If It Sounds Like Jones Act Critics Are Singing From The Same Songbook…
It’s deja vu when you come across what critics are writing and saying about the Jones Act, as the same script plays out again and again. The imports from Russia anecdote, the obsession with a single cost item, the geometric exaggeration of the overall cost impact, the disproportionate focus on LNG, the lack of awareness of actual transport cost economics and the absence of any recognition of non-economic factors. They roll out as if they are being choreographed. That’s because they are. The latest is Steve Forbes in a September 2 video against the Jones Act in a podcast for Forbes that predictably hits on all those points in an episode titled “The Jones Act: How A 100-Year Old Law Is Hurting Our Economy”.
We’ll walk through five inaccurate claims in Mr. Forbes three-minute video and compare them to the objective facts. His actual statements are shown below in bold italics. They are numbered in the order in which they occur in the video, with the starting point of each segment in the video shown in parenthesis. The comments that follow each claim lay out the facts and the reality related to each statement made by Mr. Forbes. See the full video at: https://www.forbes.com/sites/steveforbes/2021/09/02/the-jones-act-how-a-100-year-old-law-is-hurting-our-economy/?sh=7d125fad6e4b. Rather than just saying these claims are demonstratively false or incredibly misleading — which each is — the comments explain in detail why they are such.
1. US made vessels cost more than four times the vessels made by foreign competitors (0:38).
The building cost differential is the cost item critics like to constantly harp on, as it is the biggest relative difference among many shipping cost items. Shipbuilding is a labor-intensive industry and that has resulted in a structural disadvantage as our standard of living and wages expanded. For instance, US per capita income is 5.7 times per capita income in China, the largest shipbuilder.
Based on five actual examples, US ship construction costs are 3 to 4 times more than foreign costs for container ships and tankers. The actual crewing cost multiple is 2.7 times typical foreign costs for the same reason. But those two cost items are the only real differences for Jones Act vessels. With the container ships that dominate the Jones Act, those two cost items typically represent no more than 25% of total carrier costs. Vessel fuel costs the same whatever flag a vessel flies and a wide array of cargo handling, terminal, equipment, inland transport, sales and general/administrative costs are also unaffected by the Jones Act.
In addition to exaggerating the building multiple (six to eight times was previously used until referenced source withdraw that as being inaccurate), critics like to highlight and lead with this specific cost item with a goal that readers will infer that the resulting cost to consumers is the same multiple. When you go through all the math and calculate the overall cost difference of a service with a Jones Act container ship compared to a foreign flag container ship, you will see that the relatively modest difference is geometrically at odds with what the critics want you to believe.
2. It would be logical for Puerto Rico to get liquefied natural gas — LNG — from Georgia or Louisiana but because there are no US made LNG tankers the island imports LNG from Russia and other foreign sources (1:07).
The International Gas Union (IGU) publishes annual reports that are available to anyone on their website that shows in detail all shipments of LNG between exporting and importing countries for that year. Based on data in those annual reports, over the last ten years from 2011 through 2020, less than one-half of 1% of the LNG imported by Puerto Rico came from Russia. Even that inconsequential amount actually came from a LNG transshipment facility in Belgium that occasionally gets LNG from Russia. Over that same period, 77% of the LNG imported by Puerto Rico came from nearby Trinidad.
Because LNG itself is a low value cargo and the sophisticated LNG tankers it moves on are the most expensive cargo ships to build, the ratio of shipping cost to final delivered cost is quite high and can reach 40%. For this reason, the distance between the source of the LNG and its destination drives decisions much more than with other types of maritime cargoes. LNG exporters clearly have a competitive advantage in markets they are closer to. With just 575 nautical miles between Port of Spain, Trinidad and San Juan, Puerto Rico, there is no LNG exporter closer. Dominican Republic, with 678 nautical miles to its receiving port from Trinidad, obtained 84% of its LNG from Trinidad over the past seven years. The Dominican Republic is obviously outside of the Jones Act and yet it too is also getting the large majority of its LNG from Trinidad.
