200-foot-long railway to nowhere is a brilliant shipping loophole
thedrive.com
thedrive.com
> It is much cheaper for Hawaii to buy oil from Russia than from the U.S., even though the per-barrel cost of oil from Russia is more expensive than from Texas.
> Blame the Jones Act. The 1920 federal maritime law requires all goods shipped between American ports to be on vessels that are U.S. flagged, built and mostly owned and crewed by Americans.
> The result of more than a century of protectionism has been that U.S. ships are more expensive to build and operate, with the additional costs inevitably passed on to consumers. In other words, the added cost of using American ships makes it more expensive for Hawaii to buy oil from Texas than from Russia. [1]
[1] https://www.grassrootinstitute.org/2022/02/jones-act-threate...
Jones Act itself is a problem, and a blessing. It ensures a US maritime industry but has due to lack of competition left it so far behind the world standard that the minute it is removed the entire sector will go bankrupt from international competition.
The Decline of the U.S. Merchant Marine | What's Going on With Shipping?
> I wonder why we don't have more laws that gradually change things. Like instead of having jones act or no jones act as the only two options what if we could slowly remove the jones act at a rate of 3% per year or whatever? It could begin to improve things for people but also give the domestic industry some time to adapt.
Because maybe that would just draw out the failure, while still failing to achieve some of the main goals of the Jones Act?
Economic "efficiency" is not the only goal that should be pursued, which the events of the last few years should have made clear.
I'm pretty sure "the world standard" for shipping is low pay and workers getting treated like crap.
In any sector of the economy where you don't have protectionism, it quickly becomes a "race to the bottom" where companies move to the least regulated places where there's no minimum wage; various forms of worker abuse are legal; and there's basically no safety / environmental protection.
It's too bad we didn't have something like this for manufacturing, too. If we'd kept key component assembly in the US, we could've adapted to supply chain disruptions or unfavorable trading partnerships.
Our nation should be able to sustain itself as a hedge against a multitude of geopolitical risks as well as lay sandbags against the erosion of economic power.
I propose that we start by reducing your salary by 40% so that we've got some lower cost labor. It's miniscule on the world scale, so you shouldn't complain I suppose? I don't get the doom and gloom.
If exploiting desperate people is the measure an economical use case, no wonder business has a bad reputation
Are you against training more doctors too because they would make less money and therefore be more exploited? What about the people who buy their services? Or do I misunderstand?
There certainly are exploitive labor practices but I don't think being for decreasing the costs of a profession due to free competition has to be equated to being for exploiting people of that profession.
I think that many industries and use cases could benefit from software automation, but it is expensive to hire those people. If they are good there is endless demand for their skills in ad tech alone, where they can afford to pay them a salary and benefits valued over 20-30% of the gross profit that entire company brings in a year.
See the difference? Value vs. cost. Very different.
And not only Hawaii, many other places too. The costs fell on Puerto Rico when Congress refused to lift the Jones requirements to ease shipping costs even after the hurricane left them desperate for supplies. I guess the national priority fo ensuring a home-based merchant marine fleet outweighed people's need for toilet paper and medical supplies.
If there was a war I'm sure Canada would help with any marine shipping needed, and it would simplify things for some operators.
Why would the USA maintain a merchant fleet if it not economically feasible?
Why are operation costs lower for operators under a different flag?
How does disadvantaging internal transport help anyone involved other than a handful of specialty operators?
The Jones Act requires goods shipped between U.S. ports to be transported on ships that are built, owned, and operated by United States citizens or permanent residents.[0]
1. transported on ships that are built
We want to maintain domestic shipyard capacity and not have the only shipyards be those that are government contractors. Why? Imagine if we are ever in a situation where we need Liberty Ships again.
2. transported on ships that are owned, We want to both protect domestic owners as well as be able to hold them accountable if they screw up. You sometimes hear stories about ships abandoned by their owners and the crew forced to stay on the vessel. Or abandoned cargo such as the fertilizer that caused the Beirut blast. We want to minimize those situations.
3. transported on ships that are operated We want the people working the ships to be invested in our country and we want to maintain a population with these skills. Why? In the event of a Liberty Ship situation, you need people to crew them. But also accountability, who is more likely to report the captain ordering waste oil to be dumped overboard: A US citizen who knows the rules or a sailor from Indonesia whose passport is being held by the captain?
There is a large amount of intercostal and waterway shipping that takes place in the US, grain down the Mississippi, steel on the Great Lakes. Do we want that to be open to Iranian or North Korean ships?Lastly, the Jones Act only applies to goods shipped between US ports. So if Hawaii is buying Russian gas from Russia, as long as the ship goes from Russia to Hawaii the Jones Act doesn't apply.
