Trump Halts the Blockade of U.S. Ports

His waiver of the Jones Act is helping U.S. oil supply, so why not repeal the 1920 law?

WSJ editorial. Excerpts:

"So far, about two dozen waiver voyages have been reported complete as of April 30, according to the Maritime Administration."

"Mr. Trump’s initial suspension of the Jones Act was for 60 days, but late last month he extended that for another 90 days, with the White House calling it a great success. “New data compiled since the initial waiver was issued revealed that significantly more supply was able to reach U.S. ports faster,” a spokeswoman said. “This extension will help ensure vital energy products, industrial materials, and agricultural necessities are maintained.”"

"Funny, it also sounds like a good argument for permanent Jones Act relief. In a crisis, such as a hurricane in the Caribbean or a menacing in the Persian Gulf, the archaic law becomes an acute problem, because it limits the flexibility of American supply chains to respond."

"The Jones Act’s defenders call it an America First policy to protect a U.S. shipbuilding industry and merchant marine. A century later, that clearly hasn’t worked." 

Entrepreneurs Flocked to Colorado. Now Red Tape Is Driving Some Away

Proposed AI bill has many wondering whether state’s regulations killing its entrepreneurial spirit

By Owen Tucker-Smith of The WSJ. Excerpts:

"A widely circulated report last month from the state’s chamber of commerce reported a loss of publicly traded companies based in the state, estimating that Colorado had lost workers from some 98 firms to relocations or failed site-selection opportunities since 2019."

"Companies’ latest complaint is over a landmark state bill regulating artificial intelligence. A previous version of the bill would have required companies to take steps to reduce the risk that AI-based algorithms used for high-stakes decisions such as employment or healthcare discriminate against users."

"The state added half a million jobs in the mid-2010s as startup culture and domestic migration drove explosive growth, but the economy has recently grown sluggish."

"Blake Scholl, chief executive of the Denver-based aviation company Boom Supersonic, moved to Colorado a decade ago, inspired by its thriving business climate, but said the pileup of regulations has delayed his construction projects."

"the AI bill would add compliance costs and distract attention from companies when they need to focus on winning the AI race." 

Globalization’s Overlooked Economic Benefits

Antiglobalist ideas have motivated many Trump voters, but free trade benefits the average American

Letter to The WSJ.

"In his column “What Happened to the Pragmatic Trump of the First Term?” (Editor At Large, May 5), Gerard Baker wisely decries President Trump’s second-term pursuit of a misguided and extreme ideological agenda. Mr. Baker points out that antiglobalist ideas motivated voters in 2016—views that globalism “facilitated mass migration and the elevation of international capital that ravaged communities at home.”

A better name for “the elevation of international capital” is “free trade.” This term reveals the increased freedom of ordinary people to spend their incomes as they choose, while avoiding the mistaken suggestion that lowering trade barriers benefits only Davos-vacationing capitalists at the expense of the masses.

And where are these “ravaged communities at home” that voters were so worried about? Politicians and pundits still talk incessantly about these communities, but scholars who make serious attempts to locate them encounter difficulties. Economist Jeremy Horpedahl studied the 10 metropolitan statistical areas in the U.S. that suffered the largest negative hits during the infamous “China Shock” of the early 2000s. According to Mr. Horpedahl, all of the metropolitan statistical areas “hit hard by the China Shock still managed to have significant and positive real wage growth across the distribution since 2001 . . . Wage gains in several of these places, in fact, are better than the national trends.”

Whenever economic change occurs, some particular workers lose jobs, and some particular locations lose business and population. Economic growth requires economic change and adjustment. This has always been and will continue to be the case. But the story of America is that ordinary people recover over time and become wealthier. It’s an error to single out the freer trade of the past few decades as a unique source of economic change that justifies greater skepticism of globalization.

Prof. Donald J. Boudreaux

George Mason University

Fairfax, Va." 

Airlines and Overzealous Antitrust Enforcers

It’s a mistake to blame deregulation for Spirit Airlines’ demise

Letter to The WSJ. 

"Regarding your editorial “Spirit Airlines and the Antitrust Left” (May 4): Many people think that because carriers like Spirit Airlines have lower costs, they should be able to compete with the major airlines by offering lower fares. That’s a fallacy.

On any route involving a hub city of a major airline, the major airline’s network will support more flights (and therefore more possible connection options) than the low-cost carrier, which relies on point-to-point traffic. This product advantage, among others, generally allows the major airlines to charge and receive higher ticket prices than the low-cost carriers.

The revenue from these premium tickets will normally cover the cost of a network carrier’s flight before all the seats are sold. This means the remaining seats can be sold profitably at any price necessary to fill them. Unless travel demand is so high, or industry capacity so low, that major airlines can fill their planes at premium prices, it will generally make economic sense for them to match any price that a low-cost carrier offers if doing so is necessary to fill a seat.

