If the US Congress abolished both the Jones Act and the Chicken Tax allowing more competition, Americans could have affordable nice things again.
December 12, 2023
By: Bobby Casey, Managing Director GWP
I’m not a fan of government. That shouldn’t be much of a surprise. BUT, if there is going to be one, then I do think its priorities should be confined to the people and businesses that pay into it, and the geographies over which it has jurisdiction.
Whatever country it is, that government’s mandate is to put that country and its people first. I’d be saying the same thing to a family. Put your home and loved ones first economically, logistically, and in every other way.
This shouldn’t be a debate, and yet $70 billion of US funds never sees its own citizens.
Contrast that with protectionist policies. Those PRETEND to be country first, but in fact are not. They are crony capitalism at its finest.
The Jones Act of 1964 is a perfect example:
Under the Jones Act, foreign carriers and crews are banned from domestic water routes. Cabotage from one U.S. port to another is restricted to U.S.-built, -crewed and -flagged vessels.
For America, by America right? This, like many of its kind, was a well-intended bill to defend the jobs of Americans in the shipping industry. As Thomas Sowell rightly and often points out: there are only trade-offs.
The irony of it all? They didn’t even save the jobs they set out to save! John Stossel reports:
There were once more than 450 American shipyards. Now there are only 150. The number of American-crewed ships has dropped, too.
He goes on to explain the impact of this to Americans:
Today no American shipyard builds even one ship that can carry natural gas. That’s a big problem for New England if we have a cold winter.
And it’s not just mainland Americans. Look at Puerto Rico and Hawaii.
When Puerto Rico was ravaged by hurricanes, the Jones Act prevented much needed aid from getting to their shores, a timely fashion. They had to wait for shipments from the US mainland rather than the more proximate Dominican Republic.
Cato Institute broke down the costs to Puerto Rico using two different analyses. The first was on food and beverage, which came to $367 million.
The second found much worse:
“…[T]he Jones Act raises the price of shipping cargo to Puerto Rico by $568.9 million and that prices are $1.1 billion higher than would be the case without the Jones Act. This, in turn, is estimated to mean 13,250 fewer jobs. Were they to exist, such jobs would mean $337.3 million more in wages and over $1.5 billion in increased economic activity. Tax revenue would be $106.4 million higher without the Jones Act.”
Grassroots Institute of Hawaii analyzed the effects and costs associated with the Jones Act and concluded the following:
“…[L]ocal families pay almost $1,800 every year because of the act, including $389 for housing costs, $248 for groceries and restaurants, and $62 for gasoline. Overall, the act costs Hawaii’s economy an extra $1.2 billion a year, with side effects including thousands of lost jobs and lower tax revenues for our state and local governments.”
And it will be no different for the victims of the Maui fires. (Yes, that’s still a thing even though the media has folks’ attention directed everywhere else.) The Jones Act will make rebuilding Maui damn near cost prohibitive.
If you think the Jones Act is anti-nice-things, wait until you read about the “Chicken Tax“!
The “Chicken Tax” is a 25 percent tariff on imported light-trucks that was first imposed in 1964, in response to tariffs levied by some European nations on US poultry products – hence the name.
Japan came up with two truck lines: Toyota Hilux Pick-up and Toyota IMV 0. The former starts at around $15,200 USD and the latter at $10,000 USD. The former has been around for years, and you might recognize it as the truck of choice in many high conflict areas. With its price jumping up several thousand dollars, Toyota is introducing the latter. Here are some features shared with MotorTrend:
- All flat glazing for the windshield, side, and rear windows
- Flatbed with no sides as standard, with a limited number of upgrades like the drop-side model we drove
- No anti-lock braking, but a load-sensitive proportioning valve is standard, and ABS will be optional (Hilux’s standard ABS makes it difficult for upfitters to install heavier-duty rear axles)
- No airbags (these will also be optionally available or standard in some markets)
- No armrests, just door pockets that double as door pulls
- Crank windows
- Plastic and rubber galore inside
- Hilux control-arm, coil-sprung front/leaf-sprung rear chassis easily upgraded for higher GVWR
This no frills truck will be available in 181 countries. Guess who’s not coming to that dance? The US. Thanks to the Chicken Tax, along with other ecological regulations, the US gets the Tacoma which starts at $30,000 USD.
It’s so crazy how Americans are known for their big trucks and the high demand for them. Which really doesn’t make a whole lot of sense outside some trade industries or as a status symbol by some affluent folks. They guzzle gas. They take up a lot of space. Their tires are expensive. In an economy like this one, people still need trucks but don’t need to roll coal necessarily.
This is where the ecological regulations come in. It’s called CAFE or Corporate Average Fuel Efficiency standards.
Corporate Average Fuel Efficiency (CAFE) standards manufacturers must meet with their entire fleet of vehicles. CAFE standards have always been lower for trucks, and since 2011 the standard has been based on the “footprint” of the vehicle. This means that larger trucks face lower mileage requirements than smaller trucks. Absent this change, manufacturers may not have been able to produce larger trucks while still meeting CAFE standards.
181 other countries will get access to the Toyota IMV 0. But not the US. The US gets to continue to pontificate about reducing the carbon footprint while all but rigging the regulations against more fuel efficient smaller trucks… and forcing unnecessary amounts of transportation to work around the Jones Act.
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