 Think Tech Hawaii, civil engagement lives here. And Aloha, welcome to another Disney of Hawaii Uniform, I'm your host Calvin Griffin. And for those of you who may not have seen the program before, here we talk about mainly military and veterans issues. But we also talk about a lot of different issues that are connected. Today, I have a very special guest that's coming on the program to discuss the issue that many of us will be hearing about since the elections are coming up. It's one of the topics that's being discussed. That's the Jones Act. And what I wanted to do was to tie in. We talked about national security as part of the, seems to be part of the Jones Act. And I wanted to bring someone on that had, was very knowledgeable about the information, presenting it. We're looking for feedback. I believe we have a call in the number if you want to call and provide any feedback. You're more than welcome to. But right now, I'd like to introduce to the program Mr. Colin Raebel. Is that correct? Raebel. Okay. Thank you very much for joining us. I know it's been a very busy schedule for you. We were trying to line this up for, you know, for about a month anyhow. The subject matter course in the Jones Act. There are a lot of people that have a lot of misconceptions about it. And a lot of people even aren't even aware that the the acts exist. Could you tell us a little bit about the history and what the overall, you know, concept of the act is about? The Jones Act, the law passed in 1920. The formal name of the law is the Merchant Marine Act of 1920. It was passed right after World War I with the idea that the United States had a shortfall in shipping when it came time to move our soldiers and equipment over to Europe during the war. And to remedy that, they imposed this law which requires that for cargo to be moved between two domestic ports, it has to meet four conditions. The ship during the cargo has to be U.S. flagged. It has to be U.S. crewed. It has to be U.S. owned. And it has to be built in the United States as well. With all these requirements, it seems like the way things are going, the shipping in the United States, we don't build that many ships. Understanding it's cheaper to build them overseas so that we'll have an impact on making the qualifications for the Jones Act, is that correct as far as the shipping industry here in the States? That's absolutely correct. We've seen a sustained decline in the number of U.S. ships over the last at least 30, 40 years. It's been steadily trending downwards. The number of shipyards has declined from the early 1980s till today. I think we've seen something like 300 shipyards close. The number of Jones Act ships, so the number of ships that meet those requirements, those four requirements that are laid out, the number of those ships has declined from I think 193 back in 2000 to right around 100 today. And then the Mariners, the Saffy ships, the Crewy ships, we've also seen a decline in the number of Mariners. So I think that the Jones Act is not meeting its stated goal of bolstering the U.S. maritime capability. In fact, I think we've seen the opposite. Right. It seems to be opposition about making any changes whatsoever because what happened just recently, what happened in, I believe from Puerto Rico, it was a call for the Jones Act to be suspended and there was opposition from some factors, factions in the government or the unions. Is that true or? That's absolutely true. And that's usually the case when there's a call for some kind of waiver for the Jones Act. Variably, you find opposition from the unions and from the carriers who operate Jones Act vessels. They don't like competition. I can't prove it, but my suspicion is that one of their fears is that once people get a taste of a world without the Jones Act, when they see cheaper prices, when they see greater availability of shipping, it'll be harder to return to the status quo. Yeah. A lot of people don't know. Well, unless you really study the subject, especially here in Hawaii, I think it has a major impact on Hawaii, Puerto Rico, Alaska, and I think a few other places anyhow. But why is there such opposition? Because if it's going to benefit the whole, you know, the populace in general, as far as lowering prices, things of that nature, why? I mean, I understand that they're trying to protect jobs and everything else. We don't want to lose American jobs. But why is it, you know, so people are so entrenched in, you know, in opposing anything modifications? Well, here's the thing. I think actually the vast majority of people, if you explain to them what the Jones Act is and what it does, I think they would understand that it's awesome. This is something that we should get rid of. After all, there is no such thing as a Jones Act, say, for airplanes. You can buy an Airbus airplane built overseas. You can buy a foreign-built car, you can buy rail trucks, whatever you can do that. But with Jones Act mandates, you have to buy an American ship. I'm sorry, once you explain that, but the problem is the average American doesn't know about the Jones Act, doesn't know what it is, doesn't know what it does. And I think they're a little bit ignorant with regard to its costs, whereas the