Odd Lots - The Great Jones Act Debate

Episode Date: March 20, 2025

We finally did it. We finally did an episode on the Jones Act. For years on the podcast, we've been referencing this controversial law from 1920, which places restrictions on domestic port-to-port transport in the United States. But we had never actually done an episode on what it is, why it was created, and why people feel so fervently about either keeping or maintaining it. There are plenty of people who feel that this law is an inhibitor of US growth, because domestic water-based shipment of goods requires a US-flagged, US-crewed, and US-built vessel. And yet the law persists — for over a century now. At our live show in Washington DC, we spoked with the Cato Institute's Colin Grabow (who took the anti side) and the Transportation Institute's Sara Fuentes (who took the pro side). They explained their respective positions on questions of the economics and national security in a lively, heated (but polite) debate. Read more:Jones Act Descended From Centuries of Lazy ProtectionismEast Coast Gas Would Only Drop a Dime If Jones Act Lifted, Says JPMorganJones Act Ships Competitive for US Fuel Exports as Freight Soars Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

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national of formation in SOUtened by Santa Canada. Podcasts Radio News. Hello and welcome to another episode of the Odd Thoughts podcast. I'm Tracy Allaway. And I'm Jill Wisenthall.

Joe, this is the big one. We are about to ruin our most long running joke, all for this. What is our next most running joke? Anyway, yes, we are ruining a lot. So we've joked for years and years and years about how we should do an episode on the Jones Act because it's come up obviously in dozens of episodes. We actually talk about it quite a bit in different contexts, but we've never done an episode actually talking about the infamous law.

That's right. And since we waited so long, I guess, we had to do it a little bit differently. In style. We had to do it in style. Yep. So for those of us who came to our live event in Washington, D.C. recently, you will have seen exactly what format we did this in. But it's a debate. So we had someone who is pro Jones Act debating with someone who is anti-Jones Act live on stage. Things got heated. Things got emotional. but always entertaining and informative. It was heated. You know, I've joked, you know, like people have very strong feelings about the Jones Act. And when we did it live on stage, we separated our two guests at the end of the stage, you know, sort of tongue-in-cheek, you know. But actually, you know, it's like really intense. And people feel very strongly about this law, which restricts if you're going to ship something from one point in the U.S. to another point in the U.S. by water.

it has to be on a U.S. built and U.S. crude and U.S. flagged ship, people feel very strongly about this law. That's right. And it's kind of interesting also to look at it as a little petri dish of industrial policy, which I think is one of the reasons we first started getting interested in this, along with a lot of the supply chain disruptions that we were experiencing around the pandemic time. But our two debaters were Zada Fuentes, the vice president for government affairs at the Transportation Institute and calling Grabo, an associate director at the Cato Institute's Herbert A. Steefell Center for Trade Policy Studies. Zada took the pro side and Colin took the anti side. And as I said, we had some pretty good arguments on both sides. So take a listen, see if it changes your mind. I'm sure if you're listening to this, you probably already have an opinion. But here we go. Before we start, I got to ask, how many people have heard of the Jones Act here?

Wait, actually, let's hear, let's just get a temperature of both sides. So shout if you think the Jones Act should be repealed. And shout if you think we should keep the Jones Act. Wow. Shout if you just feel strongly about the Jones Act either way. Yeah, all right. Everyone has an opinion. Okay, we are giving up on our longest running joke and finally doing the Jones Act episode.

We thought we do something a little bit special instead of just having one guest. We actually have two. It's going to be in all-thoughts debate, someone arguing the pro side and someone on the con side. That's right. We're not going to formally declare a winner. Everyone's a winner. They're not formal rules in terms of, you know,

there's no mic mute or anything. But we are hoping we are going to have a spirited discussion about this very controversial law. People feel really strongly about this law one way or another. And so we're going to finally, we don't actually do a lot of debate. on the show, actually. It's a rule at my house that you can't talk about politics or the Jones Act or crypto at Thanksgiving. Okay. So without further ado, we do have the perfect guest. We're going to be

