Chuck Yates Needs A Job

0:20 Hey everybody, welcome to Chuck Yates needs a job of the podcast and we're going to try we're going to try to make the Merchant Marine Act of 1920 section 27 sexy fun and entertaining today. And I

0:35 found the right guy to do this Colin welcome on. Well Chuck thanks for having me on the show look forward to it the so Colin let's level set for my mom because I do know my mom will actually watch

0:47 this Tell us who you are, tell us about the Cato Institute and then we'll kind of jump into geeky genzak stuff. Yeah, so my name is Colin Grebo. I am a research fellow at the Cato Institute at the

1:01 Herbert East Staple Center for Trade Policy Studies, where I basically focus on dumb US. laws that try to. block the importation of US. foreign goods or services, things like the Jones Act,

1:16 which you're going to talk about, but also other things like the US. sugar program, which for those unfamiliar, is a law that blocks or puts substantial barriers of importation of foreign sugar.

1:27 This is why, for example, your Coca-Cola you drink is made from high fructose corn syrup, while in Mexico they use actual sugar, because it's a lot cheaper down there, so things like that But,

1:39 I'd say, while the disproportionate amount of time is spent on. Okay,

1:44 I'm drawing a line in the same here. This might be our first fight of the podcast. I live in Richmond, Texas, which is the next town over from Sugar Land, Texas, started by the Imperial Sugar

1:58 Factory and the company. Are they the ones that caused all your sugar problems? Well, I'm not familiar with Sugar Land, uh, Texas and its origins, but, uh, Texas. is home to some sugarcane

2:10 production and some of the folks there have definitely have an interest in maintaining this law and making sure that we can't get access to cheaper foreign sugar so that we have to turn to Americans

2:21 and pay them higher prices. All right, so that usually us Texans get insulted way worse than that. So we haven't had a fight yet, that's perfect. But so

2:34 merchant, Marine Act of 1920 section 27, what is that? Yeah, the section 27 basically states that if you wanna move something by water within the United States, you have to use a vessel that

2:50 meets four conditions. The vessel has to be flagged and registered here in the United States as opposed to a foreign country. It has to be built here in the United States. It has to be crude by

3:01 Americans. It has to be at least 75 owned by Americans by Americans. And so.

3:08 That all sounds great, particularly in a post-pandemic world where we couldn't get toilet paper and all, when's that passed? When did the GenZak pass? Yeah, so fortunately, we'll get into a

3:23 little bit of a lengthy backstory. I'm gonna try to condense it as much as I can. So like you said, this is the Merchant Marine Act in 1920. So a reasonable person might think, okay, so this

3:32 comes about in 1920. This means that pre-1920, you could use whatever ship you want There's a very different environment. And in fact, we've had laws very similar to the Jones Act dating back to

3:43 the country's founding. You go back to, I think, 1789, like the third act of Congress said, well, you can use foreign ships, but you're gonna have to pay a lot. They put heavy tariffs on the

3:55 use of foreign ships to transport goods domestically. And then in 1817, they just said, okay, no more foreign ships. It doesn't matter if there's no tariffs, just you just can't use them. But I

4:06 think it's useful. So Sibyl may hear this thing. Okay, so the founding fathers thought this was a good idea and you're against it. You know, why is that? What's going on here? I think we have

4:15 to keep in mind, the context was very, very different at the countries founding that is today. Back then, US shipping and ship building was some of the world's best. This isn't a big surprise.

4:26 The 13 original colonies, of course, they were along the ocean. We had big supplies of timber, which was an important material This is back in the days of wooden ships use sail power. So we were

4:40 very good at building ships. So being forced to use American ships was not a big imposition and also had the benefit of creating this large US merchant fleet. In case a war broke out, you could

4:53 take some of the ships and load them with cannon, and they could serve as an auxiliary for the Navy and go hunt enemy

4:60 But as time goes on, this changes. We go from this whole world's best shipping and ship building to becoming very uncompetitive. This especially pronounced around the Civil War time, we see the

5:12 change over to ships made of iron and steam. And Americans, American build ships become, instead of cheaper than most, become 25 to 50 more expensive. And so people are looking for ways around

5:25 these types of laws that I don't want to use an American ship So in the early 1890s, someone hits on this idea of sending 250 kegs of nails from New York to California and they did it through Belgium.

5:40 They loaded all the nails, all these kegs of nails on a Belgian ship sent to Antwerp, Belgium. The nails get transferred to a British ship. Then it goes from Antwerp all the way to California.

5:51 And they did the math and figured this still makes more sense than using an American ship going on a more direct route. So there's actually a court case about this. And the court rules and says, no,

6:00 actually that complies with the American law. So Congress changes the laws. There's no, no, no, no. If it starts and finishes in the US, I don't care if you go to foreign port first, you have

6:09 to use an American ship. But there was still one more loophole where you could get around the law. And that was if you're shipping goods to and from Alaska. What people were doing is they would

6:19 send goods not by water to Vancouver, but they would take the goods over land to Vancouver, to a foreign port, and then go on a foreign ship in Vancouver to Alaska back and forth. Who hated this?

6:33 Well, shipping companies in Seattle, Washington, they said, No, no, no, this is unfair foreign competition. That should all go on our ships. And by the way, we're represented in the Senate

6:43 by Senator Wesley Jones of Washington State. So, World War I comes along. United States doesn't have enough ships. You have to build lots of ship hundreds of new ships Well, most of these ships.

