High schoolers Matt Molinari and Eric Schnepf saw in recent snowstorms an opportunity. In true American entrepreneurial spirit, they printed fliers, canvassed neighborhoods, and offered their services as snow shovelers for those unable, or unwilling, to shovel themselves. Like all voluntary exchanges it offered a win-win for the boys and their customers, who apparently either valued their time above Matt and Eric’s prices or were physically unable to do the job themselves.
But right on cue, the government – today’s all too typical villain – stepped in to thwart our intrepid heroes. Someone trained in the art of snitching called the police, who ordered the boys to halt their insidious free market practices. In their New Jersey borough, you see, one must first pay the local government henchmen $450 before being allowed to “solicit” door-to-door.
Police insist they were merely concerned with the boys’ safety because a “state of emergency” had been arbitrarily declared by political authorities, which apparently allows state agents unusual license to restrict freedom of movement. But it would come as little surprise to see widespread clamping down on upstart snow shovelers become the winter version of police and local officials’ annual war on lemonade stands.
That might not sound like a serious concern, but both are sillier examples of a more disturbing problem. The sad fact is that a most fundamental human right – the right to earn a living – is increasingly being encroached upon by protectionist laws and overzealous regulations.
Most Americans think license requirements are confined to professionals such as doctors, lawyers and dentists, where highly specialized knowledge is required and poor quality could threaten the health or welfare of consumers. Although it’s arguable if such gatekeeping is desirable even in these cases – Milton Friedman argued, I’d say persuasively, that it’s not – such practice has longstanding acceptance and isn’t overly burdensome for most Americans. Yet few are likely aware of the broad extent to which occupational licensure has been adopted today.
In the 1950s, it was only deemed necessary for an aspiring worker to first acquire a license in 5% of jobs. Today that figure is closer to 30%, and has come to include work with no significant public safety implications, such as florists, barbers, cosmetologists, tour guides and interior designers, among many others. This process can be extremely expensive and discourages many from pursuing employment in these fields, while raising costs for consumers. The Reason Foundation estimates a total cost from licensing regulations between $34.8 billion and $41.7 billion.
Pennsylvania, for instance, passed a law in 2006 requiring African hairbraiders to obtain a special license, on the pretense that it would spare them from needing a cosmetology license. But even their supposedly less onerous license required completion of at least 300 hours of training, or 150 hours with three years of experience, before legally being allowed to braid hair. As outrageous as that is, many states are much worse, sometimes requiring thousands of hours in training. These unjust requirements have led to lawsuits in multiple states.
Rules tend to vary widely from state to state in arbitrary fashion. Even though it’s not mentioned anywhere in state law, Texas regulators require eyebrow threaders to “spend approximately $20,000 obtaining up to 1,500 hours of instruction in government-approved beauty schools that do not even teach threading,” according to the Institute for Justice, which is currently suing to have the requirements declared unconstitutional. Yet a number of nearby states exempt eyebrow threaders entirely. Such wide disparities in the number and type of licensed job categories are common between states, even those in close proximity, which raises an obvious question: If some places work just fine with little to no regulation of a particular field, why must other jurisdictions be so restrictive?
Rules vary not because consumers in one location are more fragile than those in another, but because special interests have simply been more successful in capturing the political process from place to place. Simply put, the rules have nothing to do with consumer protection.
Tour guides in DC won a court victory last year against a 108-year-old city code that required any “sightseeing tour guide” to pay a fee and correctly answer 70 out of 100 multiple-choice questions. Demonstrating the disconnect between regulators’ stated motives and their policies, Judge Janice Rogers Brown wrote in her decision, “How does memorization of addresses and other, pettifogging data about the District’s points of interest protect tourists from being swindled or harassed by charlatans?”
Licensure requirements are usually passed under the auspices of helping consumers, but research shows little observable benefit to product quality. Often times they negatively impact quality by reducing competition or supply.
These obstacles can also come in different forms. A Kentucky judge last year struck down a “certificate of necessity” (CON) regulation that unfairly blocked a moving company from opening. To obtain the CON, which was required before a new company could enter the market, the applicant had to show that not only was it “fit, willing and able properly to perform” moving services, but they also had to demonstrate that existing moving services were “inadequate.” They even had to notify existing companies – their would-be competitors – who then could file protest. It was explicit protectionism.
The Kentucky regulation was struck down, but there are many more like it throughout the states, thanks in large part to persistent judicial neglect of economic rights since the New Deal.
Innovative services like Uber and Lyft are learning just how difficult it is to compete against established industries protected by government. Government sanctioned taxi cartels deliberately restrict supply by requiring drivers to posses “medallions,” the number of which are tightly controlled. So restricted is the supply that in major cities a single medallion can cost upwards of one million dollars, pricing out all but major corporate entities from the industry and driving up costs for consumers.
Toe-to-toe, the taxi industry can’t compete with app-driven services capable of offering lower prices and quicker service. But with government protection, they can keep the competition out all together. And keeping out the competition is what these regulations are best at.
Faced with legal and political challenges to their blatant cronyism, head of Louisiana’s state horticulture commission snarked at the prospect of even simple reductions to their requirements that, “If [aspiring florists] can’t take the instruction and pass the exam, how can they do an arrangement that you and I want to buy?” One wonders how consumers were ever able to buy flowers before such enlightened thinkers came along to protect them from centuries of respect for the right to work.
The right to earn a living can be traced in common law back to the Magna Carta, and was appreciated by our nation’s founders. James Madison wrote “that is not a just government … where arbitrary restrictions, exemptions, and monopolies deny to part of its citizens that free use of their faculties, and free choice of their occupations.” By that measure, unjustness is in abundant supply.
In a free society where the right to earn a living is respected, you shouldn’t need to convince an arbitrary panel of judges, likely made up of industry practitioners with an interest in preventing you from competing, of your skill and ability to perform. You should only need to convince consumers.
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