speaking with Zada Fuentes. She is the vice president for government affairs at the Transportation Institute. And we have Colin Grabo. He is a policy analyst at the Cato Institute. So welcome to the Sage, Zada, and Colin. All right. Colin and Sarah, thank you so much. We're finally talking the Jones Act. Colin, what do we start with you? Why should we get rid of the edge? Why did you even agree to come out here and talk about some random shipping law from the early 1900s? And why do you devote time to it? And why do you want to kill it? Well, Joe Tracy, first off, thanks for having me to debate this issue. Thanks for ending the long-running joke and finally talking about it. So yeah, the Jones Act. Why am I so against it? I think the U.S. maritime policy should try to achieve two goals. It should provide us with efficient, domestic transportation by water, which is really important because we have lots of water in the United States. We have thousands of miles of coastline home to major metropolitan areas.

We have the Great Lakes. We have a vast network of inland waterways. We have a non-contiguous lakes and territories. So we have this big resource and we totally underutilize it by making the cost of transportation so expensive. The other thing we need to do is meet national security goals. We need to have shipyards. We need to have ships.

We need to have mariners to crew those ships. And I don't think the Jones Act does a good job of meeting either one of those goals. So I talked about shipping, water transfer, being expensive. Why is that? Well, we should back up and say, what does the Jones Act do? Well, the Jones Act... Everyone's giving history lessons tonight, so you might as well go all the way back. Oh, so the Jones Act is Section 27 of the Merchant Marine Act of 1920 was essentially states that if you want to move goods by water, you have to use a vessel that meets four conditions.

It has to be U.S. flagged. It has to be U.S. built. It has to be crude by Americans. It has to be at least 75% owned by Americans. Now, these provisions make water transportation extremely expensive. Less than 1% of the world's ships comply with the U.S. flag requirement. That means 99% of the world ships are off the table if you want to move something within the United States. If you look at a map of all the ships operating in U.S. waters, they're full of foreign ships.

We have foreign ships everywhere. We can't use them. So right there, that's less supply. The U.S. flag ships are about four times more expensive to operate than foreign flag ships. And when it comes to building that ship, they cost about four to five times more to build than those built overseas. So that has huge capital costs. You put that combination together and you're going to get very expensive shipping. How expensive?

There was a Federal Reserve Bank of New York study in 2012 that found it was twice as expensive to send a container from the East Coast to Puerto Rico, where the Jones Act applies as a send to neighboring Jamaica or the Dominican Republic. In 2017, the CEO of a Jones Act shipping company admitted that Jones Act tankers were three to four times more expensive than internationally flagged tankers. I mean, just yesterday, a state senator in Connecticut, rather, testified before the state legislature saying that his first job out of college used to work in bulk shipping and that moving goods within the United States was five, sometimes 10 times more expensive than using internationally flagged vessels. So this is the profound cost. I mean, distance is a barrier

to trade between Americans, and this makes water transportation incredibly expensive. It's a barrier to us doing business with each other. Okay, so the one thing we can agree on is America is hashtag blessed in terms of inland waterways. But Sada, I want to bring you in. So feel free to give us your own history lesson, but the Jones Act doesn't exist just to boost prices of shipping. There are other reasons such as security. So why don't we go way back in history and talk a little bit more about why this act actually exists? Sure. So the reasons for the Jones Act are the same today as they were when it passed in 1920. And also some form of, you know, Jones Act can also be referred to as cabotage laws. Some form of cabotage law has existed. What's cabotage mean again? It basically means if you're moving

goods between two points that you want those goods to move on a vessel register to your country. Okay. Right? And it's really extremely constantly. 80% of the world's coastline is governed by some form of cabotage. You see it in other industries, right? You can't take Air China from New York to L.A., right? So it's extremely common across modes, across the world. But I love the Jones Act, and I love it so much. You can really, I like to put the reasons I like it into three categories. Economic security, national security, and homeland security. Economic security is pretty obvious, right? Because of that U.S. crew, U.S. owned requirement. It's created about 650,000. thousand jobs, 650,001, if you include Collins. And also all those jobs are for Americans. Those Americans are paying taxes. Those companies are paying American taxes. That economic security also includes self-sufficiency, which especially matters in our non-contiguous trades, which I hope we get into a little bit more. The men and women who crew are Jones Act vessels are the exact same people who crew our seal at vessels in time of emergency.

