“When it was passed, the law provided subsidies for the construction of a domestic shipping industry, while imposing various employment rules and other shipping regulations. It has been amended in the century since, but it continues to prohibit foreign-flagged ships from traveling between U.S. ports, and many of its wage and labor regulations are still in effect, making it beloved, almost obsessively, by unions.
In at least one way, the Jones Act has served at least part of its intended purpose: It has benefited the domestic shipping industry by shielding it from foreign competition. But it has done so at considerable expense to everyone else.
By restricting and regulating shipping at America’s ports, the Jones Act considerably raises the costs of transporting goods, which in turn raises prices on everything from food to electronics to textiles. In good economic times, the Jones Act is a cost borne by the majority to bolster the fortunes of a few. In periods of global economic instability and high inflation, the Jones Act makes supply chain problems worse and drives prices even higher. On a daily basis, it is a force for impoverishment. “
“Just about any time one finds a politician taking credit for specific business decisions by specific companies, one ought to be skeptical, worried, or both. In this case, the proximate cause of much of Biden’s factory-jobs campaigning is the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, a $52 billion package of industry subsidies Biden signed into law in August. Manufacturers who stand to benefit from these subsidies have played along, with Micron’s leadership saying that its facility is “the first of Micron’s multiple planned U.S. investments following the passage of the CHIPS and Science Act.” Micron, however, was publicly teasing the possibility of new manufacturing facilities as early as October 2021, long before the CHIPS Act became law.”
“Just as the Jones Act ends up distorting the shipping industry, shaping it in ways that make it less flexible and less responsive to genuine consumer demand, we should expect the CHIPS Act to push the semiconductor industry into labor and production decisions intended to satisfy politically determined subsidy requirements rather than genuine market needs. Subsidies are more likely to incentivize inefficiency and dysfunction than genuinely useful production, inflating prices in the process. When subsidies are driving decisions, that means subsidy programs, not end users, are the true customer. “