The antitrust left is now blaming deregulation for Spirit’s demise. But there are far more airline flights, with more destinations served, at lower prices in real terms, than before deregulation. This is because deregulation allowed airlines to develop networks, that efficiently aggregate and distribute traffic through mergers, international alliances and organic growth.

During the era of deregulation, I was on the staff of the Civil Aeronautics Board, which regulated airline routes and prices until 1978. The architects of deregulation, Michael Levine and Alfred Kahn, didn’t know what form airline competition would take. They were confident, however, that business executives, freed from regulatory constraints, would find the most effective ways to increase output and reduce price. That is what has happened, despite resistance from regulators and occasional missteps by misguided judges. Unfortunately, the Biden administration’s antitrust enforcers and Judge William Young prevented Spirit Airlines and JetBlue from helping airline competition continue to evolve.

Ben Hirst

Wayzata, Minn.

Mr. Hirst is former executive vice president of Delta Air Lines." 

The U.S. Indicts a Mexican Governor

Charges made in New York mean President Sheinbaum will have to choose a side

By Mary Anastasia O’Grady. Excerpts:

"Mexican civil-society groups have long accused the political class of aiding and abetting cartels. Activists, family members whose loved ones are among the 130,000 gone missing since 2006, and journalists are some of the brave Mexicans who have tried to raise the consciousness of their nation about what they allege is a link between the gangsters who terrorize them and the state. It’s dangerous work."

"For more than a decade, the Cartel, under the rule of the Chapitos Leaders, and, before them El Chapo and El Mayo, has paid cash bribes to public officials at each level of the government, in exchange for protection of the Cartel’s drug trafficking operations. These corrupt government and law enforcement officials, including the defendants, are essential to the Cartel’s drug trafficking operations.”" 

Spirit Airlines and the Antitrust Left

A case study in how Lina Khan’s theories about competition failed in the real world

WSJ editorial. Excerpts:

"In 2022 JetBlue offered Spirit a $3.8 billion merger lifeline so the combined companies could offer more competition for the four U.S. airline giants. Mr. Kanter’s Antitrust Division sued to block the merger in 2023 and prevailed in court in January 2024"

"Federal Judge William Young admitted Spirit’s financial troubles. He also agreed that “an expansion of all aspects of JetBlue’s business—including network, fleet and loyalty program—would allow for more vigorous competition with the Big Four, which carry most passengers in the country.”"

"He still ruled the merger an antitrust violation because it would eliminate one low-fare option on some routes."

"Spirit declared bankruptcy in November 2024, long before the Iran war fuel spike. Now it’s shutting down for good."

"there will be less competition than if the merger had been allowed." 

Malta: A Free-Market Success Story

By Dan Mitchell. 

"I’m in Malta for a bit of research before speeches in Amsterdam and Reykjavik as part of the Free Market Road Show. 

So today is a good opportunity for a column on Malta’s rather-successful economy (something I’ve done for other countries, such as Poland, Chile, Botswana, Singapore, and Estonia).

Let’s start by looking at Malta’s score from the latest edition of Economic Freedom of the World.

Malta is ranked #18, putting it easily in the top quartile.

It gets very good scores in every category other than fiscal policy (somewhat similar to Nordic nations).

What are some of the best features of Maltese economic policy? Let’s look at some excerpts from a column in The Business Picture by Nima Sanandaji.

"…while the big economies of Europe are stagnating, several of the smaller ones are outpacing the US. Malta is the best example, since it led the European growth league in 2024 with a five per cent growth. …Malta is succeeding thanks to competitive taxes and regulations, combined with talent supply, which make it a growing brain business jobs hub. …The share of adults employed in these jobs has increased substantially over time. Currently 9.5 per cent of adults in Malta are employed in highly knowledge intensive jobs. After Switzerland, Ireland and the Netherlands, this is the highest rate in Europe. …Large economies like Greece, Spain, Italy and France have due to regulatory and tax burdens stagnation in share of adults in knowledge intensive jobs. The same countries also struggle with economic growth and job creation."

I’m not surprised that Malta is growing faster than the United States. It’s a classic example of convergence.

What’s more interesting is to look at examples of divergence.

Here’s a chart, based on the Maddison database, showing Malta’s long-run performance (in red) compared to regional competitors, as well as a sampling of other nations.

 

"A few years after World War II ended, Malta was very poor. It ranked lower than Madagascar and its level of per-capita GDP was less than half of Greece.

Now it is has shot way past those two nations, as well as other countries that used to be richer.

Amazingly, Malta has almost caught up with Italy, which had nearly four times as much per-capita GDP back in 1950.

Does this mean Malta has perfect economic policy? Of course not. But it does have better economic policy than most other nations, especially its Mediterranean neighbors.

The moral of the story is that there’s a recipe for growth and Malta is doing a decent job of following the recipe. Assuming they want prosperity, other nations should do the same thing."