Not only that, but you also get a shipyard industrial base. I've heard you all talk on this show. You all well know that Navy shipbuilding is really feast or famine, right? There's a lot of unpredictability in that market. And so the Jones Act is kind of a final line of defense that ensures you do have some shipyard workers, you have a shipyard industrial base that can be spun up when needed. Third category is homeland security, right?

That's pretty obvious. You don't want to just open up our beautiful inland waterways, our Great Lakes, to the cheapest option. The U.S. flag that Colin mentioned matters quite a bit, right? It means that our vessels are inspected by the Coast Guard. We know that they're not polluting and linking. It means that the mariners are known by the Coast Guard. They've gone through background checks. They've been trained to the highest standard worldwide.

And so, you know, think about those inland waterways, those are, you know, those run by stadiums, they run by refineries, they run by personal homes. You don't want to just have whoever there just because they happen to be the cheapest and save a couple bucks. Okay, but thank you, first of all. And I take your point about the 650,000 jobs, but, you know, there's 300-something million Americans who aren't employed by the Jones Act, per Collins' argument, paying more for any goods. why should the rest of us 330 million Americans who aren't employed? And me and Tracy maybe partially because it comes up so often, who aren't Jones Act employed, what about the cost of that? Why should we be bearing that cost?

So I take issue with the cost argument, right? I don't necessarily think that's true. You can look at the U.S. Virgin Islands, right, which does not have the Jones Act and compare prices there to Puerto Rico, and you'll see that the Virgin Islands is actually more expensive. And what matters to consumers isn't just cost anyway, right? it's reliability. It's that stability in the marketplace in knowing everybody is playing

by the same set of rules, knowing that shipment will show up, and that really matters. And also I would say the Jones Act doesn't involve any government dollars, right? So the taxpayer is not paying to subsidize this fleet.

But if you got rid of the Jones Act, you would have to eventually pay for those mariners, pay for those shipyard workers, and make those investments. So the government's going to pay for that regardless. So do you want it to be taxpayer dollars, or do you want it to be a minimum,

and sort of baked into something, just the cost of doing business in the United States. I think it's helpful for these types of things to think about the counterfactual sometimes. So I'm going to ask both of you to respond to this question. But if we got rid of the Jones Act tomorrow, waved a magic maritime wand or whatever, and it went away, what would the world look like? Let's do Colin first. Well, I think that's a great question. Because the real cost of the Jones Act is not that it costs X amount of dollars more to send a container to Puerto Rico.

it's what does the United States look like with the Jones Act versus what does the United States look like without the Jones Act? And the United States without the Jones Act is a country that is better connected to each other through more efficient supply chains. We can envision, for example, right now we make shipment of oil so expensive that we export it all over the place, but East Coast refineries will import it from, say, Nigeria or Saudi Arabia instead of Texas because it's just not competitive after you factor in the cost of shipping. Some goods are impossible to ship within the United States because of the Jones Act. The United States is one of the world's leading exporters of liquefied petroleum gas, basically propane. Puerto Rico buys it from foreign sources. Hawaii buys it from as far away as West Africa.

Not because it's more expensive. There are zero ships to transport. It's literally impossible because of the Jones Act. We've seen examples of lumber producers in Pacific Northwest saying, look, when we go to send our lumber to other parts of the United States, So we're getting beat out by Canadian competitors that can use more efficient international shipping. So we're being put on the back foot. We've seen government report cite examples of steel in the Western United States being purchased from Asia instead of Eastern producers. Why?

Because multiple times it says Jones Act shipping makes it uncompetitive for Americans to sell to other Americans. So we think about all the supply chains that would be better connected to all the efficiencies that would bring. On the more micro level, you can think of, say, ferry operators in Washington State that could buy ferries at half, a third of the cost of what they're paying now to modernize their fleets and improve transportation. So I think that the difference between the U.S. as is versus without the Jones Act, it would be a huge, huge gain. Sarda. I'm glad you asked that.