6:56 don't get built until after the war is over. United States joined in 1917, the war is over in late 1918. So most of the ships were delivered, you know, 1920, 1919, 1921. So the government has

7:07 to figure out what do we do with all these ships? And they got the idea, okay, let's pass this merchant Marine after 1920. And part of it is disposing of those ships, but I thought, you know,

7:16 while we're at it, we should just revisit US. maritime industry policy more broadly. And then in 1920, these representatives from the Pacific Steamship Company in Seattle says, you know, while

7:27 you guys are at it, you should do something else. Unfair foreign competition, we're facing here in Seattle from the Canadians. And here's a proposed legislation, we think would be a good idea.

7:40 And if you look at the language of what was proposed by the Pacific Steamship Company, and what was actually adopted as section 27, it's like 90 the same. So basically, that's the long story.

7:50 This was kind of a favor. I'll pay off arguably to the Pacific Steamship Company in Seattle so they could block Americans getting access to foreign shipping when transfer goods to and from Alaska.

8:03 So kudos to you for doing that in as short a period as you did. I was having coffee this morning as I do every morning at Joseph's Coffee Shop in Richmond, Texas, and all the old guys sit around

8:17 the table and they're going, What's on the podcast today? I was on the phone's act and a former BP engineer who ran one of the refineries in Washington or one of the chemical plants in Washington

8:32 told the same story you did, but he took 28 minutes,

8:38 but it was basically Washington, Seattle, locking down trade with Alaska and they kind of supposedly had to cut in San Francisco and San Diego as well in LA It was like we're locking in these

8:50 shipping lanes for it. What becomes really interesting later on skipping ahead is BP goes up there, finds a ton of oil in Alaska. And if you know the oil business, it's not as simple as we're a

9:06 closed loop system, let's be energy independent. We need certain types of oil to refine in our refiners. And so to some degree, oil has to be fungible. We need heavier crude from Saudi Arabia to

9:19 running our refineries We get some of that from Venezuela, et cetera. So BP finds all this oil in Alaska and they run through all their economics and everything. And the thing that works best for

9:34 them, best for the consumer, is they're gonna ship all that oil to Japan. And then they're gonna divert the oil from Saudi Arabia that Japan's taking to the US Gulf Coast because they need the

9:48 heavier crews from Saudi Arabia to do that. And no, can't do

9:56 that because they pass something, some other law or some supplement to the Jones Act, you can't do that. You can't ship oil outside the United States. So they use this as a grab bag. It's the

10:08 gift that keeps on giving, I guess is the way to put it.

10:12 Yeah, like you said, I think, we used to have the oil export ban for a long time. And there's actually a study done by the government accountability office back in the late '90s who looked at

10:24 shipping North Slope crude oil to different, both internationally and to other parts of the United States. And it's an amazing chart. And it showed that to send oil from Alaska to the Gulf Coast

10:38 cost three times more than to send that same oil to the US Virgin Islands, which is exempt from the Jones Act. But the kicker of the whole thing, is that that ship going to Virgins went down around

10:49 the tip of South America, 'cause I think they're using a tanker that's too big to go through the Panama Canal. And the journey took, I think, twice as long, but was one-third the price. So that

10:58 suggests kind of the scale of the costs we're talking about when we say, you know, Jones Act shipping is more expensive. Yeah, now kind of crazy. I'm gonna circle back to the energy business in a

11:09 little bit, but maybe give me two or three or four as many as you want kind of gripes about the Jones Act, you know, stories about how it costs more ludicrous things. I heard, you know, a buddy

11:24 that goes San Diego to Hawaii on a cruise ship and has to stop in Mexico for four hours before they come back. Give me some of that color and then where I wanna go after we hear about all the costs

11:36 of the Jones Act, I wanna turn around and say, well, what are we getting for that protectionism, you know? Yeah, so to kind of appreciate. into some of the costs of the Jones Act. I think we

11:47 should start with the US shipbuilding requirement. So again, while the requirements

11:51 of the Jones Act is you have to use a US-built ship. So if you have a foreign-built ship, it doesn't matter if you put an American flag on, a crew with Americans, owned by Americans, it violates

11:60 the Jones Act. So the problem with that is that US-built ships are incredibly more expensive than one's built abroad. Let me give you a concrete example. So the last Jones Act ship built this year,

12:13 it's the only Jones Act ship built this year, is

12:16 a container ship as a capacity of around 2, 500 TEUs, a TUs, a 20-foot equivalent unit. So a 20-foot shipping container is one TU, a 40-foot shipping container is two TEUs. So that costs over225

12:28 million. Two

12:30 years ago, two 2, 500 TEUs ships were ordered from a shipyard in South Korea for41 million each. The41 million versus over225 million We're talking roughly, you know, a 5X. delta right there on

12:46 the capital costs. Obviously, that has an effect. Among other things, it discourages the use of shipping because we try to promote, Jones Act extensively is trying to promote shipping by making

12:59 ships really expensive to buy. It's bizarre, and we don't give much shipbuilding for it. But you want to talk about costs. So, for example, in 2012, the Federal Reserve Bank of New York put out

13:10 a study about Puerto Rico's economy. They said, If you want to send a shipping container on the east coast of Puerto Rico, it costs over3, 000. If you want to send that same box to nearby Jamaica

13:22 or the Dominican Republic, or the Jones Act doesn't apply, it's more like1, 500 to1, 600. We see examples of, I gave you the one with Alaska crude. The Congressional Research Service put our

