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Culture War Roundup for the week of November 25, 2024

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I'm going to take a very controversial stance and support keeping the Jones Act. If the goal is to develop US shipbuilding for security reasons, there needs to be an actual shipbuilding industry. US shipbuilding is currently so horrendously inefficient that it will be instantly vaporized by Korea, Japan and... China most of all. US shipbuilding is not 50% less competitive, they're 500% less competitive. Instant loss. And if you nuke your shipbuilding sector who is going to build warships? Why would you want to make your warships within the Chinese missile death zone? Real great powers know how to make their own ships.

It makes zero sense to do all this onshoring and neo-mercantilism in microchips, strategic materials and leave out shipbuilding. There are all kinds of things you could do to introduce efficiencies and market discipline without razing the industry to the ground. Shock therapy is not the answer, there needs to be careful, judicious reform. Import technology and best practices from allies, reform regulations, bring in technical experts, break up cartels or cozy price fixers. Nationalize - China State Shipbuilding is the biggest shipbuilder in the world and is profitable too.

How is it that the US can build rockets, jet fighters and cars but ships are beyond them... because they protected their own market? The Chinese protect their own auto industry - lo and behold they produce huge numbers of cheap cars. The Koreans protected their auto industry for decades and turned it into a competitive export industry. The EU protects its agriculture and isn't a famine-stricken wasteland. Americans aren't some alien race that has an inherent -500% to Shipbuilding, there must be other problems than protection.

Jones act came was passed 104 years ago. Clearly it isn't working to make American shipbuilding great again at the moment. How long are you prepared to keep it and wait around for it to cause the golden age of American shipbuilding - 104 years more?

What do you think about the Trump tariffs? I'm really curious about how these things interact.

There's a strictly superior solution: repeal the Jones Act and use the resultant economic gains to fund shipbuilding directly. 3% of the US GDP, the top level estimates; $880 billion. This is 27 times the navy's current shipbuilding budget; 22 times the total US shipbuilding market. (Yes, the vast majority of it is already warships.) Oh, and it's 3.4 times the entire budget of the US Navy. Needless to say, this would completely eliminate any issue of decaying capacity. For that kind of money, we could build 60 new aircraft carriers each year (and then sink them all because it'd be impossible to man them) and have enough budget left over to nearly triple our normal construction.

Of course, if such a proposal were put to the public, I believe we'd rapidly find we do not value our shipbuilding capability at $880 billion. The Jones Act is a near-total failure in its stated aims, but even if it were a fantastic success, even if it only cost the US economy a tenth as much as it actually does, it still wouldn't be worth it, and it only survives by hiding its true costs.

(Not a fan of tariffs either, of course.)

This doesn't really seem like a good argument for keeping the Jones Act. If we're not good enough at making ships, why not just throw in the towel? You wouldn't pooh-pooh the nation of Haiti for importing computer chips instead of trying to make their own, it'd be foolish to expect them to just magically have the physical and human capital needed to do so.

Haiti is a small shithole country that, last I checked, was controlled by a cannibal who barbecued people. They're so incompetent and disorganized that the Presidential Palace still hasn't been repaired after an earthquake struck in 2010.

The US is a huge, highly developed country with aspirations to world hegemony. They produce plenty of advanced technology. Why can't they find the physical or human capital to build ships efficiently? How hard can it be?

https://en.wikipedia.org/wiki/List_of_countries_by_ship_exports

The Italians can do it. The Germans can do it. The Finns can do it! White people spent about 500 years clobbering the rest of the world because we had better ships, the US relies on its navy for relevance in world affairs. This planet is 75% water. Shipbuilding is not something that can be sacrificed.

My point is that you can't simply will your way towards robust institutions and the necessary human capital through saying "Be Tough" on the subject. Either you have an actual plan to achieve the thing you want directly, or you admit it's beyond you for lack of time or resources and turn to alternatives. We have allies who presumably do know a thing or two about how to build ships and maintain the industries needed to build those ships, and if needed, we can just rely on them. Hell, why not let the Europeans build us some warships and we can count that towards their contributions towards NATO, assuming that's still a hot subject?

We currently have the Jones act. We currently do not have a healthy shipbuilding industry. The Jones act appears to have been passed in 1920. The Jones act is not doing anything to get us a domestic shipbuilding industry. I do not see any prospect of state intervention at the scale necessary to get us a healthy shipbuilding industry. Given that, we should repeal the Jones act.