World Without the Jones Act is a pretty scary place, right? Because I want you to remember the context, I'm serious. I want you to think about the context we're living in, right? The People's Republic of China has made a strategic decision to overinvest in its own maritime capability. They are deliberately undermining the prices, low-balling the prices for shipbuilding, for shipping services, for ship to short cranes. They want to be the only provider out there, right? They want the whole world to be dependent on them for shipping because they know that is the backbone of commerce, right, is how we transport these goods. So if we wave that magic wand, first off, so 650,000 people would be out of work, which would be a drain on your taxpayers, right?

So we would have to pay for that. you would basically eliminate the American shipbuilding industry overnight because even Japan, even South Korea cannot keep up with Chinese subsidies. They're exiting the container ship market. They're exiting other shipbuilding markets. So absolutely China would swoop in and do that. You would also have ships of unknown province, right? They'd probably be owned by China through various shell companies, crewed by unbedded mariners,

sailing, moving hazardous materials, at best case. up and down our inland waterways past all these soft targets. So if you wanted to keep that security on the seas, right, you would have to, I don't know, quadruple the sides of the Coast Guard or the CBP to do those vessel inspections right now. But, you know, Coast Guard CBP, you know, are active international ports, certain ports where foreign vessels can come and visit. But you would have to really increase that. I mean, keep in mind, the Coast Guard is smaller than the NYPD.

They do not have the bandwidth to handle all these unregistered ships that we don't know how safe they are. We don't know how much they're polluting. You don't know who's on there. I think it is very scary. I was totally serious. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy.

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Get the reporting and the context from Bloomberg's 3,000 journalists and analysts we're all over the world. Listen to the latest from Bloomberg News Now on Apple, Spotify, or anywhere you listen. To Collins' point about, you know, various entities within the United States having to import. And you talked about national security or economic security and the fact that for like basic commodities, you know, for example, at times when there's a really tough winter in New England, that we can't ship LNG from Houston to New England, doesn't that create an economic vulnerability for the U.S.? The fact that we can't supply ourselves with our own raw materials? materials in certain instances? So I don't think that's true, and I think that your New England LNG example is a really good one, right?

Because what happens all too frequently is the Jones Act becomes a cover and a scapegoat for other policy failures, right? New England has an energy policy issue that I love ships, but the cheapest, most efficient way to move natural gas is as gas in a pipeline, right? They're not into pipeline. I know, yeah, they're not into pipelines. And so if they want, they also don't have storage capacity, right? Which means they cannot buy natural gas during low season.

They're only ever buying it at peak. And their need is erratic. So they don't have a long-term charter. They're buying it on the spot market. And what's really expensive about liquefied natural gas is that liquefaction. So if you were to take gas out of Pennsylvania, first you've got to move it down a pipeline. You got to liqueify it and then move it. and then re-gasify it.

And then you can only do this. It's very small amounts, right? Which is to be more expensive because what really matters is that kind of volume. So even if the transportation were free, you're already looking at having to charge quite a lot of money for gas in New England, right?

So even though it's free, you still are going to bear that cost. So in order for gas in New England to be cheap, you would have to force energy producers and those kind of liquefying facilities to do this at below market rate, right? We're in a capitalist society, so people are going to look for the cheapest option, and sometimes the cheapest option is not going to be American.

So the liquidified natural gas is a great example. Colleen, could I ask you to respond to the sort of national security point? Because when you hear statistics like the Coast Guard is smaller than the New York police force, that seems pretty worrying. Yeah, so a couple arguments that have been made here. One is about the alleged danger of foreign ships and having them in our waters. Folks, the choice here is not, do we let foreign ships into our waters? do we not. They're here. They're already here. You can go on like marinetraffic.com. It will show you all

the ships in U.S. waters. You can find foreign ships sailing up to Albany, New York. You can see them sailing past Philadelphia, up to New Orleans, up to Sacramento. The Jones Act doesn't say you can't come into U.S. waters. It just regulates what you can do within U.S. waters. So they're here and talk about hazardous materials. I mean, all the tankers coming out of Houston and Corpus Christi with energy products. I mean, the vast majority are foreign. So they're already here. We have We have customs and border protection. We have the Coast Guard to inspect these vessels. They are subject to port state control. So I find that a bit of a red herring. With regard to the issue with China, I find this ironic because Jones Act shipping companies are some of the biggest patrons of

