mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
The Guild-ed Age
Hey, Ho, Licensing Rules Have Got to Go

If you’re a small business, it’s not the taxes that will get you; it’s the regulations. The Economist has an excellent piece looking at the role barriers-to-entry play in suppressing entrepreneurial energy and creativity. Particularly bad are licensing rules that make it harder and more expensive for an American to start offering even basic services:

Licensing rules are a headache. In theory, they protect the public from incompetence, which is useful if you are hiring a doctor. But increasingly they protect incumbents from competition—the requirement to have a licence raises an occupation’s wages by 18%, according to Morris Kleiner and Alan Krueger, two economists. In the 1950s less than 5% of workers required state licences; now 35% do. […]

Lowering barriers to entry for new businesses gives consumers more choice and cheaper prices. A gourmet-food-truck fad began in Los Angeles with $2 Korean tacos in 2008, and has thrived because the city is flexible about where such trucks can park. By contrast, Chicago forbids food trucks from operating within 200 feet of a bricks-and-mortar restaurant, and requires them to have a GPS to ensure compliance, which makes life very hard for them in the downtown business district.

The Economist argues that states should loosen these regulations as much as they can while still guarding public safety. This is exactly the right approach to take, and not only because these regulations are suppressing jobs and excluding willing workers in the here and now. It’s also right because the kinds of jobs most adversely affected by licensing requirements are service related: Food providers, hair dressers, even florists are all required to get licenses even though your average American doesn’t care if his florist is government approved. These jobs, in which people compete to provide better and cheaper services, are likely to be an increasingly important sector of our economy. Unnecessary licensing requirements will only slow the transition to a heavy service economy when we should be doing everything we can to grease its wheels.

Features Icon
show comments
  • FriendlyGoat

    Hey, Ho, This will likely hit a “NO”.

    Any initiative in this direction which happens to be supported by the larger incorporated business community (Chamber of Commerce gang) will get heard in the legislatures. Nothing else will.

    • Andrew Allison

      Your mindless reflexive “progressivism” is boring. The subject of the post is the impact on SMALL businesses of the protection of “guilds” by way of licensing.

      • FriendlyGoat

        I know what the subject is. And I’m telling you that SMALL business is not getting squat unless willed by larger business. That’s how conservative-dominated legislatures work.

        • LarryD

          Thank you for explaining how government regulation becomes a tool to establish a cartel by established, larger business. Small businesses can never outbid larger ones. The only solution is for an enraged electorate to put a spiked choke-collar on government and yank hard. Alternately, wait until the whole thing collapses from increasing incompetency and financial fecklessness, then invoke the Angry Villager Rule – i.e., hunt the nomenklatura down like Frankensteins monster.

          • Boritz

            ” Alternately, wait until the whole thing collapses from increasing incompetency and financial fecklessness…”

            Alas, this will happen to the United States comprehensively but not to blue model sacred cows in the meantime.

          • FriendlyGoat

            When Americans neuter government (you know, that “of the people” thing), the business community will have the spiked choke-collar on the citizens. Getting to that state is the entire reason for existence of the Republican party. Many of the Democrats are not much better——BUT—–they are a little better. So, I’ll stay left for now.

          • liberpublican

            “Getting to that is the entire reason for existence”. Pass that bong brother. The “citizens” can control businessmen a lot easier than they can control an out of control bureaucracy. The only reason for the existence of the democrat party is to destroy the republic of the united states of america from within.You want left move to france. sheesh.

          • FriendlyGoat

            Did you ever hear of antitrust? Clean air and water? Labor laws? SEC? FDIC? FDA? FAA? Dozens of others.

            Give us a break. You’re selling snake oil.

          • liberpublican

            I am not selling anything, merely pointing out your petulant little comment regarding republicans, It has now become quite obvious that the bureaucracy has become the enemy of liberty and freedom in our country. Brought to us by the democratic party which has been pursuing a fascist/ socialistic government for a hundred years. The free market, if left free, will always self regulate. The fascist model will always degenerate into the farce of government we have now. Yes we need laws and regulations but as the founders realized we need to use those laws to make it easier for our citizens to realize their dreams rather than quash them with the bureaucratic monster we have now. See if you can wade through the thousands of pages of regulations we now deal with on a daily basis that cost our country billions of dollars of wasted time just to deal with some idiotic new regulation. Read the constitution, the federalist papers, Jefferson, etc. The federal government does not have the legal standing in the constitution to rule this way. Our congress and courts have abandoned their constitutional duties and allowed the executive to run wild.

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service