Bottoms Up!

I have been thinking about shipbuilding, and how to bring more of it back to America. This is in line with President Trump's thinking.

The Navy is going to need new vessels, if only to keep the Chinese honest. But more than that, historically the US, like other countries, had tariff preferences for imports in US-built and flagged vessels. A big cost in building and running merchant ships is labor, and crew and shipyard labor is costly because of a very oppressive regulatory environment (the Jones Act, OSHA, EPA, etc.). If we can reduce some of that burden on labor, that will make building and running US ships less expensive, and perhaps make it possible to foster the US Merchant Marine not just in protected niches like the routes from the mainland to Hawaii or Puerto Rico, but in the mainland export-import trade with the rest of the world as well. Encouraging the industry by lowering labor costs will also open up some space for innovation and new technology by reducing the per unit cost of any innovation brought to market.

I haven't gathered or analyzed any figures, but my hunch is that by reducing the regulatory burden and levying tariffs on goods imported in foreign vessels, we can encourage domestic shipbuilding and grow the US merchant marine, adding jobs for Americans while reducing the costs to domestic US shippers. There is no free lunch here, all this will come at the price of a modest increase in costs to US exporters and importers and a decline in wages for the lucky few working in the existing industry. All of this is probably in massive violation of existing trade agreements, so we will have to open up things that the conventional wisdom wants firmly closed. Glorious fun, that!