Chinese shipyards. I mentioned earlier that U.S. built ships are incredibly expensive, you know, four to five times more. Well, one result of this is that people don't want to buy new ships. So they keep old ships going for a long time. Internationally, ships are used for 20, 25 30 years. The last 17 Jones Act ships, they were scrapped, had an average age of like 43. So they keep these old ships running, and they do it by sending them to China to get maintained, a Chinese state-owned shipyards, and they turn around and use the money they save them going to China instead of a U.S. or an Allied shipyard and say, please keep the Jones Act in place. It's really critical for our national security to stop China. I mean, we're joking, but this is real life.

I mean, two years ago at Jones Act shipping company, Pesha, they took a 43-year-old ship built in 1980, And it was built with steam power. So instead of supporting U.S. shipyards, buying a new ship, no, no, no. They sent to China, ripped out the steam power, put in LNG, spent tens of millions of dollars to do so, so we can keep running for years to come. And then we tell ourselves this is all about national security. I think it's farcical. Shipyard repair and shipbuilding are two very distinct industries.

And you're correct. We don't have the shipyard repair work in the United States that we should have. I'm very glad I'm not a businessman. I don't have to make these types of business decisions. But frankly, you can't really get ship repair work done even in our allies because China has lowballed that market so, so much. Why isn't there more of a shipbuilding industry, given the existence of the Jones Act and the theoretical natural demand or the theoretical demand that creates, why is shipbuilding so meager in the United States? And why aren't they building more Jones Act compliance ships right now, given the evident scarcity.

Sure. So the reason you don't see as much shipping as I would like is frankly because we've chosen as a nation to make investments in other modes, right? If shipping was subsidized in the same way that trucking was, right? Think about the highway system. Think about pipelines. Think about all these other areas where a lot of goods have moved. So the shipbuilding market is right size for the Jones Act, right?

So we are, you know, right now we build enough ships that we need for the Jones Act market. We don't scrap super easily like China does because scrapping is expensive and bad for the environment. So yeah, we like to extend the useful life of our vessels as much as possible. We don't do a scrap and rebuild pricing scheme like China does, right, which is a big, big part of it. And I wish that we did build more ships for the international market. And I think we may see a shift in that, right, like from the Ships for America Act and some other areas. But what's really been happening is in the 1980s, the United States decided to step away from construction subsidies, which are very, very strong in the rest of the world, right?

So the United States decides, we're not going to do any more shipbuilding subsidies. You have to build here, but, you know, you have to use American laws, American workers, et cetera. And at the same time that we did that, South Korea, Japan, Europe, all invested trillions in terms of subsidies, in terms of financial schemes, and other options. What China has done is really astounding. CSIS has a new report out this year about how they're just flooding the market, with tonnage to try and drive out all other shipbuilders.

So you're seeing even our allies having to close their shipyards and decrease their shipbuilding because of the unfair playing field that's done by China. So if you say, let's get rid of the Jones Act, let's get rid of this U.S. build requirement. You're basically throwing our shipyards to the wolves, right, and saying, okay, you keep fighting by American rules. You have to pay minimum wage standards.

You had to have safety standards. And you have to go fight against a shipyard in China where people don't even have shoes on, right? you know, it's not a fair fight. So if we were living in a perfect free market world, we'd be having a different discussion. But we're not. Shipbuilding is a strategic asset.

All right, I'm going to ask a sort of middle ground question in an attempt to reconcile both positions. But let's say you don't get to throw away the Jones Act, but you get to make a change to it. And you get to keep the Jones Act, but you have to make a change to it. Good question. What would the response be?

Zara, let's start with you. The change I would make to the Jones Act is that I would add shipbuilding subsidies. Okay, Colin? I would absolutely get rid of the U.S. build requirement. The notion that we promote, I mean, forget the economic effects here, just the notion that we promote a healthy maritime industry by forcing Americans to be outrageous prices for new ships is on its face absurd. We heard talk earlier about what we needed to preserve shipbuilding. Well, how's that worked out? A GAO report last month referenced the U.S. shipbuilding industry as in a state of near total collapse.

