How to boost the economy, revitalize cities, and help the disadvantaged; How to fix the world #12

If you are unemployed, can you perform a service as a small business? Are there licensing requirements that are designed to protect incumbent businesses at the expense of you the upstart? What is the success path for an out of work chef with little savings to bootstrap into a brick and mortar restaurant? How are new small businesses created? Are they only created by the well to do with sufficient savings?

Are taxi medallions required to protect the public, or to protect the profits of those who already own medallions? Are rules against food trucks within one thousand feet of a restaurant designed to protect health and safety, or to protect the profits of existing restaurants? Does it make sense to require 2000 hours of training to legally sell African hair braiding when zero hours of that teaches African hair braiding? Is it dangerous to allow an unlicensed interior decorator to pick a paint color? Should florists have to pass a test on 1950’s style flower arranging and get a license before they can sell a bouquet?

What is economic liberty? It is the opposite of protectionism. In the United States, the 14th Amendment to the Constitution assures the right to earn an honest living without unreasonable governmental interference. What is unreasonable? The restrictions must serve a legitimate public purpose like maintain safety or standards of measurement. If restrictions are created to keep new competitors out of the business, that is unconstitutional. There is no right to make a profit for anyone, but instead a right to try and make a profit.

Unfortunately, something called regulatory capture subverts the goals of government. Existing businesses have an economic incentive to avoid competition. They lobby government to erect obstacles in front of newcomers to the market. Some of these rules sound reasonable at first, like requiring a license implies only the competent are allowed to perform that function. However, many licensing requirements don’t improve skill. By removing competition they have the opposite effect since training and innovation are unnecessary to maintain market share.

Watch the following videos and see how prolific these rules are. Also see the public interest law firm Institute for Justice (IJ) fight for the little guys right to earn a living. Support IJ as I do. But also consider adopting and sharing the view that fresh blood, fresh ideas, and vibrant competition is healthy for our local towns and thus the nation. It is the how to of the American dream. Keep the dream alive.

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