I would gladly consider supporting the reintroduction of the Jones act as a section of a bill that would, in fact, revitalize US shipbuilding. Until then, all this attitude - and it's an attitude that's shared by many people in GOP policy, it's not just you - does is hurt our economy for precisely no benefit. I do not see any harm in repealing it until that happens.

The US had a healthy shipbuilding industry in 1940, such that it could produce the biggest fleet in the world, fight and win huge wars against rival great powers on the other side of the world. 20 years of Jones Act protection didn't do much harm. I think the Jones Act is a symptom, not a cause. High US wages were already making it difficult to man a large US merchant marine back in the 1920s, hence protection. The problem is not enough protection, not smart enough protection, insufficient and inefficient subsidies, insufficient automation.

Why don't companies move into shipbuilding on the basis that there's huge latent demand? Is a wholly protected US domestic market seriously too small to support shipbuilding? The US has the second longest coastline in the world, a bunch of islands and hundreds of millions of consumers! Does the US lack the capital to build shipyards? Is there a shortage of skilled labour? Is there some huge thicket of laws preventing efficient shipbuilding? Unions? Some combination of these?

I doubt the root causes of the problem will be resolved by killing the Jones Act. All that will happen is political backlash from massive job losses and a modest increase to economic efficiency. But without protection, there is no chance of competing against North East Asia (who have the capital, economies of scale, labour and best practices already established). Without protection, there is no chance of ever revitalizing US shipping since there will be nothing to revitalize.

Shooting the patient in the head does reduce medical costs but it's not really a cure.

Okay but I think we should be realistic and note that a massive and unusually competent policy intervention targeting American shipbuilding is really probably just not going to happen. So in the meantime, the Jones act is just unneeded loss. And if it did happen, it'd necessarily be a much larger undertaking than putting the Jones act back in place, such that additionally reimposing the Jones act doesn't make it much harder to do. So I think in the meantime we should repeal the Jones act and gain the 'modest increase to economic efficiency'. And, from what I've read though I haven't checked it, the benefits really aren't that modest relative to other policy interventions. It's really hard to move gdp even by .1%

As far as I know river and coastal shopping in the US has been in decline for a long time. Particularly the great lakes: we don't move iron ore and coal (and limestone) like we used to. River shipping in the Mississippi is mostly barge these days I think.

We just don't do all the river and coastal hauling of manufactured goods like the Europeans do, not sure whether it's because we have better rail shipping or some other reason.

I do know that the US coast guard has gotten absolutely retarded about crewing requirements, at the same time as crew recruiting and training is going to pieces in the same way it is for air traffic control.
Europe on the other hand has a lot of cheap hulls and crew from eastern Europe.

We just don't do all the river and coastal hauling of manufactured goods like the Europeans do, not sure whether it's because we have better rail shipping or some other reason.

No, it's literally the Jones act. Look at how energy gets into the northeastern US. A huge part is provided by Canada, just because that bypasses the Jones act (and because they have legacy pipelines and transmission lines - and the blue states up there keep killing any new projects of that kind). Which, by the way, makes energy prices kind of a problem for the Northwestern states when the tariffs come.

Us shipyards already pretty much only make warships, and only ocassionally pop out a hulk for making trips to hawaii and puerto rico. Maybe the problem is that shipyards only know how to make warships and transfer that waste over into their civilian vessels.

According to google:

As of January 2023, there were some 56 tankers and 23 container ships in the Jones Act fleet.

That's the total number of vessels in operation, and China builds that many ships in a week.

I generally agree. Reform is a far better option than repeal. But the Jones Act is a meme and virtually all discussion of it is unproductive signaling. There's about a hundred other things that are equally or even more important for renewed US maritime self-sufficiency, but which are one or more of the following:

  • Massively capital-intensive and a gigantic gamble on a long-term investment that very likely will never pay off (mega scale dredging projects along natural US waterways; construction, maintenance, and repair facilities for expanded fleets)
  • Contingent on the existence of domestic industries that have been hollowed out and off-shored (what use is dredging waterways if no one uses them; are there enough US steel producers, assembly firms servicing shipbuilding needs, and domestic manufacturing volumes to make large-scale interior shipping profitable)
  • Third-rail line items for the affected constituents, against which running a political platform is electoral suicide (port automation in particular is DOA; see also the Dockworkers Union mafia boss video)

There's also a few extremely critical differences in the manufacturing sectors you highlighted where the US is competitive:

Rockets: There was a massive, underserved market that wanted to put payloads in space, but which could only do so at incredible expense, with extremely limited launch frequency. SpaceX commoditized and accelerated payload delivery, granting them near-total monopoly on world demand for space launches, before the competition even got out prototypes. They give high-status nerd jobs to an extremely overproduced market of estranged aerospace engineers, and use their status to pick top talent away from low-pay positions in government that are regularly threatened by cyclical party politics. Most of their flights are uncrewed, and the crewed flights carry literal astronauts - that talent pipeline isn't running dry any time soon, particularly when global demand for astronauts is countable on one hand (provided you count in binary on your hands... which is a normal thing that other people definitely do). The military isn't making demands that SpaceX build their rocket entirely out of US unobtanium, because they tried that with NASA and it went well enough to result in SpaceX existing.

