Poor Entrepreneurs Seeking Customers: Hurt by Licensing
|January 6, 2014||Posted by Staff under Editorials|
This 2014 excerpt of Newsle, Jan 2, is by Sheldon Richman. The column originally appeared in the Future of Freedom Foundation.
Licensing is one way that freedom is limited on behalf of special interests. The licensing regime is overseen by the current practitioners, giving them the power to limit the number of their competitors. This is a double whammy: it locks people out of occupations, and it raises prices to consumers.
We’re told that licensing exists to protect consumers from shoddy work, but licensing does not protect consumers. Ask yourself: When you move to a new area and are looking for a physician, dentist, lawyer, hairdresser, plumber, mechanic, or electrician, do you randomly choose one from a list of licensed practitioners, or do you ask a neighbor or check a web-based rating service?
Licensing does not really filter out the cons and incompetents? If it did, who’d need Angie’s List? Thus, we can’t even claim that the loss of freedom from occupational licensing is compensated for by the elimination of poor products and services. Without licensing, independent rating and certification services would flourish.
By raising barriers to self-employment, occupational licensing reduces low-wage workers’ bargaining power and helps lock them into jobs they would rather escape. We see a good deal of lobbying on behalf of raising the minimum wage and facilitating union organizing, but what people need are real alternatives to working for someone else. A worker can cut a better deal with an employer if he or she can say, “Take this job and shove it,” and pursue self-employment instead.
But even the kind of independent work that would be accessible to most anyone — driving a taxi, say, or being a street vendor — is mired in special-interest government decrees if not outright prohibitions. Zoning and other kinds of land-use restrictions often rule out home-based income-producing activities. The dramatically falling cost of computers and software — and new technologies such as 3D printing — are opening up the prospect of highly decentralized small-scale manufacturing that could be done from a home or garage.
Taxes and regulations may formally apply across the board, but they take a greater toll on microbusinesses than on big businesses, which have accounting and legal departments expert at dealing with government-imposed burdens. As a result, small businesses remain small. Government ends up protecting the market share of established firms.
The working poor don’t need favors but freedom from confining rules.
Ed. Notes: We could not only help poor entrepreneurs get started, we could also trim the regulating bureaucracies, saving some tax dollars. We could help all businesses even more by shifting the property tax off buildings, onto locations, spurring current speculators to put their prime vacant lots to good use. Constructing new buildings attracts investment and generates jobs. And finally, we could pay people a share of the recovered land rents; getting a share of land rent is similar to getting a share of land in that people can use it to develop themselves, their ideas, as they would develop the land.