13:35 report several years ago, saying the ship oil from the Gulf Coast up to Canada was two to three times more expensive in the Senate at a shorter distance. to refineries in the mid-Atlantic

13:48 Perhaps the craziest example most nonsensical one is when it comes to liquefied natural gas The United States is one of the world's leading exporters of LNG But we can't ship LNG to New England or to

13:59 Puerto Rico Because there are no Jones that compliant LNG tankers to transport it so they have to rely entirely on on foreign imports All the tankers that come in are foreign We've even had

14:11 notoriously a couple examples of a Russian LNG being imported even though We are you know what the world's leading producers so you know someone might hear that think well column This seems like an

14:22 easy problem solved just go build the ship But some Americans on it and there you go, but the math makes no sense Back in 2019 I think the Wall Street Journal had an article said to build LNG tanker

14:33 in Asia was about 180 million dollars at the time The estimated price for US built only 700 million dollars. So we're talking over half a billion dollars more Per ship no one's going to build that

14:45 ship the math doesn't make any sense. And so here it is this pro-american law Results that America's not getting access to American products Yeah, that's that that's crazy and I mean you almost

14:59 answered the second half of my question is like well What are we getting for this protectionism? You said one ship. I mean I looked up Jones Act Stats earlier this morning, you know back in the 80s.

15:12 We had 250 Jones Act Ships and today we've got what 91? So like what are we if take off your Cato Institute hat and put on your? You know card-carrying member of the ACLU hat or Reds for America or

15:30 Fair Play for Cuba Whatever you want to whatever what you want what are the defenders of this act saying that we're getting for this? Yes, so if I was a steelman in the case for the Jones Act, try

15:41 to make the most compelling case, it goes something like this.

15:46 The Jones Act US build requirement means that we have a shippily industry, 'cause we're required to build ships here. And that shippily industry, time of war, that's a good thing to have, 'cause

15:56 you can go build ships for the military, you can repair ships. So that's something you want for national security. It also means that we have, yeah, we don't have a lot, but like you said, we

16:08 have 90 some ships today that comply with the Jones Act, and then in time of war, you can grab those ships and say, hey, you're gonna carry goods, supplies, and equipment for the military to

16:20 where it's needed, you know, to rock or wherever it may be. And then also the US. crew requirement means that we have mariners that can both crew those ships who are gonna have to rely on

16:31 foreigners that may be unreliable, or both the commerce ships, and also the US government. owns seal-ifed ships as well, and they rely on civilian mariners to crew those ships. So it means that

16:44 we have mariners to crew ships for the government, and these are all critical items that you want to have in time of war. So I think that's the steelman case for the Jones Act. And does that,

16:57 let's get really, really micro about it, narrow down on that Is it three senators that the Mariners all live in a certain state that protected what within our government is actually stopping it.

17:12 And I just, you know, as interesting, I had breakfast with Ted Cruz, Senator Cruz, one morning. I always loved a name drop in my podcast, it's kind of my thing. But anyway, and I just said,

17:25 hey, what's the deal on the Jones Act? Can we please get rid of it? Because I went through the whole thing about, you know, it's ridiculous that we're importing Russian LNG into Massachusetts.

17:35 Can we build a pipeline? Can we get rid of the Jones Act? And he just looked and rolled his eyes that doesn't even get me started. We've tried for years to get rid of the GenZAC, not happening.

17:45 So, yeah, blocking it. So since you mentioned Senator Cruz, it's interesting, I think it was last year, he did introduce some legislation, I think it was amendment to a bill that would have

17:56 exempted, he didn't even try to repeal the Jones Act. He just said, okay, can we just exempt LNG shipments from the Jones Act? 'Cause you say, you know, this is generating nothing for the

18:06 American industry There are no ships, there are no Americans crewing the ships, we're not building the ships. So it's zero upside, it's 100 downside. So can we just exempt to that? I think there

18:16 was like a committee vote and he lost something like 26 to two, something like that. And you think this is the most common sense thing in the world. So yeah, this raises an excellent question. So

18:28 how does this law persist, what is going on here? I think it's basically, it's a classic case of dispersed costs and concentrated benefits. Your average American has no idea that the Jones Act

18:40 exists. Now, after your podcast comes out, that may change everyone gets aware, but as of right now, people don't know. In fact, there was an episode of Jeopardy, a few years ago, where the

18:49 category was Puerto Rico, five-year-old question. The answer was the Jones Act, and nobody knew. And these are Jeopardy contestants. These are smart-informed people.

18:59 Meanwhile, the people that do know about the Jones Act, that tiny percentage of Americans that do know, these are people that know because they profit from the law These are guys that work in the

19:09 shipyards, that crew the ships, that own the ships.

19:14 They want to keep, they got a good thing going as they perceive it, keeps out foreign competition. They want to keep that going. So they organize, annual off the top of my head, I could probably

19:23 name a dozen groups in DC and elsewhere that lobby Congress consistently to maintain the Jones Act. I mean, over in K Street, just a few blocks from here, we have the American Maritime Partnership.

19:36 We have the American Waterway operators. We have all the different maritime unions. We have the Lake Carries Association. These are guys that have ships in the Great Lakes. We have the Offshore

19:46 Marine Services Association, the American Maritime officers. I go down the list, but you get the point. And they're in DC every day and they're making the case and they donate, I think it was a

19:58 couple of years ago, Matty Glaseous on Twitter. He said something along these lines of, I don't get why the Jones Act persists, what's going on? And someone responded to him and said, I used to

20:08 be a staffer for a member of Congress and we were from Appalachia, I think, somewhere. I said, look, we would get these guys who would donate to us and all they asked was keep the Jones Act in

20:19 place. We're not asking you to proactively do anything. We're not asking you to introduce me, Bill. We're just saying every five or six years when a Jones Act comes up, just vote the right way.

