to high costs. WWII was an existential threat so cost was no object, and we coasted on that capacity for a long time.
For other high income nations the ship building industry has specialized on higher tech vessels while leaving the enormous labor intensive container ships to South Korea and now lately China.
The goal was to have a globally competitive merchant marine based on a home grown ship building industry to call on in case of war. Trying to balance both sides.
The end result is that that home grown ship building industry has all but disappeared together with the educated population required to crew it.
[1]; https://en.m.wikipedia.org/wiki/Merchant_Marine_Act_of_1920
What economists argue that the Jones Act is suppressing is greater use of domestic sea transport, which could be much cheaper than trains and trucks. Without the Jones Act sea transport would grow, but undoubtedly using foreign ships, perhaps relying on a primarily foreign crew. OTOH, a much larger domestic shipping industry would likely spur demand for downstream services, as well as open up opportunities for growth elsewhere in the economy, so overall jobs for Americans might grow. But deregulation grow the ship building industry domestically? Nobody expects that.
If you want to bring it back, you have to deglobalize. (Good luck with that!)
Boat building can be solved by spending money to build boats (and perhaps waiting a couple decades for expertise to be built up).
Using eminent domain or changing the view of the public on land rights is a much higher barrier.
I actually don't take it for granted that enough money thrown at a problem can automatically solve it. There's a critical mass of underlying assumptions without which the marginal output of each additional dollar supplied becomes so limited that it just doesn't make sense, even with the government money printer.
...don't we? I'm not sure about the effectiveness or how to measure it, but I know that a lot of cargo - especially long distance cargo - travels by rail.
According to the article he references that talks about the problems with shipbuilding more generally[0], the US has never been competitive in shipbuilding at any point in the post-wooden ships period, long before globalization was the issue.
[0] https://www.construction-physics.com/p/why-cant-the-us-build...
Globalization would have selected the experts rather than whatever random Germans and inexperienced firms present.
This is all about isolationism.
It's worth flipping the question on it's head. China's ambitions are very clearly best carried-out by a Navy that can harass Taiwan and expand their territorial claims in the waters surrounding Japan and eventually even threatening Australia. This is a smart move on their behalf, but they will be contending with unfriendly airspace and ground-based anti-shipping weapons. If you want to look at it from a purely military materiel perspective, I would argue the US has weighed their options and taken a less Naval-dependent route.
the US need a navy to have a presence in the middle east , and Asia. We are down to the bones for force projection and to secure our own shipping. There is no 'less Naval dependent' way to police the worlds waters - the alternative is to give up.
Which is fine, the USA has been struggling with naval force projection for some time.
This is the meat of the article in my mind. The US has globalized away its maritime industry in general and we now lack the institutional knowledge, infrastructure, and labor force needed to operate even semi-independently on the maritime front. Just look at our domestic shipbuilding capacity vs. China: https://www.americanmanufacturing.org/blog/chinas-shipbuildi...
WA state has the same problem trying to get ferries built for the Puget sound. Every decade the fleet gets more dilapidated and the replacements get more expensive and farther behind schedule. The legislature has ditched the requirements that the boats be built at a WA shipyard and they still can't find builders.