The Jones Act disadvantages non-shipping parts of the economy in order to prop up some otherwise unviable operations. In the case of Hawaii, this is especially terrible since US sources of goods and material might be competitive with Russia or elsewhere except for the transportation. The result "costs Hawaii $1.2 billion annually, including 9,100 fewer jobs and $148 million in unrealized tax revenues." [0]
Ship ownership has nothing to do with port safety and a Lebanese Jones Act equivalent would not have changed anything in Beirut since it was international shipping impounded by Lebanon, offloaded and improperly stored in the port for many years. [1]
Correct the Beirut explosion was cause by international shipping not domestic but my argument was that if you do not have safeguards then you will have more chances of something like that happening. Small backwater and intercostal ports in the US might not have the resources to deal with abandoned ships and cargo in the way that out international ports do.
Basically the same reason Japan subsidizes grain production or why Sweden doesn't buy its fighter jets from Russia. Sure, it'd be cheaper to import, but it's also a vulnerability.
It would make America dependent on foreign powers for the shipping of goods vital to the economy and even national security. How do you move oil to Hawaii and military hardware to Guam if foreign carriers decide to embargo the USA?
A ship flagged under country X has to obey the laws of country X. So a Liberian flagged ship has to obey the laws of Liberia. The minimum wages in Liberia is much less then the US. Overtime rules more relaxed. Safety standards are more relaxed.
The cost of not having one is hard to put a number on but very likely much higher than the savings of offshoring all of your shipping.
Once grid-scale energy storage gets cheaper Hawaii will have one of the cleanest energy grids on Earth. Until then they have to complement their solar production with peaker turbines that typically burn diesel.
[0] https://www.hawaiianelectric.com/clean-energy-hawaii/our-cle...
At that point, legislators can then "patch" the law if they feel it necessary. (Do you realize exactly how bad "a quick security update to zero-day loopholes as they are found" would be?)
(Knowing only the facts in the article, I would be willing to bet that some judge is going to say, "haha, yeah, good try, but no." But then I don't know all of the facts of the case.)
That new decision then becomes part of the law (case law).
And in both cases the correct solution is fixing the law (code) but often that opens a whole new can of worms ...
>The reliance on judicial opinion is a strength of common law systems, and is a significant contributor to the robust commercial systems in the United Kingdom and United States. Because there is reasonably precise guidance on almost every issue, parties (especially commercial parties) can predict whether a proposed course of action is likely to be lawful or unlawful, and have some assurance of consistency.[76] As Justice Brandeis famously expressed it, "in most matters it is more important that the applicable rule of law be settled than that it be settled right."[77] This ability to predict gives more freedom to come close to the boundaries of the law.[78] For example, many commercial contracts are more economically efficient, and create greater wealth, because the parties know ahead of time that the proposed arrangement, though perhaps close to the line, is almost certainly legal. Newspapers, taxpayer-funded entities with some religious affiliation, and political parties can obtain fairly clear guidance on the boundaries within which their freedom of expression rights apply.
>In contrast, in jurisdictions with very weak respect for precedent,[79] fine questions of law are redetermined anew each time they arise, making consistency and prediction more difficult, and procedures far more protracted than necessary because parties cannot rely on written statements of law as reliable guides.[76] In jurisdictions that do not have a strong allegiance to a large body of precedent, parties have less a priori guidance (unless the written law is very clear and kept updated) and must often leave a bigger "safety margin" of unexploited opportunities, and final determinations are reached only after far larger expenditures on legal fees by the parties.
I would say it's a problem with laws, not the system itself. Also the continental system does not imply that precedents do not have any force. The difference is that when a law changes the system accumulates new precedents for it instead of using outdated ones.
1. There would be no centralized repository of what the laws were.
2. Even the best interpretation of existing precedent could be wrong or overturned, making any action potentially illegal.
3. The size of the entire corpus would grow with every case and make knowing what the law was only possible for people with a lot of law clerks to research it. The complexity of definitions could grow without bound.
The law is stupid, so this is what it incentivizes, the Jones act is like a Soviet Nail factory.
My business gets credits from our vendors if we bring customers from other competitors, if it's a new customer we have a vendor we work with that provides very cheap options so we sign them up with a competitor, before onboarding them with the vendor. If the customer is with one of our existing vendors we switch them to a different one. EVERYONE is happy, all our vendor reps are making their numbers, executives are making their competitive advances, even the cheap company is making bank because none of the customers ever even use the service.
I wonder what the law would have to say to produce the legislators' intended result. Possibly they could require companies to define, for each journey:
* Point A - the average(?) location of where the fish are caught, and
* Point B - the average(?) location where the fish are sold to the public or stored (for the majority of the time they are stored).
Then there could be some requirement that there be two points, C and D, with the following properties:
* the fish pass through points C and D on their way from point A to point B,
* points C and D are on the main Canadian rail network (such that most rail track in Canada can be reached by a train starting at point C or point D),
* the minimum rail distance between points C and D is some percentage P of the straight line distance between A and B, and
* the fish travel only by rail between points C and D.
The precise value of "P" would have to be chosen by looking at examples of intended paths and thinking of possible unintended paths.
Software lacks the persuasion element. The CPU either runs the code or it doesn't. You fix edge cases by making all possible states explicit, not by arguing with the CPU that it should do something differently to set a precedent.
For a law to have a loophole it must already be misaligned to its user's interests.
