In 1920, the US government passed the Jones Act, an act requiring all sea shipping between US ports be done on ships that were built, crewed, flagged, and owned by Americans. The act is a clearly protectionist measure designed to protect domestic shipping from foreign competition (although there is also a national defense argument for it). The idea is that a cheaper foreign shipping company could not undercut US shippers on domestic trade routes. If I were to ship something via ocean from Miami to Boston, I’d have to do it on US built, crewed, flagged, and owned ships.
The Jones Act, to the extent it is binding, raises the cost of ocean shipping in the US (if this were not the case, say it were already cheaper to ship on US ships than foreign ones, then the Jones Act would not be binding). When the relative price of something rises, it encourages the use of substitutes. The main substitutes for domestic shipping are trucking and railroad (and air to a lesser extent). With the rise of ocean shipping costs from the Jones Act, transporters would turn to trucking and rail. Furthermore, since trucks take up a lot of room on the highways and freeways, it is likely the marginal increase in trucking from the Jones Act increases congestion on the highways. In short, the unintentional result of the Jones Act is to increase traffic congestion (and, potentially, traffic accidents as well).
Some interesting thoughts for further research:
- Do trucking and rail companies lobby in support of the Jones Act (bootlegger and Baptist)?
- Has the Jones Act had a measurable impact on the level of traffic (this is an empirical question that would be extremely hard to answer because of the age of the Act)?