Yesterday, Donald Trump again insisted that we “can’t let the cruise lines go out of business.” This has become conventional pundit wisdom after two commercial cruise ships became high-profile coronavirus hot zones. The cruise ship industry is in dire trouble, as are all travel-related industries.
That doesn’t mean American taxpayers need to bail them out now. The cruise industry has done everything in its power to skirt U.S. laws, regulations, and taxes. None of the major cruise lines fly the flags of the United States—every ship is registered in another country, one with lax environmental protections, labor protections, and other rules that make it easier to squeeze out maximum profits at public expense. Now those foreign-flagged ships want United States bailouts? No. That was a choice these companies made; now they have to live with it.
All the major cruise lines are asking for bailouts from the U.S. Government.
Yet, Disney Cruises sails under the Bahamian flag … Celebrity Cruises under Liberian/Maltese flags & Carnival Cruises under the Panamanian flag – all to avoid U.S. taxes & employment law
— Sabrina McDaniel (@Sabrina_McDa) March 22, 2020
There is a reason that the cruise you may have taken, on the ships of one of these corporations, never directly travels between two U.S. ports. As foreign-flagged ships, they are not allowed to. They must dock somewhere else, even if only for a few hours of “sightseeing” that will see few passengers bother to leave the ship, to skirt United States regulations.
The International Convention for the Safety of Life at Sea (SOLAS), provides the main framework for the operation of the international merchant fleet; it dictates minimum standards for ship construction, firefighting and fire prevention, life boats, inspections, and crew. Most nations adhere to these standards, and the United States is vigorous in its own enforcement; a “flag of convenience” nation is a nation that does not abide by those conventions. Fly the flag of one of those nations, and you can get away with things that most other countries would not tolerate.
To those companies, then, the advantages of flying a foreign “flag of convenience” are numerous. U.S. environmental laws governing ship discharges are nullified. U.S. crews would come with U.S. labor laws; those, too, no longer apply. Taxes are reduced. And both criminal and civil liability when something goes wrong, as recent cruise-goers are now becoming aware, can be minimized.
All of these advantages, however, come down to one thing: money. By reducing costs, cruise lines can make more money. Not enough to save for a rainy day, mind you, but enough to satiate shareholders who do not want American flags flying from those ships if it is going to reduce the value of their own investment.
But that was a choice. It was not a decision with unknown downsides; flying under the flag of a foreign nation is flying under the flag of a foreign nation. Want a taxpayer bailout after a worldwide crisis causes severe harm to your corporation? Ask the Bahamas to bail you out. You’ve been claiming for decades now that you’re not under our purview; you’re not our responsibility now.
This should be uncontroversial, but it of course is not. The United States government is targeted keenly at the interests of major corporations over all else; the people hobnobbing with White House officials at Mar-a-Lago, or attending top-dollar fundraisers with members of the House and Senate, are the nation’s wealthiest investors and highest-paid corporate officials. It is they who have the ear of government, not their workers. It is they that the treasury secretary and other top officials insist need bailing out regardless of cost, not small business.
The cruise lines are an especially toxic bailout target, however. Even aside from the major lines being deeply damaging to the environment and the health of their own passengers, they are not and cannot possibly be considered an “essential” industry. If the major cruise lines shut down tomorrow and forever, their poorly paid workers would suffer—but the world would do without cruises. Easily.
We are fighting over whether Americans can survive on $1,000 for the duration of the pandemic—but we will bailout companies who incorporate overseas, who fly the flags of overseas nations, all to dodge as much of their American responsibilities as possible? No. To be blunt about it, pound sand.
There are several mechanisms for ensuring that what we will call, for the moment, “pirate” corporations now seeking U.S. taxpayer bailouts. We could demand that the ships be re-flagged to the United States—but that can be easily undone. Better would be to tie bailout money to corporate taxes. The metric of how much money a corporation ought to be offered in a U.S. bailout program should be directly tied to the amount in taxes that a company did or did not pay in the past ten years or so.
Or we can tell foreign-based companies that they are out of luck, regardless. That was the choice all along, after all: You claimed you were not a United States company. You claimed that was not a United States ship. So go ask your home country for help. Not us.
This cannot be another “bailout” of the worst corporate actors as it was in the 2008 Great Recession. This cannot be another shovel-the-money-to-Wall-Street event that sees small businesses in every town close forever while top Wall Street companies that have lived their every modern day seeing what they could get away with get red-carpet treatment from our collected lawmakers and administration officials.
Give the money to the consumers. Give the money to the small businesses, the ones that our towns hinge upon. It will “trickle up” to the larger companies in the form of the usual bills and purchases, and we will see which of those behemoths are truly essential and which can be done away with. The free market will do its work, as free market adherents have blustered during every good period while demanding the public provide them with socialism during the bad ones.
Corporate decisions have consequences. If they do not, we are an oligarchy, the wider public useful only insofar as it fattens the rich. Those consequences must therefore be enforced. Let the Bahamas bail out their own ships. Let Liberia pay those bills, or decide not to. Let those corporate officers—and shareholders—who valued small government when collecting the profits abide by small government principles now.
You did not pay for the disaster insurance provided by a strong United States government to its citizens and companies, because you did not want to pay for it. You said so. You insisted. It was your own calculated risk. Now that a disaster has happened, there are no claims to be filed. You have no contract here.
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