Tony Munoz, the Publisher and Editor-in-Chief of the Maritime Executive Magazine & MarExe Newsletter, has more than 30 years experience in the maritime industry and has earned the right to bring into line outsiders whose thoughts and opinions are off base. ‘Way off base.

On April 04, 2013, Tony found it necessary to comment on “a couple of editorials in U.S. maritime publications” calling for the dismantling of the Jones Act. Like the gentleman he is, he refuses to embarrass the publications by revealing their identities.

He begins his article, “End Jones Act Protection?”, by quoting one of the world’s best known scientists, Albert Einstein. “Only two things are infinite,” Professor Einstein insists, “the universe and human stupidity, and I’m not sure about the former.” Think about that.

“Recently,” Tony writes, “I was stupefied by a couple of editorials in U.S. maritime publications calling for the dismantling of the Jones Act. In ‘The Economics (sic) Justification for the Jones Act Is Still Not Proven,’ Martin Rushmere criticizes the American Maritime Partnership’s assumption that the recent GAO report on Puerto Rico was supportive of U.S. cabotage laws. In fact, he says any conclusion that there are pro-Jones Act sentiments in the report is simply ‘wishy-washy.’

“He also interjects that Einstein was hardly needed to deduce that the only reason rates dropped by 17% from 2006 to 2010 was the Great Recession. And in a final effort to provide a summation of his analysis, the writer points out that the GAO report is a complete failure because it did not provide any rate comparisons with foreign carriers calling the island.

“Economic Consideration

“Let’s get the facts straight. First, the GAO was providing an analysis of whether the Jones Act was adversely impacting the Puerto Rican economy. If the writer did his homework, he would have discovered that Puerto Rico has no natural resources. In 2010 the U.S. exported $ 11.4 billion in raw materials to the island and Puerto Rico exported $ 29.9 billion in finished products back to the United States. Jones Act companies transported about $ 41.3 billion worth of goods in the Puerto Rico trade at an estimated cost of $ 767 million, which is about 1.86% of the value.

“Puerto Rico’s per-capita income is about $ 16,300, the highest in the Carribean and 73rd in the world. While Puerto Ricans pay no federal income tax, they are covered by the U.S. Federal Fair Labor Standards Act, which guarantees the federal minimum wage of $ 7.25. But they do pay into Medicare and Social Security, which affords its citizens old-age benefits.

“In the second editorial, ‘Don’t Limit Jones Act Reform,’ Captain Max Hardberger calls the Jones Act an onerous and outdated mode of transportation while criticizing the president of the Hawaiian Shippers’ Council for his self-serving statements concerning Hawaii’s proposed exemption from U.S. cabotage laws.

“Hardberger says ending restrictions on foreign-flag carriers to operate along all U.S. coats would be a bigger benefit to the economy than exempting just Hawaii and Alaska. He also claims arguments by interest groups seeking to preserve the Jones Act are counterproductive and irrelevant in this age of interdependence. And he ‘wishes’ the U.S. would strip down the artificial barriers of protectionism in free trade and eliminate the Jones Act.

“National Security Considerations

“As the Korean Peninsular continues to become a tinderbox and China and Russia spend billions of dollars building their military capability, providing open-access U.S. coastlines and inland waterways is not a good idea. Hardberger would have us believe that foreign shipping companies are as patriotic as American companies.

“The Jones Act transports about 25% of the nation’s cargos at only 1% of the national freight bill. Furthermore, U.S. cabotage laws not only create $ 100 billion in economic output but also sustain around 500,000 jobs, which generate roughly $ 29 billion in total compensation. U.S. operators have privately invested more than $ 34 billion in building 40,000 vessels in the nation’s shipyards.

“Hardberger and Rushmere are way off base in their disregard for the importance of the Jones Act in terms of national security. Must ‘free trade’ mean total access by foreign carriers to America’s coastlines and inland arteries? Yes, Grandma will pay an extra dollar for the iron at Walmart because freedom is not free and the world is a dangerous place. And these two laissez-faire proponents should do a little more research on world affairs and understand that what America needs now are jobs because the Great Recession is not over. And the biggest threat the U.S. faces is in Asia Pacific, which is someplace close to Hawaii and Alaska. – MarEx” —

Tony published that back on April 04, 2013. Two years earlier, on March 21, 2011, he produced a highly critical article on the shortsightedness of Congress when the DOT and MARAD budgets were shortchanged by those ignorant politicians in D.C. We reprinted some of that March 11th story in our Vol. XXXV, Art. 1 commentary (March Madness) because of the valuable of information Tony provided to his readers.

And speaking of valuable information, here’s what Tony just gave us this past June 11th:

“‘Sink the Jones Act’ – An Appeal to Ignorance

“A new report from the Heritage Foundation tries to discredit the Jones Act. Nice try.

