The Star-Spangled Banner closes with the line, “…O’er the land of the free and the home of the brave.” That land of the free has one of the most restrictive and absurd laws that has ever been enacted. We’re talking about an expression of the most infamous protectionism, the Jones Act of 1920, legislation that requires merchant marine shipping between all ports of the United States to be made exclusively by U.S. vessels and crews.
This foolishness is a product of lobbying by large companies, and its price tag is paid by families, especially in the most vulnerable sectors of society. As an island, Puerto Rico is particularly affected by this law. Let’s take a closer look.
Any product that arrives at the United States and whose final destination is Puerto Rico must be unloaded in Jacksonville and reloaded on a ship with an American flag and crew. This means families on the island pay a mark-up of 15% to 20% on everything imported to the island. This extra cost represents a considerable negative weight on the wellbeing of Puerto Ricans, especially in the wake of Hurricane Maria.
The devastation caused by the storm left the island on the verge of a deep humanitarian crisis. Puerto Rico’s electricity network was destroyed and could take weeks to rebuild. The lack of electricity and damage to infrastructure are paralyzing hospitals, schools, and other basic institutions. The population is at risk of a health crisis due to the scarcity of drinking water and basic medicines; despair is increasing among people due to scarcity of food and other necessities; dozens of buildings have collapsed and numerous roads were destroyed. Furthermore, the money supply on the island has collapsed, leading to speculation and growing violence.
When this is coupled with the damage from Hurricane Irma, the weight of the debt and the bankruptcy that the local government faces, the outlook for 3.4 million citizens of Puerto Rico is terrifying.
Faced with such desolation, the White House has been harshly criticized for its banality, lack of empathy, and for aiming unfounded criticism against the affected population. Fortunately, the federal government decided to temporarily lift the application of the Jones Act. As a result, any ship could transport goods to the island, and therefore create the conditions for a drop in the price of all articles of consumption, medicines, other relief supplies that were so urgently required.
Thanks to this measure, importers had the freedom to choose among transportation options, and Puerto Ricans briefly enjoyed quicker access to basic necessities. No one was required by law to use more expensive non-competitive companies that provide poorer service.
The bad news is that this great gesture of generosity was only temporary.
After a few days, everything reverted. In other words, the exploitation of the inhabitants of Puerto Rico at the hands of shipping companies, distributors, and other predators continued, thanks to their powerful lobbyists in DC.
This is possible because Puerto Ricans are treated as second-class citizens. They have only one Representative in the U.S. Congress — but this person cannot cast a vote on the House floor. This reminds us of that memorable revolutionary slogan of 1776: “No taxation without representation.”
Today, the White House is blaming and humiliating this “Commonwealth” for having an unpayable debt totaling $72 billion dollars. However, compared to the value of the plunder of the Jones Act, this debt is insignificant. The annual cost of this looting is estimated at some $6 billion. After 97 years of abuse, it could be said that U.S. companies have unjustly extracted at least $582 billion from Puerto Rican families ̶ and this is without adjusting this figure for inflation, which would result in a staggering sum.
From this shameful chapter we have learned that the United States does not fully maintain a free market. The Jones Act is a typical case of what is known as regulatory capture: that is, the imposition of laws that only benefit the big and powerful. It is also an example of the damage generated by the anti-capitalistic mentality, as defined by Ludwig von Mises.
It is shameful to see that industry is represented by abusive companies that thrive at the expense of the well-being of the most vulnerable families, those who, because of an unjust system, do not even have political representation in Washington.
Freedom is a key value for which we have historically paid a very high price. Furthermore, it is very easy to lose that freedom. This entire humiliating story teaches us that commercial freedom is a cornerstone of the system of liberties and we must defend it with everything in our power.