20:29 That's it, you know? And nobody ever walked and marched in their office how dare you support the Jones at what are you doing? So these are the dynamics, if you go against the Jones Act, you're

20:39 making enemies, life is not going to be easy for you, you just go along with it, you're going to get endorsements, you're going to get donations, you're going to support, it's just the path of

20:48 least resistance. And I think we're talking about the Jones Act, we can be talking about any number of issues that are dysfunctional, you go, why does this ridiculous thing keep going on? It's

20:57 that basic dynamic. That's interesting, because that makes sense to me, I'm not saying I agree with it, but that at least makes sense of, here's dollars, just don't get rid of it. Let me give

21:11 you a concrete example, so make it less abstract. So you would think, if you just had like a passing familiarity with the Jones Act, you would think, okay, so people in the contiguous United

21:21 States, in the mainland, yeah, it makes sense they support the Jones Act, because maybe they're hoping to ship yards or something like that. But the guy is in Alaska and Hawaii and Puerto Rico,

21:31 they all got to hate it, right? They must go into Congress and rant and rave about it. Well, no, you know, a couple of years back in 2019, Senator Trump, some of Senator Trump, President

21:42 Trump, some of his advisors present him with an executive waiver said Trump, we think you should wave the Jones Act for 10 years, use executive power to not apply it to LNG. So Americans get

21:56 access to American LNG. And according to Bloomberg, Trump was like initially leaning in favor of it. He was thinking about doing it. And the next week, six centers went down there to talk him out

22:06 of it. Among them, Lisa Murkowski and Dan Sullivan of Alaska. You would think if anybody hates this law, it would be people from Alaska. In fact, people in Alaska hate this law so much. And

22:16 back in 1984, they passed a referendum mandating. They made it part of the government's official duties to lobby Congress for repeal of the Jones Act. It's written into Alaska state law. The

22:26 governor has to try to get rid of the Jones Act. Yet these centers are going to bat for it. I can't tell you exactly what their motivations are, but I can tell you that if you go to standard Dan

22:35 Sullivan's campaign website and look at his list of endorsements of which they're 20-some, like four of them are from pro-Jones Act groups, from different maritime unions, and master's of mates and

22:46 policy unions, and Marine Engineers, and the Official Association, Seafair's International Union. So I don't think that's a coincidence. Same deal in Hawaii. There is one member of the Hawaii

22:56 delegation that opposed to the Jones Act, Representative and Case, he gave an interview a few years ago and said, When I was a state legislator, I just asked the question, 'Can we study this

23:06 issue? I didn't even take a stance on it, I just said, 'Can we study this? ' He said, You would think the sky fell down on me. He said, People just,

23:14 it was like apocalyptic. He

23:22 said, The shipping companies were mobilized against me, and it made life very difficult. So you have someone in Hawaii going against the Jones Act, and that makes his life more difficult I think

23:28 that has a lot of explanatory power. and why the Jones Act stills on the books. So what you just said with a huge cloak of just ignorance by everybody makes a lot of sense to me. I'm gonna go back

23:43 and watch it. I had Kelly Chewbacca, who ran for Senate up in Alaska on the podcast, and we were talking about things. I don't even think she brought it up. And it's not because, I mean, she's

23:54 very intelligent, she's very well informed. It was probably her advisor's saying, that's not even an issue to anyone. Don't bring it up, you know, no one knows about it. I mean, even though

24:04 it's Alaska law, to say please go lobby against it. Well, one other thing, you know, 'cause you and I met on Twitter when somebody, I had posted something about the Jones Act and we all got

24:16 going, I'm not sure I understood this and maybe I missed it, but there was something that a foreign LNG tanker would show up in Texas, let's say down in Freeport. to fill up, but have a little

24:32 bit of room left and maybe wanted to stop at another LNG

24:39 Phillips exporting station. And something about when they connect to the next, a little bit of the LNG goes into, to in effect kind of prime the pump so they can fill up the rest of the ship. And

24:55 someone's designating that as, you know, domestic trade. And so you can't use a foreign ship to do that. Generally speaking, I get that right. Yeah, that's basically it. There was a recent

25:10 ruling from the Customs and Border Protection Agency, which they're the ones that interpret the Jones Act and make rulings about things. For example, technically the Jones Act does not say

25:24 transportation between two US ports It actually says two US points. So then the question comes up. Well, what's a point? And for example, if I want to transport, say, a bunch of rocks from the

25:38 US to an offshore wind site, because they use these rocks as scour protection,

25:45 can I do that? And the CBD rule, they said, basically, well, it's

25:51 the pristine seabed floor. That's not a point. But if you put a layer of rocks, then it is a point Any subsequent transportation has to be on a Jones Act compliant vessel. Well, what you're

26:04 talking about is, yeah, there was a ruling, something along the lines of - but LNG tanker loads partway in one

26:14 LNG terminal in the US and goes to another LNG terminal. Well, some of the boil-off gas and the vaporized LNG, at the second terminal, it goes into the lines Thanks. there and then returns. So

26:29 say, well, that vapor went from one US port to another US port and then got off loaded because it went up through the lines there in the terminal. That's transportation. That's the Jones-Egg

26:41 violation. So yeah, these are some of the absurd outcomes you can bump up against when talking about this law. That's crazy. So now you've got me all riled up. All right, I'm really pissed off

26:54 now. I'm educated on this issue. I'm hiring you to be my quote-unquote political consultant. Give me our 25-point, 27-point plan of how we're going to change this. What are some suggestions we

27:14 should be doing now that I'm all riled up? Yeah, so I mean, I think.

