August 07, 2011

About a week ago, I had the opportunity to party it up with some friendly small-l libertarian types. Possessing the Obamian tendency of trying to find common ground with others, particularly ideological adversaries, and not wanting to say the one obviously libertarian tendency that I and other left-of-center types possess (Yes on Pot !!!), I was reminded of something that has rankled me no end on my frequent visits to the high seas: the existence of the what may well be the dumbest, least worthwhile law in the books, the Passenger Vessel Services Act of 1886 (PVSA).

In short, the PVSA forbids "foreign vessels" from transporting passengers between American cities. Well, actually it doesn't technically prevent that; what it does is force cruiseships going from one US city to another to either stop at what is called a "far foreign port" (ie., outside of North America), or to stop at a foreign port within North America before returning to the American port of embarkation. Thus, a cruise ship cannot start in Los Angeles and end in San Francisco unless it stops in Tokyo or Lima first. But it can start in Los Angeles, go to San Francisco, then later end in Los Angeles, as long as it stops in Ensenada, Mexico or Victoria, British Columbia first.

And effectively, almost all cruise ships are considered "foreign vessels" for purposes of this act, regardless of whether the line is a domestic corporation, since almost all cruise ships are built overseas. This is not from any fault of the American shipbuilding industry, or from high labor costs, or from any of the other reasons typically used to disparage American competitiveness, but because domestic shipbuilders view building ocean-bearing craft for the military or for cargo lines as a much more profitable use of their resources than building cruise ships. The one recent effort to create such an industry collapsed in the aftermath of 9/11, and the only "American-flagged" cruise ship, the "Pride of America", sails for Norwegian Cruise Line in Hawaii, where it has a government-sanctioned monopoly on inter-island cruising.

Although this may be a boon for Norwegian, it's hard to see how other cruise lines have really been disadvantaged by this protectionist inanity. Other cruise ships have their own lucrative version of the Hawaiian cruise, with the minor disadvantage being that it's length is twice as long (since it starts and ends out of a western coastal port, like L.A. or San Francisco), and it must make at least one brief stop in Ensenada. The cruise ship gets to rake in the dough by having its captive passengers on board ship, purchasing overpriced trinkets and souvenirs, not to mention drinking and gambling, for 9-10 sea days, while the customers are none the wiser.

Obviously, there is nothing in the current law that would encourage the development of a domestic cruiseship building industry, since it doesn't increase the operating costs, or diminish the profits, of those lines that contract with Italian or Japanese shipbuilders to build their next megalopolis-on-the-seas. However, the consumer is shortchanged, since we: a) have to spend more money to take an unnecessarily longer cruise, and b) have fewer consumer choices as to which ship to take, since the domestic market is already saturated with ships taking the same routes to the same locales. Moreover, dockworkers and others who benefit from having busy and profitable ports are screwed by the PVSA, since few cities are close enough to foreign ports to make cruising out of those cities a worthwhile proposition.

And who likes this law? Cruise lines, of course. If the law were to be repealed, the increase in the number of short, affordable cruises within the United States would be exponential. One of the most popular cruises at present is the weekend "booze cruise" that leaves a US port, sails to a nearby foreign locale, like the Bahamas or Ensenada, and back. The typical passenger on such a cruise is much less affluent than the seagoing traveler who typically sails on the larger ships; given the option of taking a weekend cruise from LA to San Francisco and back, or from Baltimore to Brooklyn, or to and from cities on the Great Lakes, more people would sail than ever before. But that would also entice other ships into the market, so the market share of the half-dozen or so companies that control the US market would plummet.

In effect, the PVSA provides for the cruise industry what the pre-1980 regulation of the passenger airlines did for flying; it creates a non-responsive, expensive business oligopoly that caters to the well-off, and prevents the emergence of innovative, cheaper competitors. And it does all this while providing nothing of benefit to the consumer, to industry, or to the worker.

UPDATE: Thanx to the good people at Reason for the link. In the comments, a number of people have pointed out that the restrictions in PVSA purportedly protect "American flagged" ships, not ships originally made in the USA. That mix-up is due, I believe, to the confusion centered around the notion that many ships fly what are called "flags of convenience", ie., are registered in 3rd World countries that do not have the labor or OSHA restrictions required under American law. In fact, under American maritime law, in order to qualify as an American-flagged ship, the ship must not only obey such laws and regulations, but must also be built domestically. The government can grant waivers to this requirement, as it did with the aforementioned Pride of America, which was only partially built (with heavy taxpayer subsidies) in the US of A. Since the lack of a domestic cruise ship building industry makes even this step impossible, the circumvention of American labor and safety laws are the least of the problems with this statute.

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