people that benefit from the Jones Act, the years, you know, such as Matt's Center, Pasha, which operate out in Hawaii, they're very attuned, Steve, from the Jones Act, which means reduced competition, higher prices that would otherwise be the case. They're very invested in this law sticking around. I think it's very interesting. You think about it logically. You would think that the people most opposed to the Jones Act would be, as you pointed out, the elected representatives from Alaska, from Hawaii that are most impacted by shipping costs. In fact, we find that these politicians are the ones that are usually some of the strongest supporters. Well, I think the only way you can really explain that fact is that from the Jones Act and the profit for a lot, keep it in place. They may be a minority of the population, but they're the ones that care the most about the issue where the average American probably isn't that motivated by the Jones Act. Yeah. Yeah, I think what I see the impact it has, you know, with the shipping costs and everything else and more or less, of course, as a monopoly over here, it has an impact on the local economy because if you're able to receive goods and ship them out cheaper, wouldn't that stimulate the local economy? Absolutely. You know, I think that when it comes to Hawaii, a lot of people are very cognizant of the fact that Hawaii has an island or a series of islands has to import the vast majority of what they consume. And so I think about the Jones Act in terms of increased costs for the goods they buy. And that's true. But sometimes I think what's maybe overlooked is it also hurts Hawaii when it comes time for Hawaiian businesses to export the goods they produce. So for example, we have a situation on the big island where you have ranchers that actually put the cattle on airplanes to transport them to the West Coast to feed lots and to slaughterhouses there. I know that Kaloa Rum based in Kauai, for example, they like to export their products internationally. But because the Jones Act, you get reduced shipping coming through Honolulu, so what they have to do instead, according to their CEO, is they have to ship the rum from Hawaii to the mainland and then from the mainland then on to its final destination, such as Australia. And in fact, it costs them, I think, you know, three times more to ship it from Hawaii to the mainland than it actually does from the mainland to some places far away as Australia. The Hawaiians get hurt on both ends of this. It means that their dollars don't go as far when it comes time to go to the grocery store, for example. It also means that they make less money because they have fewer business opportunities and they're less competitive because of this fall. Yeah, because it seems a little bit strange over here. I mean, people talk about it offline or, you know, the verb rarely is any public discussion about this. But here in the state, I mean, we're a water state, basically, and you would think that there would be some sort of ferry system. Does Jones Act have an impact on why we may or may not, I mean, why we don't have any inner island ferries for the most part? Well, last year, the Hawaiian government, the Department of Transportation, put out a study looking at the feasibility of putting, implementing an inner island ferry system. And they identified the Jones Act as significantly, in their words, raising the cost of acquiring vessels. And we know that, you know, back in, I think 2007 or so, you have the Hawaiian Super Ferry. And this was composed of two large, these were built in Alabama for $95 million a piece by a company called Osso. Same company, its parent is based in only one in the United States capable of building that type of ship, building that double hold catamaran ferry. So in the entire United States, you don't have any choice when it comes time to buy these ships and you're dealing with a monopoly, that means higher costs. That parent company based in Australia, they built few years after the one used in Hawaii, it's now being used in Spain. The cost of that was 60 million euros, which is about 70 million dollars, and it's seated about 400, I think 500 more people than the Hawaiian Super Ferry. So I think this sums up the Jones Act very nicely. We have, we're paying more and we're getting less. You know, in this example, for a ferry that's being used over in Spain, they get it for $30 million less and it seats more people. So I have to think that this is not exclusively the reason why there isn't an inter-island ferry system, but it absolutely has to be counted as an obstacle for an explanation for why Hawaii, a series of islands, doesn't have the ability for passenger ferries. Yeah. The one thing that I hear a lot of our elected officials may say, who are for the Jones Act, is that national security. They keep throwing that up that, you know, you're, if you are inclined to, you know, support any changes, would the Jones Act eliminate it? You're not patriotic because whatever. But in actuality, doing the Gulf War and some of the other events, weren't there a large percentage of the shipping done was by foreign flag? Absolutely. During the Gulf War, I think the Gulf War is a great example. You