Contrast with shipbuilding: the market has many competitors with decades of experience, most of the market has no comparable binding restrictions on material or labor sourcing, and no one enters the industry for nerd street cred. It's now a massive uphill battle just to gain a foothold in the market, and anyone trying has to face pressures that just don't exist for SpaceX.

Fighter Jets: The US spent decades pouring money and talent into the production of fighter jets and selling them to allied nations, justifying the expense by pointing at the hostile foreign superpower doing the same; then the hostile foreign superpower collapsed. It has taken decades for any credible competition to re-emerge in the market, and arguably we're still not there. Notably, fighter jets are also unambiguously weapons, in fact high-tech weapons, with all purchasers being militaries trying to gain substantial competitive advantages over adversaries - it's not a race to the bottom on cost. Even if the materials and technologies are highly exotic, the cost is currently bearable, the volumes of exotic materials required are relatively small, and the procurement process is at least partly designed around this requirement.

Contrast with shipbuilding: we don't sell aircraft carriers, we might sell a handful of submarines for the first time ever to Australia in a decade as an explicit attempt to block Chinese naval dominance in the Pacific, and we don't even have enough capacity to build or maintain our existing fleet well. Recent military shipbuilding efforts have been somewhere between a total mess and an absolute disaster, with projects running over-budget, over-schedule, and suffering from early cancelation or non-functional key armaments. We just flat out aren't competitive on non-military vessels.

Cars: This one's easy - a big chunk of the manufacturing is done outside of the US. When competitors got better at cars, we forced them to manufacture those cars in the US or face steep import tariffs. Cars are multiple orders of magnitude less expensive than ships, creating economies of scale. They are commodities for domestic transport, and are indispensable for a substantial fraction of the country.

Contrast with shipbuilding: if the US demanded that all ships docking in a US port had to be made in the US or face steep tariffs, I predict exactly zero foreign shipbuilders would set up shop in the US. There's no economy of scale without volume, and there's just not enough US ship volume to justify that expense compared to the global volume of shipping. The tariffs would just be passed on to consumers, either directly at ports or indirectly overland through Canada and Mexico.

A closer analogy might be nuclear power plants. We used to build lots of those, but the one-way ratchet on the regulatory framework imposed some frankly ludicrous requirements on new and existing projects, making it almost entirely unprofitable to bother in the present time (even after a majority of the national security concerns have evaporated). We subsequently lost all industry knowledge and experience, except for a tiny military niche. A handful of startups have concluded that the only way forward for the technology is to deliberately eschew the major advantage of nuclear power - scale - because it is no longer economically possible to scale. And now a competitor superpower is credibly focusing national effort on generating their own nuclear power industry.

I'm reasonably confident that the legislative gridlock and ephemeral executive alignment of the US has rendered us structurally incapable of ever solving this problem again - by the time we figure out how to set a national agenda that is durable to half-decade pendular political cheap shots, we will have been thoroughly eclipsed by China, and on the way to our own steady decline and stagnation much like most of Europe. My best-case reform package for the Jones Act is too heavily dependent on so many other reforms and re-industrialization efforts that will simply never be.

port automation in particular is DOA; see also the Dockworkers Union mafia boss video

It's critical to distinguish 'DOA as a result of contingent political arrangements / coalitions in today's politics', and 'DOA under most possible political arrangements / coalitions'. I don't think port automation is the latter!

I also fully support US shipbuilding for security reasons.

I do think we can do a lot better in terms of crafting a policy that does so without the distortionary effects that the Jones Act does and in a way that's fundamentally more fair.

Part of the issue to me is that the Jones Act imposes the cost of maintaining a national shipbuilding industry in a completely non-uniform fashion. And because it applies only to domestic routes, it effectively penalizes domestic trade within the States (especially Alaska, which is ridiculous given its criticality) in factor of foreign trade with other countries.