The fact of where the Dominican Republic gets its LNG actually confirms that it is very logical for Puerto Rico to also obtain its LNG from Trinidad. The distance from the main US Gulf LNG facility to San Juan, Puerto Rico is 1,686 nautical miles, or more than 2.9 times the distance to Trinidad. If the commodity price of LNG is equalized, then the delivered cost of LNG from a distance almost three times longer on the same ship would always be higher. Under those conditions, it would in fact be illogical for Puerto Rico to import LNG from the US Gulf.
The consistent reference to LNG from Russia by Jones Act critics is objectively hilarious given the actual data. They seek to promote the inference that the Jones Act forces Puerto Rico to get the majority if not all of its LNG from a long standing strategic adversary of the US. The facts demonstrate how incredibly misleading that inference is.
3. It is cheaper for New England to get natural gas from Trinidad & Tobago or even Siberia than from our Gulf Coast (1:23).
This involves many of the same points made above related to LNG going to Puerto Rico. Siberia is in fact where the LNG coming out of Russia originates that infrequently makes it way to the US via the transshipment facility in Belgium. Boston is the only city in the US other than San Juan that has imported LNG during the last ten years. It has imported approximately 42% more LNG than San Juan over that period. In the case of LNG imports to Boston, the IGU data shows that LNG from Russia also represented less than one half of 1% of total imports during the last ten years. It also received the preponderance of its LNG from Trinidad, with 79% coming from that source.
Not surprisingly, Trinidad also has the closest LNG export facility to Boston. In fact, Trinidad is actually less distance to Boston than the main US Gulf LNG facility. While the difference is only 4%, the equation used above where delivered cost is a function of the equalized commodity price of LNG plus shipping costs would still result in Trinidad being a more logical choice than US Gulf even if the same ship could be used for both. This will be expanded on below in broader points related to the fixation of the critics on LNG.
In total, the IGU data shows that on a combined basis Boston and San Juan have received 35.27 million tons of LNG over the last ten years and only 120,000 tons or 0.3% of that came from Russia (which includes Siberia). Using the typical size for shipments, that equates to 588 shiploads in total, with only two of those coming from Russia. Hardly relevant or worth mentioning and certainly not the point of origin to constantly harp on to the exclusion of other more relevant points of origin. Unless, of course, the goal is to ignore the facts and purposely and consistently mislead in order to advance a specific agenda related to LNG. Which is the point of the efforts by the think tanks.
4. Deep sixing the Jones Act would lower the cost of moving cargo by water in the US by 50% (2:08).
The actual facts demonstrate that the cost difference of carriers do not back up that assertion. Those overall cost differences are the only item that results in sustainable rate differences. As shown earlier, the current facts point to the cost of building and crewing a Jones Act vessel to being 3 times as much as the same foreign flag vessel. Those combined costs (after converting the building outlay into its equivalent capital cost per period) represent just 25% of the total costs for the container carriers that dominate the Jones Act. The impact if foreign flag vessels were allowed in the domestic trades would therefore be that overall costs would be 16.7% lower (25% divided by 3 = 8.3%; 25% less 8.3% = 16.7%).
Note that this is based on current cost differences between US and foreign flag vessels and assumes that the latter do not increase either from existing laws/regulations that may apply if they become engaged in domestic commerce or new laws or regulations that may come with any hypothetical repeal. Folks who seem to believe that vessels can operate outside of the very rules that are the primary driver of our labor cost differences never consider those realities and the effect could be material. Even before taking that into account, the claimed 50% reduction is 3 times higher than what can be supported by the actual underlying facts.
Looked at another way, for rates in the Jones Act container lanes to go down by 50% presumes that costs that are not impacted by the Jones Act such as fuel, cargo handling and other non-vessel costs will come down under a repeal. That is nonsensical. The only costs that would be impacted are building and crewing costs. As noted above, the change in those results in an overall cost decrease of no more than 16.7%, or one-third the claim.
Making a claim that is off by a factor of 3 is a material error but it also tends to be on the low side of the hyperbole used by Jones Act critics when their claims are compared to the verifiable facts.
