This is the Cato Daily Podcast for Wednesday, January 2nd, 2019. I'm Caleb Brown.

What if a law meant to protect American industry in fact caused that same industry to shrink

while imposing significant if imperceptible costs on most Americans. In the case of

the Jones Act that's just what has happened, according to economist Thomas Grinnis.

We spoke at the Cato Institute's conference on the Jones Act last month.

The Jones Act has caused in some ways the U.S. shipbuilding industry to actually shrink. Why?

So it's somewhat ironic that the stated goal the Jones Act is to encourage the.S. ship building and also a ship operation, but in fact it's

done just the opposite. It's shrunk dramatically over 100 years when the Jones Act was in force. It just makes, it's more expensive. It turns

out American ships now cost perhaps four times or more as much as foreign-built chips.

And so it's like a huge hidden tax on anybody who uses American ships.

And so what has happened is American ships are no longer competitive on international routes.

They're about 1% of the world fleet and

domestic routes they're also not competitive with all the domestic forms of

transportation such as railroads and trucks etc.

So let's walk through some of the mechanics of what makes this happen.

The Jones Act requires that ships that carry goods from port to port intra or I should say inter-state within the United States has to be a US flag ship.

It has to be a US-flagged ship, it has to be a US-owned ship, and it has to be, is that crude by predominantly

Americans, is that right?

Yes, right, that's right. That's right.

There's four conditions, so it's got to be built in America, which is probably the most important

one, most costly one, and then owned by Americans and have an American crew and then

fly the American flag which means

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