Licensed Into Poverty

Conor Friedersdorf has an enragifying article about how permits and licenses are strangling the American economy. After using the example of Burns Harbor — a small town with a terrible economy that now requires onerous permits for any business, he summarizes:

The normal mindset among U.S. officials is that prior permission should be required to sell legal goods to a willing buyer. Kids selling lemonade on the street are shut down. A Missouri man has been fined $90,000 for selling rabbits (he made about $200). In Illinois, an artisan ice cream maker is being shut down for lack of a dairy permit. Manuel Winn was arrested, handcuffed, and booked for selling magazines door-to-door without a permit. A Maryland mother of three was arrested for selling $2 phone cards without a license. Lots of municipalities are going after food trucks. A group of Louisiana monks had to go to court to win the right to sell simple wooden caskets to consumers.

If you read enough of these stories, you’ll see the targeted entrepreneurs say the same thing again and again: I just had a good idea and started a business. It never occurred to me that I needed permission. And, of course, other would be entrepreneurs don’t ever get started because they’re too intimidated to assess and grapple with the bureaucratic hurdles. Or else the regulations are written in a way that excludes from commerce folks who are operating at a very small scale.

I can see licensing, say, doctors or airline pilots. But we’ve gotten to the point where beauticians, decorators and food vendors — businesses people can start with talent and a business card — are closed off. A quarter of American jobs now require some official license or permit.

Big business, needless to say, loves permit and licensing requirements. These are much easier to handle when you’re an established million dollar business as opposed to a small thousand dollar business. And brick-and-mortar stores are delighted when the authorities chase away taco carts and raid a salon run out of someone’s living room.

But we are strangling entrepreneurship. And strangling it most viciously in communities and demographics that are struggling. Many is the American whose success in life started with a small food stand or a neighborhood beauty salon. But self-important assholes at all levels of government have decided that entrepreneurs must genuflect to them; must beg and pay for the privilege of growing the economy.

This is something that should be non-partisan. Conservatives and libertarians should be fighting this for economic freedom. And indeed, the eeevil conservative Institute for Justice is doing all they can, having won a huge victory for the Louisiana monks. Liberals should be behind this too, however, since these regulations trap poor people in dependency. But every time Matt Yglesias brings this up, he gets hammered by his readers.

This probably requires action at the state level, since fighting this regulation-by-regulation is like fighting Lernean Hydra. Governors need to be putting in laws or amendments establishing a basic right to do business. But is anyone going to run on this kind of platform? I’m not holding my breath.

Comments are closed.

  1. Rann

    One wonders if the whole matter of regulating capitalism until it’s not capitalism anymore and then claiming capitalism obviously doesn’t work because look how broken it is was the plan, or whether it was just a “happy” accident caused by stupidity.

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  2. Seattle Outcast

    You run into the “capitalism is very dangerous” crowd fairly easily these days. All of them are willing to tell you how we’d all be fucked over royally in a heartbeat if it wasn’t for “common sense regulation” and other actions by the all-wise government (our best and brightest).

    Oddly enough, none of them actually have any experience doing real work or trying to run a business.

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  3. Nexus

    Yet another sign of US decline. The productive must seek permission from the non-productive to produce. Mark Steyn covers this in some detail in his latest book. It’s well worth the read if you haven’t read it yet.
    Francisco’s money speech from Atlas Shrugged also comes to mind…

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  4. AlexInCT

    I can see licensing, say, doctors or airline pilots. But we’ve gotten to the point where beauticians, decorators and food vendors — businesses people can start with talent and a business card — are closed off. A quarter of American jobs now require some official license or permit.

    Best way to limit competition is to get some politician to license whatever you are in, then charge ridiculous fees for anyone trying to get into it. Other than that, I have no clue what licensing is supposed to prove or disprove. I have had the “pleasure” of dealing with licenced people that where total asses and did terrible jobs because they knew they had a monopoly.

    Still without power at home now for day 4. Thanks Irene!