27:21 to change things. I think we need to emphasize a few things. First off, we need to make people aware of the law. You're not going to get change over something that people just don't even really

27:28 know exists. But I think people need to understand, earlier in our conversation, I mentioned this is a US bill, a US flag, all the rest. I think your average person might hear them go, that

27:39 sounds pretty great. Toys, Americans, and American shipyards, what kind of monster could be against such a law? I think we need to emphasize that this law, I think, is properly understood as

27:51 basically a tax on American commerce. You know, if I want to sell something from one, and if I'm in New York, I want to sell something to someone in California, we live in a huge country, and

28:02 distance is a barrier to trade. And having an efficient domestic transport is a way to connect people and enable that trade. And so we're in a situation where if I want to sell to another American,

28:14 I got paid this expensive Jones Act tax. But if I want to sell to someone overseas, or if I want to buy from someone overseas, I can use much more efficient international shipping. So it basically

28:26 tilts the playing field against American businesses. I think that's, and that's just not, this is a media like spitball in here being abstract. And we have document examples of this. For example,

28:38 the US International Trade Commission back in the '80s did a study of US steel imports into the Western United States. And one reason they said people in the Western United States were buying foreign

28:48 steel, instead of American steel, they specifically said the Jones Act, the high cost shipping, say, from steel from the East Coast, out West, gave advantage to imports. So I think we need to

28:59 drive home the fact this is very much an anti-American law. I would submit that in its most extreme form, actually, it doesn't make it more expensive to buy American products, like with LNG. You

29:09 just can't get it, you just don't. And I'm usually in the position of arguing free trade and say, you know, imports are a good thing that contribute to our economy and they do, but I also don't

29:21 think we should be tilting the playing field, you know, against Americans and putting them on the back foot. So I think we need to educate people. Yeah, let me jump in on this because I grew up,

29:30 you know, in the, I'm a kid of the 80s, Reagan's America, you know, say all you want about Reagan. He made it cool to be an American again. You know, the American dream became free drinks and

29:40 cheap debt, you know, so. And so I kind of had this issue from a political front that I think you have from a political front. Now that I've been an energy guy for all my career, we kind of have

29:53 it in triplicate is when you look at the psychological studies on how you change someone's mind, the three most effective ways are the Socratic method, just asking questions, incredibly effective

30:07 at changing people's mind. Number two, you make them laugh. I got a whole diatribe about how kids today are way more liberal than they should be because of John Stewart. I mean, I watch John

30:19 Stewart every night. I didn't agree with him on a lot of stuff, but man, I thought he was funny and quite frankly, if he made me laugh enough, I'd look at something a different way sometimes.

30:28 And then the third and most unfortunate way that you change somebody's mind is scare him, you know? And I think that liberals have always been good about your killing grandmother, you know, all

30:41 those type of stuff, the environmentalists have been really good at the world's gonna end in 10 years because of hydrocarbons and all the least effective way to change somebody's mind, facts,

30:54 figures, and reason. It just is. And I think one of the things conservatives have always done and Reagan was actually really good at Reagan sold the positive vision of conservatism and that sort of

31:10 stuff But I think throwing facts, reasons, and stuff. never very effective. And we do that, we do no advocacy and energy. And when we do it, we sit there and scream a bunch of facts and figures

31:22 'cause we're a bunch of geeky engineers and it's never that effective at all. So in our information campaign, we can't do this with facts, figures and reason. We can get together and say, are we

31:36 gonna cross the moral line and start scaring people? You know, and maybe we need to do that. Maybe we need to say, here's how many deaths because of the Jones Act or whatever, or how are we gonna

31:47 be able to connect on an emotional level to change this? I am now getting off my soapbox if you wanna hang up after that rant, but seriously, it's. No, I think these are great points you're

32:01 raising. It's, you know, it's not a contest usually who can produce the most compelling, you know, info graphics or whatever. But yeah, let's walk through some of these. So you mentioned the

32:10 Socratic method and just kind of asking questions. I think that's well taken. In fact, a couple years ago in the anniversary of the Jones Act's passage, I just posted a series of questions on

32:19 Twitter for Jones Act supporters and said, Look, I just want to throw this opento anybody that cares to respond 'cause I haven't gotten good answers these questions And these questions were all

32:28 along the lines of, okay, let's assume, for sake of argument, the Jones Act really is about Nash security providing those mirrors and shipbuilding. By what metrics is this law working? We built

32:40 one ship this year, last year we built one ship. Year before that, we built zero. I think on average, over the last 20 years, we've built somewhere around three ships per year. Put that in

32:51 context.

