President Trump’s top economic advisers, Larry Kudlow and Peter Navarro, are embroiled in a battle over the outdated crony capitalist Jones Act.
It’s a fight between the petroleum industry and the shipping industry. It’s a fight between free enterprise and cronyist regulation. And it’s a fight between the U.S. economy and the self-dealing swamp.
Navarro, to protect a few politically connected shipping companies, would harm other U.S. companies and hand American business over to foreigners.
The Jones Act is a century-old law that restricts American companies who want to ship stuff to American buyers. All such shipments must happen on U.S.-flagged ships, the Jones Act demands.
This law obviously drives up the price American buyers pay for any U.S. goods transported by ship or could be. It also cuts into the profits of the U.S. sellers. Sometimes, the Jones Act forces U.S. companies to buy from foreign companies, because there are simply no U.S. ships available for the job, thus making it effectively illegal to buy U.S. goods.
Kudlow is lobbying Trump for a long-term waiver from the Jones Act for shipments of liquefied natural gas. Puerto Rico needs the gas, and boats are the only way to get it there. New England needs the gas, and there’s not enough pipeline capacity to get enough up there over land.
There also aren’t enough U.S.-flagged ships that can transport LNG. The result is perverse: “Russian LNG was delivered to Massachusetts last year,” Bloomberg reported this week, “to help supply consumers in the Northeast U.S.”
Foreign oil producers are beating American oil producers on selling to American consumers — all because of the Jones Act. That’s why Kudlow is arguing for a Jones Act waiver for natural gas shipments.
Navarro, though, is mounting a counteroffensive. He has rallied the U.S. shipbuilders in opposition to the waiver. Now he’s working Capitol Hill, trying to get GOP congressmen — both those who represent shipyards and those on the transportation committee and thus are cozy with shipbuilder lobbyists — to change Trump’s mind.
But helping foreign oil companies while hurting U.S. energy producers and consumers does not make America great. It mostly rewards the swampy lobbyists who have run Washington for so long.
In the coming days, Trump will hear both sides. One side will be arguing for old regulations that just help the well-connected. The other side will be arguing for less regulation and making it easier for American companies to buy American stuff.
It’s not a hard call. Trump should grant the Jones Act waiver.