know, it's almost 30 years ago, but this is a really useful example because this is a situation that the US military had to get as much of its troops, as much of its equipment and associated cargo over to the battle zone, over to Saudi Arabia in this example, as quickly as possible. And what happened? We didn't have, we didn't have the sailors. We didn't have the ships. We had to rely on foreign ships. Foreign ships carried 26% of the unit cargo versus the US commercial fleet carried about 13%. So these are, you know, civilian, in terms of mariners, we're so short of mariners that we had to use the 92 year old, we had to use teenagers, things were so desperate to get shipping, but the US actually went to the Soviet Union and asked them if we could borrow one of their ships and we asked them twice and they said no both times. Hmm. Why is, how did we get into the situation? I mean, as some of it seems very obvious, but how, why are we in a situation? Well, what's the root cause of it? Well, I mean, the root cause of why we still have to deal with this law. As I said before, I think it's because I think there's a few things going on. There's status quo bias, people are comfortable with the status quo, change is scary. We told ourselves this story that the Jones Act is imperative for national security and a lot of people don't want to do anything that imperils national security, even though I think when you actually look at the facts and look at the history, you'll see that it doesn't help our national security. I think it actually impedes it. And more than anything, it's really the power of a special interest that keep this law in place. And they can't make the argument on economic grounds because there are clear costs there. If there was no cost to the Jones Act, if it didn't benefit these players, they would be open to getting rid of the law, but they don't want the competition. So they put out the story about how we need it to national security reasons. They wrap themselves in a flag. And I think that, unfortunately, most people aren't aware of the facts, aren't aware of the truth, and they don't look any deeper. So we're stuck with this law, unfortunately, for almost 100 years. All right. Okay. Colin, we're going to take a short break, and we'll be back in about about a minute anyhow. So we'll continue our conversation. But please stay tuned to Hawaii Uniform, and we'll be back shortly. Hi, I'm Bill Sharp, host of Asian Review here on Think Tech Hawaii. Join me every Monday afternoon from 5 to 5.30 Hawaii Standard Time for an insightful discussion of Contemporary Asian Affairs. There's so much to discuss, and the guests that we have are very, very well informed. Just think we have the upcoming negotiation between President Trump and Kim Jong-un. The possibility of Xi Jinping, the leader of China remaining in power forever. We'll see you then. Hey, Stan Energyman here on Think Tech Hawaii. And they won't let me do political commentary. So I'm stuck doing energy stuff, but I really like energy stuff. So I'm going to keep on doing it. So join me every Friday on Stan Energyman at lunchtime at noon on my lunch hour. We're going to talk about everything energy, especially if it begins with the word hydrogen. We're going to definitely be talking about it. We'll talk about how we can make Hawaii cleaner, how we can make the world a better place. Just basically save the planet. Even Miss America can't even talk about stuff like that anymore. We got it nailed down here. So we'll see you on Friday at noon with Stan Energyman. Okay, you're back with Hawaii in uniform, and I'm your host Calvin Griffin. And again, we're continuing our conversation, Mr. Colin Graebel, I'm sorry, with the Cato Institute. May I call you Colin? Yeah. Okay. Before I apologize, when we first opened up, when I first opened up the program anyhow, we didn't get a chance to talk about your background. I know that your father was in the military, and if you could tell us a little bit about yourself and also about the Cato Institute, and what some of the things they're addressing. As far as myself, my father was in the U.S. military, he's a career army officer. That should form an Air Force base, an Air Force base in New York, Nebraska. So I grew up looking on a near military bases all through high school, but I left the house. And I currently work at the Cato Institute for Washington, D.C. Bank that is guided by libertarian principles. You know, this is free markets, free people. I keep the government as small as possible, to the minimum. Strong believers in individual rights, and the ability for people to freely transact. Which is, you know, why are we here talking about the bank? Because the bank, it runs afoul of that. It's a violation of some of our freedoms. Yeah. One of the things that has also impacted, I mean of course we're, I want to, of course we'll talk about what's happening here in Hawaii, but overall, like say, the Jones Act has an impact as far as the environment, because right now there's ships, there's not many ships going from port to port within the United States. Is there? Within the continental United States, the U.S. mainland, you don't find very much coastal shipping at all. Most Jones Act