5. A study from the OECD declared that torpedoing this law would add $135 billion dollars to America’s economic output (2:15).
In April 2019 the OECD issued a paper entitled “Local Content Requirements and Their Economic Effect on Shipbuilding”. This 41-page paper looked at the shipbuilding industries in Brazil and the US with a clear focus on the impact on those industries if local content policies were abolished. In the case of the US, that involved a hypothetical repeal of the Jones Act. For instance, the paper indicates that without the Jones Act, US shipyards will have to reduce prices by at least 50% to converge to international levels to stay competitive.
This action in turn is expected to sharply increase demand for US built ships, which according to the paper begins a virtuous circle of benefits for the industry and the economy as a whole. Included in the latter was a single tangential reference that without the Jones Act, US total output is likely to increase between $40 billion and $135 billion annually. The equivocating tone and wide range in that reference are hardly confidence building to begin with. Then by cherry-picking the high-end number only, it could already be off by a factor of three even if the estimated flow through benefits are accurate. There is no detail on these claimed benefits other that they came from simulations involving models and include the elasticity impact from the initial changes.
This is where the specific US facts collide with whatever is embedded in OECD’s black box model. First, the catalyst setting everything in motion that the US shipyards will reduce prices by 50% shows no awareness of the financial results of that industry and assumes profit margins must be above 50%. Without the latter, which no US shipyard has or comes near, any yard that did as OECD anticipated and cut pricing in half would experience a large loss for each ship it built. With my experience in building multiple Jones Act vessels, I’ve yet to encounter a shipyard that will sign a contract at a price guaranteed to result in a loss. So the shipbuilding facts in the US don’t align with this key predicate in the OECD paper.
A hypothetical repeal of the Jones Act could reduce costs in the range of the 16.7% figure detailed above. Applying that percent to the total annual Jones Act revenue of no more than $4 billion results in $668 million. The claimed impact of $135 billion is 202 times an amount that can be established by applying the most relevant facts. Even using OECD’s inaccurate assumption on the Jones Act rate impact, the claimed impact is still 67 times that figure. Clearly the model must assume significant elasticity and flow through benefits. This is where specific knowledge related to the Jones Act markets along with transport costs in the US is required. As to a reduction in rates generating additional activity in the current Jones Act lanes, the basic consumption nature of most of the cargo moving today makes them highly inelastic. If rates go down 16.7%, the impact on the retail price of goods is minor. It simply isn’t rational to think that people in Puerto Rico or Hawaii will eat more food or buy more clothes based on what would be a very small change in the cost of those products.
So that leaves the estimated knock on effects of new water transportation following a Jones Act repeal as filling the gap between the tangible $668 million that can be seen and the breathtaking $135 billion figure. To have any insight into that, a granular understanding of the costs of the various transport modes in the US and how they breakdown between fixed and variable is required. This is because it is from those other modes that any new water transportation will come from. The example most used by critics is that without the Jones Act, foreign flag container ships rotating through a series of US ports would move domestic cargo between those ports. In doing so, critics demonstrate their lack of awareness of the cost components of container shipping in general and in particular those components in the US and how they compare to rail and road modes. The linehaul costs per unit mile at sea are a minority of total costs and by focusing on those the critics ignore many of the facts driving actual freight decisions. Just the variable cargo handling costs on both ends on the largest container ships precludes most of the examples highlighted by the critics. That one cost item is more than the full cost to move a box on a faster land mode even before taking into account other costs that make such a comparison even less attractive to shippers. The rail and road modes in the US are much more efficient than those same modes in Europe.
The implicit assumption in the OECD claim that the Jones Act is the only thing standing in the way of massive additional movements of containers in new domestic lanes is misplaced. It is bereft of the actual facts as they exist in the US, regardless of what models or simulations based on what is happening in Europe may say. Europe’s cost components within and across modes as well as its geography is different. The US is not Europe and vice versa and the actual facts as they exist in both places must be part of any analysis. It would be similar to saying the US should be producing 49 times more wine based upon France’s per capita actual wine production experience. Like the claimed exponential growth in domestic water transportation solely from repealing the Jones Act, the results from both extensions are nonsense as they fail to take into account fundamental structural and factual differences.
