John Willoughby: The Jones Act And Hawaii Monopolies

Mid-April, I introduced my readers to John Willoughby (R) who is running to unseat Mazie Hirono in Hawaii’s 2nd District. If you have not yet taken the time to peruse this common sense, conservative alternative to Mazie Hirono, go here.

Mr. Willoughby has written an op-ed about how the ‘Jones Act‘, (which is very much in the news currently because of the gulf oil leak), is unnecessarily inflating prices on the islands because of the stranglehold that shippers, unions, and democratic lawmakers have on this state.  He understands the pieces of the puzzle and would be working to exempt Hawaii from this ancient law put in place to protect American merchant seamen.  Our newest representative, Charles Djou has already called for Obama to waive this act as was done during hurricanes Katrina and Rita.

Bold Colors No. 6: Jones Act Exemption Will Bring Down the Prices of Goods and Services in Hawaii

The prices of goods and services are higher in Hawaii than any other state in the country.

That’s not news to anyone who lives in Hawaii. However, if the two words ‘kept unnecessarily’ were to be inserted in front the word ‘higher,’ that would be news.

If elected to Congress, the very first day in office I will introduce legislation that will drastically lower the price of virtually every good and service bought or sold in Hawaii.

If you were to ask anyone who lives in or visits Hawaii why prices here are the highest in the nation, they would typically answer that there are several reasons. First, we produce (locally) a very small percentage of what we consume. Secondly, we export very little. But the primary reason people would give is that it costs a lot to transport goods to Hawaii, and we transport virtually all of what we consume – not only to the Islands, but also between the Islands.

These facts accurately describe the effect (high prices), but not the cause. This article will address that, and our solution.

Imagine if you will, Hawaii’s private sector economy as a tall three-legged wooden stool with the legs connected by supporting braces. Let’s say the seat represents the prices of goods and services, once again being kept high by the three legs.

The first leg represents the monopolistic trust of a few powerful and politically influential shipping and transportation companies such as Alexander & Baldwin’s Matson Navigation Company (who sets the costs for transportation of goods and services to and from the Mainland), Saltchuk Resources, Inc. (whose companies Young Brothers and Aloha Air Cargo determine rates for the interisland transportation of goods and services, and who is credited in many circles for shoring up their position by helping to sink the Hawaii SuperFerry), and Hawaiian Holdings, Inc. (whose Hawaiian Airlines controls pricing of interisland air passenger transportation).

The second leg represents Hawaii’s union leadership. Notice that I said “leadership,” because most of Hawaii’s union members are good, honest, hard-working people looking to earn an honest-day’s pay for an honest-day’s labor. Union leadership on the other hand is a de facto political action committee operating by a simple mantra – elect politicians who support the union’s goals to work as little as necessary and earn as much as possible doing it. (I’m a union member and my union’s contract and work schedule-bidding program is based on that formula.) Union leaders will make large contributions, lobby legislation and promise votes to labor friendly politicians, and negotiate contracts with their companies to achieve those goals.

The third leg represents four people – our Hawaii congressional delegation including Senators Daniel Inouye and Daniel Akaka, and Representative Mazie Hirono (and former Representative Neil Abercrombie). They are all responsible to ensure no legislation is advanced to “rock the stool.”

The supporting braces that hold the legs together (and will not allow the others to stray) represent the Merchant Marine Act of 1921, also known as the Jones Act. The Jones Act requires that all goods transported by sea between U.S. ports be carried on U.S. flagged ships that are constructed in the U.S., owned by U.S. citizens, and operated by U.S. crews. The law was designed to support the U.S. merchant marine industry. Opponents (including farms, ranches, and small businesses here in Hawaii) claim it stifles competition and increases the cost of shipping.

Though the Jones Act may still be appropriate on the Mainland (and even Alaska) where there are alternate means of transporting good and services, it is an extremely unfair and business and consumer unfriendly law here in the Islands. Our obvious boundaries allow only two means of conveyance between Hawaii and the Mainland – air or sea. As oil prices rise, it becomes less economical to transport goods by air. A large percentage of our goods must be transported by sea.

And though the increasing price of oil has a debilitating effect on the price of conveyance, it is the lack of choice and competition that radically exacerbates the cost of doing business in Hawaii. These costs are further increased by unions that get what they ask for without a fight, monopolistic trusts that can simply increase their cost of doing business to offset higher costs of labor, and politicians who have received millions in campaign contributions from the unions, Alexander & Baldwin, Saltchuk, Hawaiian Holdings, et al. in exchange for maintaining the status quo.

The only way to stop the continued escalation and lower the price of virtually every good and service in Hawaii is to knock one of the legs out. As with the seat of the stool, prices will fall. We must elect representatives who are not loyal to special interest groups (unions and monopolistic trusts), but to the people of Hawaii.

As we all know, congressional committee assignments are based in large part on the background of the elected representative. As a commercial airline pilot for the past 12 years, I would line up for membership in the powerful House Committee on Transportation and Infrastructure where legislation supporting an exemption to the Jones Act for Hawaii would be introduced, debated, and moved forward. We are already off to a good start with the election of Congressman Charles Djou who also favors exemption. With the impending large-scale change in U.S. House membership after the 2010 general election, having both Hawaii representatives co-sponsoring and fighting in favor of an exemption, advancing legislation on Hawaii’s behalf would be virtually guaranteed.

Hawaii desperately needs an exemption to the Jones Act. An exemption will allow us to lower the cost of living for our Hawaii families and the costs for farms, ranches, and small businesses to do business and export their products to the mainland. It is undeniable that an exemption will also lead to more jobs for Hawaii residents, and an increase in tax revenues to state and local governments.

Hawaii voters must elect representatives who will take this “common sense” message to Washington. A Jones Act exemption is a win/win solution that will benefit everyone in Hawaii – everyone that is, except the current legs of the stool.

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