Tag Archives: economics


Commentary: Cato’s Jones Act numbers wrong

John McCown, a former shipping company CEO and transport hedge fund executive, debunks the faulty calculations in the Cato Institute’s analysis of the Jones Act as it applies to Puerto Rico.

Most container traffic from the US flows from Jacksonville FL to Puerto Rico. Containers headed to Puerto Rico must be carried in US-flagged hulls, due to the cabotage restrictions of the Jones Act.

It appears Cato Institute researchers’ figures are patently wrong, their methodology is flawed, and they have excluded several factors that would affect the Puerto Rico – US container trade link.  Cato researchers came up with an 88% decline in the cost of shipping a container by their flawed technique. But Mr McCown’s spreadsheet says it is more like 10-12%, an amount that is hardly worth junking the Jones Act.

The purpose of the Jones Act is to maintain a capable US maritime segment. It embraces, for instance, container shipping between US ports, US shipbuilding, and US seamen and training, along with the stricter requirements for seamen’s well-being that a US flag puts into effect.

The Cato Institute seems to have aligned itself with some radical allies of the sitting US President. We don’t see why they would be so eager to cook the books on this issue.  And we don’t understand why they insist on repeating their false conclusions even when they have been called into question by a serious critic, on fairly easily ascertainable facts.

It seems as though Cato is falling prey to the fake news fad, and won’t shut their collective mug when they are found out.  It’s a good way to lose everyone’s respect.


   via Commentary: Cato’s Jones Act numbers wrong


How robots change the world | Oxford Economics

Thanks to Supply Chain Digest for promoting this study by Oxford Economics.  Read the article here for a synopsis of its findings: Supply Chain News: Oxford Economics Says Robots Benefits will Outweigh Cons

Basically, it says robots will greatly raise productivity and take jobs with a repetitive aspect, displacing workers toward jobs with high cognitive content.  But there may be local dislocations that will be hard for some people.   We’d better prepare for that and put in measures to alleviate the suffering, if we care about people and their lives.  They think about 1.6 jobs will be lost for every job robots take. but GNP may grow 5% as a result.  China is the major user of robots now, and the revolution promises to be harder on them than any other country as it looks now.

It isn’t clear from the summary whether the 1.6 jobs lost will be found again in other sectors, such as service and sales, support of the robots, or technical work like fixing the robots.  Nonetheless this kind of assessment is an eye opener to concerns we may have in our economy and political world for quite a while.

The report is available here:  How robots change the world | Oxford Economics

Or here: Oxford Economics 2019 Report – How Robots Change the World



The danger of a $2 trillion infrastructure promise

Shalini Vajjhala has written a good article about the issues with current ways of thinking about infrastructure planning and the money spent.

She points out the game-theoretic nature of decision making the way things work now.  Local and regional transportation planners and funders won’t go forward until they know they can get federal money.  That means the p[lanning doesn’t start till the grants are there.  This is a perfectly rational strategy.

I know of only a few places that have avoided this trap.  I happen to live in an area, Sonoma County California, that built SMARTT, a passenger rail line connecting Marin County and Santa Rosa airport,  with its own tax money. It got some federal money later; but it was a local initiative, led by people like Steve Birtlebough, who campaigned for over 20 years for this passenger rail line.

It also shows the fallacy of the Trump cancellation of funds for California’s high-speed train project.  The money had been committed long in advance, and planning went forward. But upon its cancellation, the project fell into disarray, and is unlikely to generate the political will and statewide tax funding to continue.

You can argue whether the high-speed train is useful, since it connects two places that are not in major population centers.  But every large project has people on both sides of its viability.  And changing the balance without careful thought about the strategic implications makes everyone less eager to get started.

screenshot-www.brookings.edu 2018-01-25 13-18-03-392  via The danger of a $2 trillion infrastructure promise