“The Heritage Foundation’s May report, Sink the Jones Act: Restoring America’s Competitive Advantage, is an exercise in pure laissez-faire economics. Authored by Brian Slattery, Bryan Riley and Nicholas Loris, the writers seem unable to differentiate between, among other things, U.S. cabotage laws and the international transport of government cargoes by the U.S. Merchant Marine. They also ignore the fact that the maritime industry does not operate on a level playing field. The report begins by calling the Jones Act a legislative gift to a select few that increases costs and stifles competition for everyone else.

“It states that the Jones Act fleet can no longer fulfill its intended national defense mission because it numbers just 90 vessels. It cites the Ready Reserve fleet as another example of why U.S. cabotage laws should be repealed, stating that 30 of its 46 ships are foreign-built.

“It categorically dismisses the national security benefits of the Jones Act as simply ‘nonsensical’ despite repeated testimony to the contrary by top civilian and military officials.

“The report attacks the shipbuilding and commercial sectors next, arguing that the Jones Act’s ability to sustain U.S. naval superiority is an antiquated idea and that only one U.S. yard builds both warships and commercial ships. It states that foreign ships and mariners are less costly, as if this were something we didn’t already know, and that the country would be better off ceding its U.S.-flag operations to foreign competition.

“However, it begrudgingly admits that the Jones Act is not the sole driver of cost differentials in U.S. commerce because U.S. shipbuilders and vessel operators face higher tax rates and operating costs along with burdensome environmental and other government regulations that foreign competitors do not.

“It concludes by stating that repealing the Jones Act would save the U.S. economy $ 682 million per year.

“False Distortions

“What the report fails to acknowledge is that the U.S. maritime industry has never been stronger. New vessels are being built. New jobs are being created, and new trade routes established. America’s transportation needs are growing, due in large part to the shale energy revolution. And all this is happening not despite the Jones Act but because of it. The Jones Act ensures that benefits of increasing energy production, a reviving economy and growing transportation requirements go to Americans.

“Sadly, the Jones Act is not alone on the Heritage Foundation’s hit list, which also includes the Food for Peace program, food stamps, reforming student loans, the extension of unemployment benefits, and collective bargaining by federal, state and union employees. The Foundation did, however, support the $ 780 billion bailout of Wall Street and banks ‘too big to fail,’ which it defended as totally acceptable and vital to the economy. Yet it is completely silent on the fact that no single executive has faced prosecution while Americans lost more than a quarter of the nation’s equity in stocks, retirement funds and home values.

“The Foundation also supports the $ 2 billion in subsidies received by the oil industry each year, which it claims are necessary tax incentives. The oil industry as a whole has gotten more than $ 11.5 billion in tax incentives for depleting U.S. reserves and another $ 13.9 billion for intangible drilling costs. These incentives are essential to the well-being of the industry, it argues, despite the fact that BP, Chevron, ConocoPhillips, ExxonMobil and Shell still managed to post $ 93 billion in combined 2013 earnings after exhausting every loophole possible.

“During the 2012 presidential election the U.S. Chamber of Commere, whose national headquarters are directly across from the White House, hung a massive sign from the building that said one thing: ‘JOBS.’ And that’s really the bottom line, isn’t it? The Jones Act is responsible for nearly a half a million U.S. jobs, which equates to about $ 29 billion in wages and benefits and $ 10 billion in federal, state and local taxes.

“U.S.-flag operators are today investing billions of dollars in new product tankers and articulated-tug-and-barge units to service the oil industry. The new tonnage will increase capacity and create thousands of new jobs, which will further stimulate the economy and, ultimately, reduce energy transportation costs.

“The Limits of Laissez Faire

“The laissez faire arguments of the Heritage Foundation ignore the fact that there is no level playing field in the maritime industry and that U.S. shipyards and mariners must compete against foreign yards and workers who receive massive government subsidies along with lifetime benefits for retirement and health care.

“Its national defense arguments against the Jones Act are uninformed and ill advised. U.S. cabotage is a key factor in national security because American citizens are on domestic waterways and vigilant against foreign threats and terrorism. While the ivory towers on Wall Street peer down on the populace, it is important to remember that Jones Act vessels and American mariners – both voluntary and professional – provided the single greatest sea lift of people in history off Manhattan Island during 9/11.

“The Heritage Foundation would do well to understand the difference between U.S. cabotage and international deepwater commerce as well as the impact of more jobs on an economy that sorely needs them. – MarEx” —

Dr. Albert Einstein was absolutely sure that human stupidity knew no bounds. It was, and is, infinite. He must have had in mind folks like those in the Heritage Foundation who issue garbage such as what we’ve seen above.

But the writers of the above report aren’t stupid because they know so little. On the contrary, they know a lot.

They’re stupid because they’ve convinced themselves that all of us believe the trash they put out.

They espouse and promote the very steps that have caused this nation’s economy to crumble. Their devious strategies to make possible the transfer of everything of value from the 99% (us) to the greedy 1% (them) is boundless. That’s the kind of “human stupidity” Professor Albert Einstein undoubtedly had in mind.

But bear in mind, the term “Laissez faire” also allows the downtrodden to act freely, and they will – eventually and vengefully.