shipping takes place between the mainland in Puerto Rico, the mainland in Hawaii, and the mainland in Alaska. Outside of that, there is very little coastal shipping. So what this means is that I think we're foregoing an opportunity to take cargo that alleviates some of the traffic on I-95 or I-5 in California. But we can't do that, and they can large part because the Jones Act which drives up the cost of buying ships and makes them artificially more expensive than would otherwise be the case. I think most of the shipping that's done when it's offloaded from overseas, since foreign carriers are prohibited, I believe by law, from going to enter, like going down to Mississippi, or things of that nature, is that the fact? I mean, of course there's restrictions on foreign carriers doing that. And is there an increase in barges or other forms of transportation that's being used in the United States? One thing I think actually, well, when defenders of the Jones Act talk about why the law is great, they'll say something like, you know, there are 40,000 Jones Act vessels out there, which is evidence of how strong the Jones Act is. Well, the overwhelming majority of those 40,000 vessels are in fact barges. And go down, for example, to Mississippi. The United States, when it comes to shipping, barges is one thing that we're actually pretty good at. There's a lot of traffic there on the Mississippi. We're not as good at building, you know, seagoing ships that can handle coastal waters. As far as foreign ships being able to go in inland waterways, such as the Mississippi, my understanding is that there actually is no prohibition. They can. The problem is it just doesn't make any sense for them to do that. For example, you know, to enter the Mississippi, you'd first have to go through blue water to the Port of New Orleans, and then from there up to Mississippi. It makes a lot more sense for foreign ships just to dump off their cargo at the Port of New Orleans, and then from there it'll be placed on barges to go further up the river. Yeah, okay. But getting back to Hawaii, one of the beliefs, and I guess it's true, is that when we have foreign cargo coming in from overseas, it goes to California, and it's offloaded onto the docks, reloaded onto a Jones Act compliant ship, and shipped to Hawaii. Is that correct? I can't speak to Hawaiian shipping routes. And exactly what happens. But my understanding, I know that from the perspective of Hawaiian exporters, that they have that consideration that they don't. There isn't as much international shipping coming through. So what they're forced to do, such as an example of Kuala Lumpur and Kauai, is they have to ship it to the West Coast before they can find a vessel, they can take it to its final international destination. I imagine that the reverse also holds true, but I can't speak to that authority. All right, okay. What can be the average citizen, when you become aware of what's going on, what can be done to, I would say put pressure, but that's for lack of a better word. For some of our elected officials to revisit or give a really honest evaluation of what the act is about, how it's being implemented, and what changes can be done that benefits all of us. Again, like I said, nobody wants the union to lose any jobs or anything else, but compared to the overall population, it's a relatively smaller number. And you would think that there were people who claimed to have the interests of the United States and our country at heart would be more accommodating to some sort of resolution with this addressing this issue. Yeah, I think we have to do a few different things. I think we have to, one part of this, educating the average American, making them aware that the Jones Act exists and how it impacts them. The average American, particularly those in Hawaii and Alaska and Puerto Rico, but also I think other Americans, we all pay at least a little bit more in the case of Hawaiians, perhaps significantly more for the goods that we purchase. But the costs go beyond that. Like you said, there's an environmental cost. It means we have more traffic on our highways. We have more pollution. Shipping goods on ships. It's the most energy, most environmentally friendly. We try to do more of that. So I think we need to educate the average American about the costs. And then I think we have to also educate policymakers. Part of that is not only alerting them to the costs, but I think we have to expose the myth of this national security benefit. Because I think lawmakers, understandably, are very reluctant to take any action that is at least perceived as undermining our defense capabilities. And of course they shouldn't do anything that undermines it. But I think properly understood that Jones Act is not a national security asset. I think in fact it undermines our national security, both in terms of wartime situations, but also when there's a national emergency such as hurricanes, getting relief supplies as quickly and cheaply as possible to where it's needed. That's why we have Jones Act waivers. So I think there's a variety of things. We need to educate the public and we also need to educate our politicians. And I hate to say it, but also swayed by special