The Walsh Journal just last weekend article referred to the U.S. shipbuilding industry as tiny and rusty. In 2023, the most recent year for which we have data, the U.S. accounted for 0.1% of global shipbuilding output. I mean, obviously we're well behind China, but folks, we're behind Norway, the Netherlands. I think in 2022, we're behind Croatia. This is the United States. He's one of the biggest manufacturers in the world, an incredibly inventive dynamic economy, and this is what we've been reduced to. It's shameful, and it's an indictment of what the Jones Act has done.

Well, actually, I want to ask you about this. Do you accept, I mean, Cato, I associate with, like, not industrial policy, sort of true laissez-faire. Do you accept the premise setting aside how we get there? Do you accept the premise that the U.S. should have more domestic shipbuilding? I think that we should have, you know, I defer to the national security experts. what we should have, but absolutely we should have it. And the Jones Act does not give it to us. So I'm not against government intervention per se. So for example, I think we need ships. I'm not against subsizing ships where the government says, here's money. In exchange in time,

of war, we get to grab that ship and use that. That makes sense to me. You can do a cost-benefit analysis. The X-much money gets you this many ships. We can't do that with the Jones Act. Let's stop doing things that don't work and do things that do work. I would take issue with the fact that you say that U.S. shipbuilding is expensive. Shipbuilding is expensive. It's expensive everywhere. Our shipbuilding is right priced, right? Everybody else is cheating is kind of what's going on. Like all these countries you mentioned have heavy subsidies, financial schemes. Look at the two biggest cost drivers in shipbuilding are labor and steel components, right? And so, of course, labor is more expensive in the United States. That's true for every American industry, right? We have a higher standard of living. We pay taxes. And then look at steel. The top steel producer in the world is China. Do you think that they are selling, targeting market prices for their steel? No, of course not. If I may.

So I think there may be a notion here that people think, okay, things are okay and then China came along. Or the U.S. is okay and then South Korea came along. Things are okay and then Japan came along. Folks, U.S. shipbuilding has been internationally uncompetitive since the Civil War. Okay? This is not something that happened recently. It's been going. And nobody is buying ships from Norway instead of the United States because of the cheap wages.

That's absurd. You know, there was an article, I remember, like 15, 20 years ago that said that Dutch shipyards were building ships at one-third the U.S. price and paying their workers 20 to 40 percent more. It's indefensible. I actually, there's a question about the Jones Act that I've had for a long time, and I want to get your take on it, Colin. We did this interview with John Arnold. The philanthropist, he does a lot of stuff, like, with, like, policies. And we asked someone, you know, we talked about like YIMB stuff and highways and stuff. And we're like, and Tracy said, well, what do you think about the, you know, would you put any effort towards repealing the Jones Act?

He's like, I'm not even going to try. That one's not going anywhere. Can you describe to me 650,000 people? I don't know, you know, whatever. Why, given the meager size of the U.S. shipbuilding industry, is it perceived that this law is so hard to dislodge? It seems like such a political hot potato for some reason. Yeah. So the question is why, why is this law so?

difficult wives remain in place despite my, you know, criticism of people like me and whatnot. I would submit this as a tribute to the power of special interests. You know, I can come up with, off the time of head, probably... But it's apparently not a big one. I can, you know, there are any... It's a small industry, yes. So, Saturday referenced 650,000 jobs. That's based on a study that calculated there were somewhere like 98,000 jobs, actually in the

domestic maritime industry. Each one of those has a multiplier of, like, five, and then you add those together. So in theory, that should make it even less of those special interests. Yeah, I mean, no. It's a small. industry, right? So why does it remain in place? The dynamic is this. There are any number of organizations dedicated to preserving the Jones Act. There's the American Maritime Partnership where Sarah is also what vice president, I believe, the Transportation Institute, the Lake Care Association,

an offshore Marine Service Association, the American Waterway operators, the Marine Engineers Beneficial Association, Seafar's International Union, I go on and on. I can't think of any industry in D.C. in association where task priority one, two, or three is get rid of the Jones Act. In fact, I've had conversations with folks where they say something like, look, I hate the Jones Act. I think it hurts our industry. But on my top 10 list of issues, it's like number four or five. If it's issues one, two, and three, I need the support of senators that support the Jones Act. And this is a dynamic you see over and over again.