32:53 in South Korea this year, are supposed to build 47 ships. That's one shipyard. All American shipyards combined, we're talking one or two. So by what metrics is it working? And let's also, if

33:06 these are the goals, or this is what we're trying to achieve, is the Jones Act the most effective and efficient way of achieving that? If we want lots of ships, is this the best way of doing

33:16 it? Is this effective? Is this working? And I haven't seen good answers to those questions And I haven't, my own answers are no, none of this is working. And no, this is not an effective or

33:27 efficient method of doing it. We know this because, for example, okay, so you want ships. Well, you can just subsidize the ships. You can pay ship owners money and just say in exchange for that

33:39 money, we get the right to use your ship and tie a war. This is me spitballing here, making things up. We actually do this right now. There's something like 80-some foreign-built, US flag ships,

33:51 these are non-Jones Act ships. They're not allowed to operate here in the United States. They have to operate internationally. They're purely taking imports and exports from the US to other

34:01 countries. And we pay 60 of those ships, 53 million a year is basically a stipend in exchange for the right to use those ships for the military and tie of war. My attitude is we want more ships,

34:14 expand the program. I have no problem with that. And we should absolutely meet our national security requirements I just don't think this is a very effective way of going about it. Look at other

34:25 things like even the shipbuilding part of it, to the extent we built that one ship, well, that one ship that was built last year this year, look at where the components come from. Like the

34:36 propeller comes from the China State Shipbuilding Corporation. They're totally reliant on foreign actors, including some that we're not so friendly with for these ships. So in time of war, do we

34:48 think the Chinese are going to keep selling us, you know, these components and the ship took like three and a half years to build. We better hope that

34:59 war is a long one for these ships to even, you know, come online. So I think, you know, just asking some questions along those lines and then also, you know, making fun of it. You know, you

35:07 brought up, we talked about LNG a lot and the, you know, silly example with, with a vapor, but there are plenty of ways to make fun of this law You know, throughout the example of rocks, and

35:19 this is not, you know, this is not abstract. In fact, right now in offshore wind farms up in New England, right now they're bringing in rocks from Europe and Canada because they can't use

35:30 American rocks because there are no ships to transport the rocks. This is crazy. We have the example of in Hawaii. We have Hawaii, the big island is home to the park of Ranch, it's home to one of

35:43 the top 25 biggest cattle herds in the country. And they put some of their cattle on airplanes and fly them to the west coast because it costs about the same as using a ship. This is crazy, we have

35:55 flying cattle. They can't get access to normally the way you transport cattle is what's called a livestock carrier, but there are none in the Jones Act fleet. This is a recurring theme where

36:06 there's types of ships that just don't exist. So instead they either have to put them on airplanes or they put them on what they call cowtainers These are modified shipping containers that carry

36:19 cattle. No one else in the world uses these cowtainers. This is a purely Jones Act creation and the National Cattlemen's Association, they regularly pass a resolution condemning the Jones Act

36:31 because of lobbying from the Hawaii guys. But these are, again, some of the absurd silly outcomes. And then very early on in the conversation, you mentioned the cruise ship example. Now cruise

36:41 ships, They're under a slightly different law, but very closely related to the Jones Act, called the Passenger Vessel Services Act. Basically, the Jones Act is for transferring stuff. The PBSAs

36:51 are transport people, so we're talking cruise ships and ferries. And yeah, if you wanna take a cruise ship from California, Hawaii, well, you gotta stop in in Sonata, Mexico on the way back,

37:01 'cause if you have to hit a foreign port, make it an international voyage, not a purely domestic voyage, so you can get around the PBSA. Same thing if you wanna take a cruise up to Alaska, they

37:11 all stop in Canada on the way there, or the way back to check that box, who went to a Canadian port, this is international voyage. This created actually a real problem during the pandemic, 'cause

37:21 Canada closed their ports to foreign cruise ships. They thought, We don't want these COVID-filled shipscoming into our ports. So then the cruise industry said, Well, we can't go to Alaska. And

37:31 that's like 60 of their tourism revenue are these cruise ships that come up. So Congress exempted Alaska for a year from the PBSA, so they didn't have a stop at a Canadian port. which means they

37:42 could spend more time visiting Alaska. But now that's laps and we're back to the previous status quo of driving tourist dollars to Canada. So there's lots of absurd outcomes and certainly plenty of

37:54 stuff to make fun of. You know, it's interesting because the nuance to humor and it kind of really digging into the psychological research and figuring it out is you need to make the person whose

38:10 mind you're trying to change laugh, not you laugh. You know, and so one of the things we get wrong in energy is we make fun of all of these people for doing stupid energy policy that lead to bad

38:25 outcomes, but it's not making the person who's mind I'm trying to change laugh. It's making the echo chamber laugh. So I love your examples. We're gonna have to figure out how we make The

38:37 uneducated American laugh by that. I'm actually sitting here going and, you know, I throw out all ideas all the time and then I don't do anything 'cause I've figured out being unemployed is really

38:49 good. It's my jam, I'm lazy, so I do this really well. But there's a cute little cartoon in there of somebody wandering around trying to find the Jones Act and just popping up all these funny

39:01 stories. I mean, you could make kind of a quirky cartoon, where's the Jones Act or, you know, where's Waldo or some take on that that could be really funny. Yeah, you know,

39:17 talk about cartoons a couple of years ago, the Washington Examiner published a cartoon about the Jones Act and it showed Uncle Sam holding, handing over a water cache to Vladimir Putin who's sitting

39:29 on some barrels labeled LNG. Of course, LNG doesn't get transport barrels. And he's holding up a piece of paper says Jones Act on. So basically, you know, we're forking over dollars to the

39:39 Russians because of the Jones Act and kind of making fun of it that way. But yeah, your point's certainly well taken. That's, yeah, no, it really is. It is crazy. And look, I've, you know,

39:55 I've always kind of been libertarian leaning and all that. And I do get, you know, if everybody's reasonable and it's easier to live in a libertarian world than some of the folks we have to live

40:07 with. You know, I do get that. And anytime you draw a line somewhere, it's tough. But man, the world's a better place with fewer lines 'cause as nefarious as the passing by Senator Jones was the

40:26 unintended consequences that just keep piling on I mean, it's when things cost more, poor people suffer. It's not me and you, it is poor people, and I just hate that and I hate that people don't

40:40 recognize that. Well, yeah, let's take it a step further. It's not like poor people, but who uses these Jones Act ships? Well, it tends to be people in the non-continuous states and territories,

40:50 Alaska, Hawaii, Puerto Rico, Guam.