interests, such as unions. And we also need to make the case there and let them understand that yes, there will be some people that will lose their jobs, but more people I believe will gain jobs. Remember every dollar, some other area of the economy. So we talk about people that have their jobs because of the Jones Act, but what about all the people that have lost their jobs because people don't have the extra money to spend supporting their business when they want to do? So these are all elements, I think, of a successful strategy. All right. You mentioned the waiver. It seems like when something comes up, a national disaster or whatever, especially like in Puerto Rico, and we dodged the bullet over here recently with the two hurricanes that came through here, is there anything in place currently right now where instead of waiting for it to happen and debating whether you're going to get the waiver or not, which caused lives could potentially cause some lives? Is there anything in place right now where it's being expedited or contingency plan where it's in place and you just make it happen? Unfortunately, no. Like I said before, Jones Act opponents, they hate giving, they don't want to give an inch on this. They don't want a waiver, however temporary. I know that a senior official in the Bush administration, I think it was the Council of Bush's Council of Economic Advisers, I believe, he said that he talked about the experience with a Jones Act waiver after Hurricane Katrina in 2005 and how when the topic came up, the phone was just starting ringing off the hook immediately with people in support of the Jones Act, very special interest, trying to convince them to keep it in place. Before I don't think these people want to give an inch. Now, as far as efforts, in the wake of Hurricane Maria that hit John McCain and Senator Mike Lee legislation that would grant Puerto Rico a permanent exemption from the Jones Act, so they wouldn't have to go through this waiver process every time that there was a natural disaster or some other emergency in which a Jones Act waiver could help the island. Unfortunately, that hasn't gone anywhere and I haven't heard any recent talk about pushing that. Now, like I said, it just boggles my mind. I mean, I understand trying to protect jobs, but when you talk about putting certain impediments in the way of saving lives, that I cannot wrap my mind around. It's really disheartening to think that there are people out there who are more willing to look at the bottom line as far as dollars in a sense of lives. Is there anything else that, you know, we could talk about this for hours? It's been really informative for me. But is there anything that you think we need to touch on? We're getting out into the wire anyhow, but it is something that you need to be, that would you like to express to the public, our viewers? A few points. You know, I don't think, we always talk about Jones Act reform or repeal is hurting the US shipbuilding industry. And I'm not even sure that's true. Let's think about other forms of transportation, such as autos or airplanes. Do we think that the US aerospace industry would be better off if we had a Jones Act law that said you could only buy Boeing planes, for example? You can't buy foreign planes? I think absolutely not. Competition has made Boeing better. Back in the 1970s or 60s when Japanese cars started arriving in the United States, initially that was quite bad for GM Ford and the domestic auto producers. But I think in the long run, people would agree to force them to up their game, become better, more efficient. We're not doing any favors for the US shipbuilding industry or the carriers by maintaining the Jones Act in place. I think that ultimately, competition makes people better and they will be better off. Great. Okay. As I mentioned, I wish we had more time to further discuss this, but unfortunately, we're limited. But I want to thank you for coming on the program. I think it's enlightened a lot of our viewers of what's going on because it gives you basically the unvarnished version of what's happening. And I would encourage people to seek more knowledge anyhow because you have to be very careful of where the information is coming from. I'm not trying to call anybody's character in the question, but I think that we have to be more vigilant as citizens to what's going on. I would really like some time in the future, like say, do a follow-up program because, again, there's so much things that needs to be covered. Inhale, not only here about Hawaii, but also enlightening other people about what's happening in other parts of the country because I think we need to work together as a people, as a country, to resolve some of these things and overcome some of these obstacles anyhow. Colin, again, thank you very much for joining us. And any intense seconds or less, any final words? Please visit our website if you want to learn more at www.kato.org.johnsact. Great. Okay. And again, thank you very much for coming on the program. And of course, I'll be in touch. And I want to thank the viewers for staying tuned. And of course, we're always looking for responses here at the program. So, again, thank you. God bless and until that time.