It's concentrated benefits, dispersed costs. The people that care the most about the Jones Act that think this is existential to me are the people and the companies in the industry. And they allocate their resources accordingly. So it's just, you know, you can find any number of ridiculous laws. Like the U.S. Sugar Program, same basic dynamic. We see it over and over and over again. Sara, I'm going to give you the chance to respond.

Why are you so good at your job? No, it's easy. The Jones Act is popular. It's been popular with Republicans. It's popular with Democrats. It's popular across administrations. It's also really popular with the United States military. Heads of Transportation Command,

militarily CIS command, the Navy, have been asked about this multiple. times, and they all find a lot of value in it. They know that if you didn't have that, we would see our shipbuilding capability, and most importantly, we would lose those mariners, right? These mariners that crew these seal of ships, they need time at sea to train, to be ready, to move up in their ratings, right? So they need that work as well, so they can be called upon when they need. And they answer the call. They've answered the call many, many times. You know, in every war, you've had a merchant marine component, and it's critical. So it's successful because

it's popular, it's well-loved. Like, it's extremely effective. Like I said, you're going to pay these costs regardless. So do we want to spread it out? We're all in this society here. We all share. We all enjoy these benefits. The savings that Collins is talking about is a rounding error.

You know, the reason laws don't exist just to save us money, right? That's not how you determine if a law is good or not. Does it save people a couple of pennies? Or, let's be real, does it save shippers a couple of money? couple of pennies, right? Like, even if Collins' cost arguments are accurate, are those cost savings going to be passed down to the consumer? I mean, costs are costs. I mean, I don't know. All right. We could go on and on and on, but a big round of applause for these two. It's not easy to come on stage and debate these things. So thank you. Thank you so much. Tracy, I'm so glad

we finally did the Jones Act episode. And to be honest, it actually fulfilled all of my hopes and wishes for the episode. That's good. Did it change your mind at all? Did it change my mind? I mean, that presupposes that I had an opinion. I guess what I would say... You don't have opinions.

What I guess what I would say is that at least if we think that shipbuilding in the U.S. is important. And I think I am convinced of that, the Jones Act... our current structure is clearly not sufficing. Yeah, I would broadly agree with that because if you look at, I guess, it's sort of the proof is in the pudding, right? If you look at the outcome of the Jones Act, it hasn't actually been that successful in terms of American shipbuilding. One funny thing, right before we recorded this, we asked the audience who was in favor of

the Jones Act and who was against it. And I swear, like, it was pretty evenly split. but also everyone in the audience raised their hand at one point or another. Yeah, it's so polarizing. Everyone has an opinion on the Jones Act. I know. It is really polarizing. And I thought like our guests, like, you know, I did want to, I did a good job of having it be kind of heated and tense on stage.

Of course, it was like very civil in a good conversation. But I thought from listening to Colin and Asada that, you know, you actually got a pretty good sense of how strongly the opposite sides feel about this, like, very old law. Oh, yeah, totally. It was a great rundown of, like, the arguments for and against for sure. All right. Shall we leave it there? Let's leave it there. This has been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

And I'm Joe Wisenthal. You can follow me at the stalwart. Follow our guests, Colin Grabo. He's at C.P. Grabo. And Sadda Fuentes. Actually, she's not on X, probably wisely. But you can follow the Transportation Institute at TransOwark. underscore i n s t follow our producers kerman rodriguez at kerman armin dashel bennett at dashbot and kale brooks at kail brooks for more oddlots content go to bloomberg.com slash oddlots where we have all of our episodes in a daily newsletter and you can chat about all of these topics including plenty more jonesack talk in our discord discord dot g slash odd lots and if you enjoy odd lots if you want us to do more

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