After reading the OECD report and being concerned its conclusions related to the Jones Act were inaccurate, I contacted the author and some dozen email exchanges ensued. I learned that the senior OECD person who focuses on shipping was not involved in any way with the report and the author was a junior person who had been at OECD for just a few years after college. From the questions I was asked about intra US trade elasticity and US transport cost by mode and distance, it was clear that these specific US facts had not been incorporated into any of the numbers included in the report. It appeared that the $40 billion to $135 billion range referenced in the report had resulted in inquiries and a separate project was now being undertaken to buttress that initial effort. In several extensive emails, I shared with the author information on cost per unit mile across modes in the US and my view that elasticity from changes in the Jones Act is almost non-existent. That conclusion was based on the consumption nature of cargo, container shipping costs not involving the ship and the efficiency of road and rail networks. I noted that few believed more than I did that US coastlines and waterways can and should be utilized more for moving domestic freight. However, I indicated the Jones Act simply isn’t the culprit it is made out to be and that fresh ideas and innovative initiatives are the best path to competing with other modes that are also based on US labor costs.
I expressed the view that given the specific US facts, the only impact that can be verified would be the direct costs estimated above at $668 million. The claim of $135 billion is more than 200 times that tangible figure and was therefore ludicrous. OECD has issued no subsequent report or clarification on the impact of a hypothetical Jones Act repeal on US economic impact. The author of the report recently left OECD to obtain a graduate degree at a French university. In summary, the claim by Steve Forbes that repealing the Jones Act would increase US economic output by $135 billion is complete and total nonsense.
A modicum of due diligence would have revealed the striking inaccuracies in each of the five claims. Indeed, a reporter working for Forbes who showed such a glaring disrespect for the facts would be looking for another job. So why did someone like Steve Forbes say things that were so demonstratively false? Because he was provided information from think tanks that he viewed as credible sources. The likelihood that he might be philosophically opposed to the Jones Act at any additional economic cost probably made it easier for him to be victim to lobbyists masquerading as academic researchers. I speculate on that from a personnel frame of reference.
When I first became aware of published reports by a think tank over two years ago regarding the Jones Act, my assumption was that this well-respected entity was unbiased and simply unaware of all the relevant facts. My view was like that of most people assuming these organizations did basic research and issued white papers. While they might have an ideological bent, the assumption was that the work of think tanks follows a model of academic rigor that has them following the facts rather than making inaccurate or misleading claims. As I engaged them, pointing out errors with detailed explanations while seeking to educate them based on my decades of experience in container shipping both in and outside the Jones Act, it became increasingly apparent they had a one-sided agenda on this topic. The constancy in everything they put out was an exaggeration of the economic impact of the Jones Act. Repeating claims even after they were debunked leads one to conclude that their efforts had little to do with research and everything to do with marketing. That the lead person at one think tank used his Twitter account exclusively for posts related to the Jones Act underscored this point. He was prolific, averaging 11 tweets or retweets per day against the Jones Act. My prior assumption that these were think tanks focused on academic research and papers presenting facts on this topic was dispelled. There was no original research, just a drumbeat with cherry-picked, out of context information. Some of this was pulled from previous unsubstantiated claims while other talking points appear to be completely made up. Renting a billboard on Manhattan’s West Side Highway and putting up a catchy ad blaming commuters traffic congestion on the Jones Act was only one such example of the latter. They were selling their skewed claims like someone would sell potato chips.
These think tanks weren’t content with the modest overall cost difference that can be traced to the Jones Act, but sought to portray it as geometrically higher. They seemed to realize that Americans would recognize the national security benefits of the Jones Act and that modest cost differences alone would not sway their view. Therefore, they needed to give the impression it was geometrically higher and indeed many of their claims circled in on being off by a factor of ten or more when compared to real facts. When these think tanks strayed directly into the national security issue, their so-called analysis in that area proved to be even shoddier than their so-called economic analysis.