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  5. mikedomi39

    But we’ve gotten to the point where beauticians, decorators and food vendors — businesses people can start with talent and a business card — are closed off. A quarter of American jobs now require some official license or permit.

    Well, if these new entrepeuers, who have “no idea” they need a permit or license also don’t know that the beauty product they came up with is toxic, or use interior design products that are of poor quality or toxic, or don’t know how to properly store the neat new food products they make, would you be all over the governemnt for not making sure they were on the up and up?
    We do need to make meeting regulations and licensing less onourous, but here does need to be some kind of standard you have to maintain, especially when it comes to quality and safety.

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  6. AlexInCT

    Well, if these new entrepeuers, who have “no idea” they need a permit or license also don’t know that the beauty product they came up with is toxic, or use interior design products that are of poor quality or toxic, or don’t know how to properly store the neat new food products they make, would you be all over the governemnt for not making sure they were on the up and up?

    As someone that actually researches the people I get services from, I would say no, I don’t want government involved that much at all until laws are broken. What’s the government going to do for me anyway? I once reported an issue to them here in CT and got told they could do nothing about it, likely because the person I reported on was big buddies with one of the donkeys that has held perpetual office in this state, and I wasn’t. That entity I had trouble with was fully licensed by the state, BTW. I pass on this. I would prefer laws that allow me to deal with borderline criminal behavior as such. Licensing is a joke.

    We do need to make meeting regulations and licensing less onourous, but here does need to be some kind of standard you have to maintain, especially when it comes to quality and safety.

    So you are saying that without licensing we can’t have laws that people have to follow? Sorry Mike, I don’t buy that for one second. You may be crazy enough to buy the idiotic premise that these crooks require licensing so they can protect us, but upon close examination, that premise falls apart and it is obvious to anyone paying attention that this requirement exists to allow government to get more income and control access, which if they didn’t wield as a weapon against those they don’t like for reasons other than that they are not capable of doing the services they sell, wouldn’t be a problem.

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  7. mikedomi39

    I once reported an issue to them here in CT and got told they could do nothing about it, likely because the person I reported on was big buddies with one of the donkeys that has held perpetual office in this state, and I wasn’t.

    I’m sorry to hear that, but one anecdotal incident doesnt seem enough to blow the concept of licensing out of the water.

    So you are saying that without licensing we can’t have laws that people have to follow?

    No, I’m saying that having one legal hoop to jump through in your state and locality isn’t that onerous. Three or four? now I understand Hal’s point.

    but upon close examination, that premise falls apart and it is obvious to anyone paying attention that this requirement exists to allow government to get more income and control access, which if they didn’t wield as a weapon against those they don’t like for reasons other than that they are not capable of doing the services they sell, wouldn’t be a problem.

    I know this is blasphemy here, but governments need revenue. As long as it isn’t an onurous amount, I just don’t see a problem with a licensing transaction. and to your other point, that sounds alot like discrimination, and more than enough grounds to sue.

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  8. Rann

    Since when does licensing have anything to do with running a safe establishment?

    While you can lose your license for being unsafe, that seems like somewhat circular logic.

    “We need business licenses!”
    “Why?”
    “So that unsafe businesses can lose their license!”
    “Couldn’t you just make being unsafe against the law? Actually, isn’t it already against the law?”
    “… WE NEED BUSINESS LICENSES.”

    I know this is blasphemy here, but governments need revenue.

    He pulls back, he pitches, HE’S STRUCK OUT THE STRAWMAN! Oh my! Impressive!

    Unfortunately he will now be pitching to another actual player.

    Considering that businesses already pay taxes on any number of things… including pretty much every time they sell something to someone… why exactly does the government need extra revenue from business licenses? Except… y’know… to pay the salaries of all the government employees that oversee licensing.

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  9. sahrab

    but here does need to be some kind of standard you have to maintain, especially when it comes to quality and safety

    You do realize this is a flavor of the “Do it for the Children” meme?

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