40:55 Like every Jones Act container ship operates there. There are no Jones Act container ships that go from Boston to Houston or Miami or something like that They only use these ships where there's no

41:06 alternative, there's no trucks, there's no rail. That's when you use a Jones Act ship. So in effect, who's paying for these? Well, some people live there. Puerto Rico has, last I checked,

41:16 like a 41, 42 poverty rate, and you were subjecting them to some of the world's highest shipping. You know, Guam, I think, has similar problems. And then you think about the fact that if this

41:29 is truly about national security, national security is national. all pay for it. That's what this is really about. What we're doing is we're saying this national security and then we take a huge

41:40 part of the bill and we stick it to, you know, less than 2 of Americans who live in these places. That's not right. That's not fair. That's not equitable. So just from a simple fairness

41:49 perspective, this doesn't work. You know, I think it's particularly egregious in the case of Puerto Rico because they don't even have congressional representation. They have one non voting member

41:59 of Congress, no voting representation is said. They can't vote for president. Yeah, they're subjected to the Jones Act, so the world's most expensive shipping. And we wonder why things are as

42:08 bad as they are there. And we have these discussions sometimes about how we help Puerto Rico. And I think we'll only start by, we just stop hurting them. Let's do that. How we put that in the

42:18 table. But, you know,

42:21 that's crazy. Yeah. One of the, you know, you always talk about the great marketing campaigns of history and And always I point out two of them.

42:33 Avis used to do, we're number two, we try harder. They were actually the number four car rentals company in America when they ran that campaign. So totally made up campaign, but very effective,

42:44 right? Number two on that list of things that weren't true, but very effective marking campaign, hate to say this, no taxation without representation. The colonies did have a representative in

42:57 parliament. Now granted we didn't have a lot of power, but we actually did have a representative and you just highlighted the thing I always love to say. Puerto Rico didn't have one, not a voting

43:09 member. So. Yeah, yeah. And by the way, that one non-voting member, she supports the Jones Act. And last year was given an award by a Jones Act lobbyist for her support at the Jones Act. So

43:21 again, this speaks to how even in a place like Puerto Rico, you find a Jones Act supporter. It's crazy stuff.

43:30 Colin, you were cool to come on. This was good stuff. Well, Chuck, I appreciate having me on. I really enjoyed the discussion and a lot of the points you raised is a great conversation. And I

43:41 know you need to hear this. If I was, I would give you a hug, but the Cato Institute needs a hug periodically for doing the Lord's work up there in DC.

43:52 I, y'all are amazing. Oh, I appreciate that. Thank you.

43:57 Anything we didn't cover that you thought we should have?

44:01 Well, one thought is that, you know, I gave the kind of steelman case for the Jones Act. You know, I could do why all those things are wrong. You know, why, you know, these arguments are all

44:14 flawed. I think I kind of did that in the course of our conversation, kind of exposed some of that stuff. I could do it more explicitly, but you know, I kind of leave that up to you.

44:25 You know, as you know, when I was in seventh grade, my football coach was. Larry Roode, Coach Roode. And anytime we'd lose a game or something, and we'd go down the excuse path of, Well, they

44:39 did this, they were holding the refs did that. Coach Roode always said, Look at the fucking scoreboard. And I think you did that really well. Look at the scoreboard, we don't have any shifts,

44:50 you know? So we could certainly, if you wanted to talk about I would say, yeah, I think you spiked myself up. Yeah, okay. Yeah, we're in a shift, you know? I mean, even I got it. Nope,

45:00 don't be done. But I actually gave it too much credit because the thing is like, you know, you like the head of the US Transportation Command a couple of years ago, he was testifying before

45:10 Congress and someone asked him very directly, so what about Jones Act ships? What are your plans for them? And he said, look, we've done war gaming and we don't really count on using Jones Act

45:20 ships in our war. And like a couple of years ago, like the US released a maritime administration, released a strategy document, And they referred to those subsidized ships. I told you about the

45:30 60 ships. That's our primary source of sealant. It made no mention of Jones Act ships. In fact, it's very rare that these Jones Act ships ever get used for the simple reason that, you know, if I

45:41 take a ship that's normally going to Hawaii or Puerto Rico and use it, carry goods from the military, well, who's feeding the people in Hawaii, you know? So these ships aren't even really

45:50 available and they rarely get used. I mean, it has to be like literally a World War three type scenario for these ships to ever get used And there aren't very many of them. But again, this might

45:59 be a little bit in the weeds. And, you know, if you think that already knocked it, knock those arguments down, I'm happy to leave it as it is. Yeah, nah, that's crazy. Well, in all

46:10 seriousness, thanks for coming on. This was really cool. What I'll do is I'll get it to Jacob, get edited. I mean, I don't think anything's gonna get edited. It's more normalizing our voices