In their reports and social media postings, a pattern began to emerge of a disproportionate focus on LNG and the claimed impact of the Jones Act. There is actually no domestic movement of LNG for the reasons stated above. Even if there were no Jones Act, the domestic movement of LNG would be a small trade compared to both the domestic container and tanker trade lanes. Those facts made the focus of the think tanks on this narrow segment even more surprising. The interest in LNG was highlighted by an initiative just over a year ago to get a waiver for LNG by executive action. Press reports said that apparently received some serious consideration at the White House by the previous administration. While the think tanks would like to see a full repeal of the Jones Act and that would address their concerns regarding LNG, the initiative related to it last summer underscored that a key goal is narrower in scope. With two of his five inaccurate claims by Steve Forbes related directly to LNG, that is just the latest data point highlighting the continuing disproportionate focus of the think tanks on that specific area.
Pulling all this information together, it was increasingly clear that the efforts of these think tanks were likely being funded by entities that had a stake in the outcome. The area they were paying the most attention to actually provides a roadmap to entities that may be supporting them. The phrase “follow the money” is a useful analytical tool and when it is put into practice in this situation, a picture emerged of what was going on and who was behind it. In responses to their more egregious social media postings, I referred to the think tanks as actually being engaged in lobbying activities and carrying water for various businesses, some of which I believed were foreign. At no time have any of the think tanks denied that assertion by me. The closest thing to that was when a acolyte of theirs who, without denying my assertion, simply said I couldn’t prove it. That may be one of the few things I agree with him if you’re talking 100% verified proof as there is no disclosure requirement for contributors to think tanks. However, one can analyze the known facts and come to a reasonable conclusion that is supported by the data. That after all is what analysis is all about. So I’ll present what my analysis shows are the key entities that would benefit from a change in the Jones Act as it relates to the movement of LNG. By extension, they are the same outfits you would suspect of funding and supporting the efforts of the think tanks. As the man said, I can’t prove this with 100% certainty, but I do believe with a high degree of confidence the companies I identify are playing a key role in supporting the anti-Jones Act actions of the think tanks.
LNG is imported into only two places in the US, Boston and San Juan, which makes it relatively easy to “follow the money” and see who in the supply chain stands to benefit the most from any change in the Jones Act. In those specific cases, it becomes abundantly clear that nobody would potentially benefit more than National Grid and New Fortress Energy, respectively.
National Grid is a major UK based utility conglomerate headquartered in London. It has significant operations in the northeast US that are concentrated on Massachusetts. Those operations include electricity distribution networks serving 3.4 million customers and gas distribution networks that provide gas to 3.8 customers. Subsidiaries of National Grid include New England Power Company, Massachusetts Electric Company, Nantucket Electric, Boston Gas Company, New England Gas Company and Colonial Gas Company. National Grid companies were at the forefront of the switch by Massachusetts utilities away from coal and to more much cleaner natural gas. Some 68% of Massachusetts’s electric power is now generated from natural gas, more than twice the national average and one of the highest such percentages in the country. Almost all of that difference can be accounted for from Massachusetts going from some one-third of its power generated from coal twenty years ago to none of its power coming from coal today.
It was this rapid transition to natural gas that gave rise to LNG being imported into Boston. Most of the natural gas used by Massachusetts’s utilities still comes via pipeline, which is by far the most cost efficient way to transport natural gas. The actual transport method is not only lower cost versus ships, but it precludes the costly steps of liquefying natural gas on the front end and the regasification of it on the back end. When the utilities converted, they recognized that they would likely reach the capacity of the existing gas pipelines coming into Massachusetts at some point. Their assumption was that they would build additional pipelines to move all of the natural gas they needed in the most cost efficient manner. Those plans, however, were thwarted by the state of New York, more specifically by Governor Andrew Cuomo, who stymied all efforts to build additional gas pipelines. Those pipelines would need to traverse long distances across New York and agreement by it was a necessity. It never came. Small amounts of additional natural gas from other areas via pipeline were obtained, but without new pipelines crossing New York to large sources of natural gas, the capacity of the existing pipeline network was reached. Imports of LNG to Boston became Plan B for National Grid and other utilities such as Eversource.
