John McCown, a former shipping company CEO and transport hedge fund executive, debunks the faulty calculations in the Cato Institute’s analysis of the Jones Act as it applies to Puerto Rico.
Most container traffic from the US flows from Jacksonville FL to Puerto Rico. Containers headed to Puerto Rico must be carried in US-flagged hulls, due to the cabotage restrictions of the Jones Act.
It appears Cato Institute researchers’ figures are patently wrong, their methodology is flawed, and they have excluded several factors that would affect the Puerto Rico – US container trade link. Cato researchers came up with an 88% decline in the cost of shipping a container by their flawed technique. But Mr McCown’s spreadsheet says it is more like 10-12%, an amount that is hardly worth junking the Jones Act.
The purpose of the Jones Act is to maintain a capable US maritime segment. It embraces, for instance, container shipping between US ports, US shipbuilding, and US seamen and training, along with the stricter requirements for seamen’s well-being that a US flag puts into effect.
The Cato Institute seems to have aligned itself with some radical allies of the sitting US President. We don’t see why they would be so eager to cook the books on this issue. And we don’t understand why they insist on repeating their false conclusions even when they have been called into question by a serious critic, on fairly easily ascertainable facts.
It seems as though Cato is falling prey to the fake news fad, and won’t shut their collective mug when they are found out. It’s a good way to lose everyone’s respect.