That's not necessarily true. The solution is to give regulatory agencies more leeway to enforce and shutdown these violations. It's only really cultural bias against "big government" (and towards letter-of-the-law rather than spirit-of-the-law style enforcement) that prevents this. If you are consistent enough about doing this, then you massively disincentivise companies from exploiting these loopholes in the first place as they know they're likely to get heavily penalised for it.
Otherwise everyone will be on the hook for some imaginary "not following spirit". Might as well hire shamans
The only way you can get to that point via a slippery slope is to bring your own barrels of lubricant and spend a while clearing rocks and trees and other obstacles off of your slope. You might even have to put some effort into increasing the grade of that slope.
I wonder how much they saved by doing this stupid game instead of using actual rail shipping for about thirty miles, and how much of it ended up in the pockets of their top-level staff and investors vs. the pockets of their employees?
IMO the fact that US culture is utterly intolerant of any kind of "spirit of the law" governance is one of the reasons why America can't have nice things. It's regulatory bodies have other problems, but one of the main ones is that they are toothless because they generally aren't given any real power. Where they are (such as the FAA), they're often much more effective.
Nope. Once caught bug in law, fix it. But don't punish people / corps for failure to "guess". One more time. Iam not law maker and it is not my job.
>"that US culture is utterly intolerant"
I am in Canada. Not the US.
>"why America can't have nice things"
I do not get it. Sure there is a lot of awful thing in the US. And an awful lot of good things as well. Just as everywhere (assuming developed countries).
You don't punish people for failure to guess (you may warn them if necessary). You punish people for flagrantly violating the law. Do you really think the creators of the railroad in this article didn't know that this wasn't what the law intended? It's infeasible to update laws in response to every violation - the process takes too long - so we need a lighter weight process that can keep up. You keep that process in check by updating laws where it oversteps the mark.
Or just ignore them.
No need to get all jackbooty with broad laws and subjective enforcement powers when the basic law and basic enforcement covers 99.999% of cases.
https://www.npr.org/sections/money/2017/12/20/571645063/epis...
And yet those people are routinely attacked instead of the laws themselves, which to me seems completely absurd. A person should no sooner pay "the spirit of" the amount of tax they "should" owe, than the IRS would forgive a restaurant some tax during the pandemic since "the spirit of" tax wouldn't sink businesses temporarily set back by pandemics.
Does it really just backup? That seems much more treacherous, than having a ramp on the other side.
Look at a map. How did that happen?
Slave labour imported by ruthless business operators on foreign flagged vessels.
Now COVID has hit, we have very little coastal shipping of any sort.
Put the Jones Act in that context
Credit where credit is due.
-- Dorothy Parker
https://en.wikipedia.org/wiki/New_Brunswick_Southern_Railway
ahh... the Irvings, petrochemical and politics they showed up here on HN not that long ago (4 months) in conjunction with the mysterious chronic wasting disease in the same area
HAI makes interesting, short, sarcastic videos about obscure topics that HNers will probably enjoy.
If a law is preventing us from being globally competitive it is a bad law.
For example, in cases where this competitive advantage is gained through means that cause what a reasonable person would considered an excess of human suffering and the relevant US laws prevent the actions that gain that competitive advantage in exchange for human suffering, does it make sense to submit that this human suffering is just a fact of life or would it be better to attempt to eliminate that suffering?
That used to be palatable to Americans when the polluting resulting from manufacturing their kewpie dolls in Walmart was a local concern of the third world factory.
But global warming pollution isn't localized.
Thus "being globally competitive" amounts to code words for bypassing environmental regulations and further dooming the entire human race. That is a big big big issue.
So while this is amusing and farcical, loopholes are dangerous at industrial scale.
Why is there an exemption for trips by rail?
Objections were raised at the time about the potential disruption of pre-existing patterns of travel of both passengers and merchandise in part over Canadian rail lines.
To address those objections, a proviso was added to the restated coastwise law – then the “first proviso” – which stated that the coastwise restriction did not apply to transportation “over through routes heretofore or hereafter recognized by the Interstate Commerce Commission for which routes rate tariffs have been or shall hereafter be filed with said commission when such routes are in part over Canadian rail lines . . .” – and “excluding Alaska.”
In 1935 this proviso was interpreted by the U.S. Supreme Court which wrote that “its evident purpose was to avoid disturbance of established routes, recognized by the Interstate Commerce Commission as in the public interest, between Northwestern and Eastern states through the lake ports.”
End quote.
The TLDR seems to be that forcing it for rail would have caused too many disturbances to how the rail was operating at the time.
I always attributed this to the fact that anyone who has ever tried to tell a computer what to do has a different kind of understanding of how hard it is to precisely define intentions, even when the compiler doesn't have a personal financial or other incentive to deliberately misconstrue your code so as to create a bug.
It doesn't matter how beneficial is the intention of your law, it'll really only work if it's generally aligned with the local cultural values -- in which case people will Do What You Mean.
Politicians either don't understand this, or pretend not to; you regularly see them passing laws to outlaw things that are already illegal.
The business in question is owned by a Norwegian. Perhaps American businesses should only be owned and operated by…Americans?