46:23 and all that sort of stuff. and shoot it to you. And if you want me to wait for approval for you, happy to do it. If you feel like, No, it's good. Everything's cool. It's fine. I'll shoot it

46:38 to you in advance and

46:42 we'll publish. My thought is it may be published next Wednesday or the next Wednesday. Okay, sounds good to me. And I appreciate you reaching out and inviting me on the podcast and the willingness

46:54 to talk about this. Yeah, no, it's a, I don't know. It's kind of my pet peeve. I ate great. Yeah, no, I mean, in my ten foil hat has been too right the last few years and it's making matters

47:09 even worse. So, you ever get to Houston, look me up, beer's on me. Well, also, I'll tell you something else. Senator Cruz, I mentioned that he introduced that legislation. Well, since then,

47:21 Cruz is now the ranking member the Commerce Committee. So if Republicans get the say, he'd be chairman of the most relevant committee for overseeing Jones Act issues. That doesn't mean that he

47:31 could single-handedly overturn the law, but he'd be in a great position to have hearings and make life uncomfortable and raise some of the nonsense that's going on. There might be something worth

47:41 keeping an eye on. Yeah, and say what you want about Senator Cruz,

47:48 as smart as anybody in the Senate, he's really, really sharp, and you get him outside of a camera, delightful. I mean, actually a really pleasant person, very smart, very thoughtful, very

48:00 curious and inquisitive. We do a conference called Empower and it's Bitcoin mining for the energy business because we kind of take the position of, at the end of the day, Bitcoin mining is all

48:13 about energy cost. Ultimately, the energy companies will do it, you know, and we're starting to see that Flared gas, etc. I mean They don't advertise it, but EOG, Conoco, all these guys are

48:25 Bitcoin mining because it's in effect a way to use stranded energy. So, Ted Cruz was our headliner two years ago at it and we had breakfast with him kind of like 25 of us, the next day. I

48:40 mean, he really is smart, thoughtful, all that sort of stuff. We gotta get him a front man though, if he's gonna go against the Jones Act 'cause he doesn't change anyone's mind You know? Yeah,

48:53 yeah, his partner's on that is. Yeah, I say that with love for Ted Cruz. He doesn't change anybody's mind. Right, yeah. By the way, while I'm thinking of it, the only other thing I can think

49:05 of maybe we're talking about, but again, maybe I already covered this, is he kinda asked about a political strategy. And one thing I thought for a long time is you step back, there's actually a

49:14 really interesting potential anti-Jones Act coalition to be built I mean, you could have, like.

49:21 For example, so we have Ted Cruz who's criticized it. We've had AOC criticize the Jones Act last year. She called for a one year exemption for Puerto Rico from the law because she's not doing the,

49:32 obviously she doesn't come from the same perspective I do, she just looked at

49:37 it as like, this is bad for Puerto Rico, I kind of represent Puerto Rico. So this is really interesting coalition we built. It could be like, you know, wackos like AOC, you could have Ted Cruz,

49:46 the American Farm Bureau, like the farmers, they hate the Jones Act because they're transporting cheap commodities, transportation costs are a big deal for them. Obviously got the oil and gas

49:57 people, you have, you know, libertarian free market types, you have environmentalists should be on it, screw it up, the offshore wind industry. You got all the extra pollution, you know, from

50:07 trucks going down highways, that stuff could be going on more CO2. You may have a car dash, you mean? Get a car dash and there, and we got it. What I said, you know, what we need is we need to

50:17 get like J-Lo. And some of these other Puerto Ricans. Yeah, there you go, there you go. We get JLo, we get what's his name that did Hamilton, Lin-Manuel, Maronda. There you go. Get some of

50:34 the Puerto Rican singers and kind of make this an issue. I feel like that would do a million times more than whatever I could say. Yeah, there we go. I like it. I'll go figure out a way to do

50:45 that. Been concert. I love to have concerts Yeah, concert against the Jones AS. Back of the night, you used to have those Tibet concerts, right? We need to make this the cause of the umbrellas

50:56 behind. Three Puerto Rico, there we go. So anyway, really cool you came on, get to Houston, let me know, I'd love to buy you a beer. And anything we can do to help, so I don't know what you

51:09 know, but the short version of digital wildcatters, we published 10 podcasts, we have, we

51:16 do live events, particularly a lot around energy technology. We do this thing called energy tech night. Think Shark Tank meets WWE. We've get these energy tech companies up there do a product demo.

51:29 The audience, fueled on beer and pizza, cheers and whoever wins gets a wrestling belt. And we get 300 people at these things. We generally kind of, the community we've built with all this content

51:43 and live events. I like to call it a cult, not a community, but we generally have a lot of young folks in the energy business. I'm kind of the zoo animal. Look, there's an old 55 year old white

51:56 guy, you know? Wow, you know, so I'm definitely, I'm not a boomer, I'm Gen X, but it's only by three years. But we've kind of built this community. We're working on a knowledge share app.

52:10 Ultimately, we're doing some cool stuff with AI on the jobs front, as well as kind of, energy education stuff. So anything we could ever do to help you guys on that front, we're happy to do.

52:24 Well, I appreciate the offer. And again, I appreciate you reaching out. I'm glad we're able to make this happen. Cool. Well, I will be in touch.

52:33 All right, look forward to it. Take care. And if you leave kind of that screen on your computer up for 15 minutes, just in case. Yep, we'll do. Awesome. Thanks, ma'am.