So what’s in it for National Grid if the Jones Act doesn’t apply to LNG shipments? They are no doubt displeased that their plan to bring in natural gas via pipeline was blocked by New York. When they turned to the much higher transport cost method of importing LNG, they must have realized that by virtue of its distance from Boston and the dynamics of the delivered cost of LNG, Trinidad had a near lock on their needs. Giant corporations tend to dislike the idea of being more or less held captive by a smaller vendor. Even though LNG is a commodity and in theory should be priced the same prior to shipping costs, given the importance of the latter and the fact that LNG producers also have a map and can calculate distances between ports, that is not always the case.
What National Grid needed was a viable alternative to Trinidad. Even though the main LNG terminals in the US Gulf are a slightly longer distance, they would provide just that alternative. Given the hundreds of millions spent each year on the minority of its natural gas requirements satisfied by LNG, even a small price concession on the commodity would justify spending lots of money to make that outcome a possibility. In other words, just creating the optionality of purchasing LNG from producers on the US Gulf would likely get Trinidad to be more competitive and provide better LNG pricing. Based on the dynamics of the LNG trade and the key role shipping distance plays, it may very well be that even without any Jones Act requirements for LNG movements, most of the LNG imported through Boston would still come from Trinidad. But it would likely come at a slightly better price than it would have otherwise. Just a very small difference would more than justify a meaningful budget item at National Grid and its affiliates for lobbying to make that outcome a possibility. While they are a regulated utility, the present costs of importing LNG are already embedded in their rate base. National Grid would have reason to believe that some or much of any benefits from better LNG pricing would flow through to their shareholders rather than their customers, which would be a further incentive.
There are other tie-ins with British interests that point to efforts on the other side of the Atlantic Ocean to accomplish the same thing that was being worked here. Various news reports in August 2019 said that UK Prime Minister Boris Johnson suggested at a meeting as part of bi-lateral trade agreement talks with former President Trump that UK flagged vessels be allowed access to the Jones Act markets. While National Grid could be expected to support such an initiative, and may have even encouraged it, they would have likely been behind Britain’s largest global company, BP, in encouraging such an initiative in London. Indeed, there could have been a commonality of interests between those major British corporations at the time as BP had just taken delivery of six UK flagged LNG tankers referred to as the Partnership Class of vessels. In the name it chose for its new LNG tankers, was BP showing its hand with what it hoped would happen in terms of shipping cooperation with its country’s closest ally?
There is another British connection that underscores a concerted effort to get a waiver for UK flagged ships in the Jones Act. The senior person on the Jones Act at another think tank, other than the one whose lead person has 11 tweets per day on the topic, is British born and educated. In a white paper published last year, he called for allowing British flag vessels to operate in the Jones Act. As it turns out, this same man was in 2016 a co-recipient of a five year $5.75 million grant from the Charles Koch Foundation. The Koch Foundation is believed to be the major contributor to the other think tank that is actively involved in criticizing the Jones Act. Koch Industries, a major privately owned energy conglomerate, is one of the largest traders of LNG and that business could be expected to benefit if the Jones Act did not apply to the movement of LNG. Even before the development of the LNG export business in the US, Koch Industries and the brothers who controlled it were known long-term critics of the Jones Act.
New Fortress Energy is a public company controlled by Fortress Group, a large private equity fund, which itself is controlled by Softbank, a very large Japanese holding company with major investments in technology, energy and finance. Much of New Fortress Energy’s business is focused on the Caribbean. In 2019 it entered into a twenty-year contract to provide LNG to PREPA, the Puerto Rico electric utility company. It is the exclusive provider of LNG to Puerto Rico and this contract is a meaningful part of its business.
The same points made above related to LNG imports to Boston apply in spades to LNG imports to San Juan because Trinidad is just one-third the distance as shipments from the US Gulf would be. Having the possibility of bringing in LNG from there would likely get some price concession from Trinidad. Because of the very large amounts involved, even a small change in the price for LNG would translate into a significant amount. But in the end, the shipping distance dynamics still favor the large majority of Puerto Rico’s LNG continuing to come from Trinidad. That is and has been the situation at the neighboring island of the Dominican Republic, which is actually further away from Trinidad than Puerto Rico, and it would be unreasonable to expect that Puerto Rico would be materially different even without the Jones Act.
There is a particularly interesting fact related to the contract New Fortress Energy has with PREPA. In that contract, the price paid for LNG by PREPA is based on a formula that has a variable component and a fixed component. The variable component is driven by the New York Mercantile Exchange’s Henry Hub natural gas futures contract price. In other words, even if there was some economic benefit in the form of better commodity pricing from Trinidad as a result of the Jones Act not applying to LNG movements, the contract price would not change and all of that benefit would go solely to New Fortress Energy. Presumably this fact hasn’t been highlighted by either the think tanks or New Fortress Energy to the government officials in Puerto Rico who have joined their campaign against the Jones Act applying to LNG movements along the way.
National Grid and New Fortress Energy are the two corporations whose profits stand to benefit the most if the Jones Act didn’t apply to LNG movements. Another thing they have in common is that they are both foreign controlled entities. As such, presumably if they were to officially hire lobbyists to work for such a change, a filing reference to this would likely need to be made under the Foreign Agents Registration Act. It looks like a loophole exists for entities that may choose to lobby stealthily through contributions to think tanks. One way of addressing that would be to establish disclosure requirements for any contribution to a think tank over a significant threshold amount. For foreign controlled entities where it is be difficult to articulate a legitimate reason for contributing to a US think tank, it would be reasonable to require that any and all contributions to think tanks be disclosed. Policy makers and the public have a right to learn if someone is pitching them who doesn’t appear to be a lobbyist but is in fact acting just like one.
So that is one way to connect the dots in terms of why the think tanks are doing what they are doing and who is supporting them. On the one hand, it shows a certain cleverness and efficiency on the part of the corporations. After all, there sole objective is what is in the best financial interest of their shareholders. While I don’t like what they are doing and view it as exploiting a loophole, my strongest contempt for the think tanks themselves. It is easy to imagine the rationalizations they go through. Something along the lines of “we’re philosophically opposed to the Jones Act and that end justifies any means to get there” must be the refrain. They are peddling claims that they know are exaggerations and they are doing that solely for the dollars they are being paid. When they pull the wool over the eyes of a businessperson like Steve Forbes, in large part because they come in under the cloak of research and academia, what chance does someone who knows less about business have?
The behavior of these think tanks related to the Jones Act is reprehensible and despicable. They tout claims and misinformation not in furtherance of their own research, but just in furtherance of the profit goals of businesses that seek a change in our country’s laws. They peddle balderdash. They care nothing about other economic consequences of any change to the Jones Act (see https://john-d-mccown.medium.com/jones-act-critics-visionless-outlook-just-got-worse-b0f266cc5aa7). Their only concern is that it provides some benefit to the inbound LNG shipping lanes they want to open up. The national security consequences aren’t even on their enabler’s radar screen as they are businesses, and those are concerns for someone else. When confronted with the myriad of outcomes that could result from changes that could get them a better LNG price from Trinidad, their refrain would be “I don’t care”.
But reasonable Americans have to care. Yes, the Jones Act does come with a modest economic cost due to the same structural changes that have affected western economies in the postwar era. But our merchant marine still plays a vital national security role and we should be looking for ways to build it up rather than move along the tear it down path advocated by these think tanks. No less a subject matter expert than General Eisenhower said just before the allied victory in WWII “When final victory is ours, there is no organization that will share its credit more deservedly than the merchant marine”. We don’t know that the future holds, but we do know that any projection of military force will require a supply line that can only be provided with certainty by our own merchant marine. Not having an adequate merchant marine isn’t a problem…until it is a problem. And at that point, it’s a real big problem.