How America Kills Entrepreneurs
John Stossel writes in reason of how so many states just regulate them to death, utterly unnecessarily (except as necessary to preserve the income of those they'd compete with). My favorite was the monks who were stopped from making caskets:
To sell caskets legally, the monks would have to obtain a funeral director's license. That required a year-long apprenticeship, passing a funeral industry test and converting their monastery into a "funeral establishment" by installing embalming equipment, among other things.The state board and the Louisiana Funeral Directors Association--the profession's lobbyist--say the law is designed to protect consumers. But that's what established businesses always say about absurd regulations they demand. An unusually candid funeral director told The Wall Street Journal, "They're cutting into our profit." Well, yes, free competition does do that. That's the point.
Another funeral director said that the law must remain unchanged because casket-making is a complicated business: "A quarter of America is oversized. I don't even know if the monks know how to make an oversized casket." Does that even deserve a comment?
...Case No. 3. Melony Armstrong of Tupelo, Miss., wanted to expand her African hair-braiding business. But Mississippi bureaucrats told her that to teach workers how to braid she needed a full cosmetology license. That required 1,200 hours of classes. Next, she needed a cosmetology instructor's license--2,000 more hours.
The courses and license had little to do with her profession. They were simply barriers to entry favored by her competition. Fortunately, IJ won that case.
Case No. 4. Dennis Ballen has a bagel shop located far off the main roads in Redmond, Wash. He couldn't afford to advertise on radio or TV, so he paid someone (typically unemployable people with quirky personalities) to stand on the road with a sign directing traffic to his store. It worked. The sign brought him two or three new customers a day.
Then Redmond police slapped him with a cease-and-desist order, warning he could face a year in jail or up to $5,000 in fines if he didn't stop displaying the sign. Ballen estimates that he would lose at least $200 a day in business if he complied. He and IJ sued the city and won the right to employ the sign-holder.
It's great that IJ and some determined entrepreneurs win a few victories for free enterprise. But in a country with a real free market, such lawsuits would be unnecessary.
(These cases are from Institute for Justice, a libertarian public-interest law firm that works to free entrepreneurs from these sorts of opportunity-killing regulations.)







Who is IJ?
NicoleK at September 10, 2010 12:11 AM
Sorry, Institute for Justice - left that off from the bottom initially. It's up there now.
Amy Alkon at September 10, 2010 12:20 AM
According to what I've read, Mexico doesn't go in for this kind of regulatory nonsense. So what I don't understand is, why are they so much poorer than we are? Everything I believe about economics says that our peasants should be flocking South looking for work, instead of the other way around.
Rex Little at September 10, 2010 1:11 AM
@Rex - Corruption. Mexico is far more corrupt than we are. Corruption kills free enterprise even faster than enforced anti-competition rules.
brian at September 10, 2010 5:36 AM
>>The state board and the Louisiana Funeral Directors Association--the profession's lobbyist--say the law is designed to protect consumers. But that's what established businesses always say about absurd regulations they demand.
The rip-off tricks in the US funeral trade produced one of the funniest non fiction books ever written - still relevant almost fifty years later.
Seriously, it's a scathingly glorious read - by one of the infamous British Mitford sisters.(She also produced an updated version - published in 1998, two years after she died).
From Amazon:"Before the turn of the century, the American funeral was simple "to the point of starkness," says Jessica Mitford, the acclaimed muckraking journalist who published this investigation of the country's funeral business in 1963."
http://www.amazon.com/American-Way-Death-Jessica-Mitford/dp/156849159X
Jody Tresidder at September 10, 2010 6:12 AM
The current administration has it's foot on the throat of businesses-threatening to increase taxes on anyone who makes over $250,000- and they wonder why businesses aren't hiring people.
Since most of The Obama administration and Obama himself have never run a private business or worked for one, I will inform them at no charge how this works.
If I have a million dollar business and I pay $200,000 to our wise and benevolent government there is $200,000 that I could use for salaries or equipment. Equipment I buy would put other people to work by producing. Now I've adjusted to the normal $200,000 tax and they say we want to tax you more, we don't know how much. We are going to force you to pay for health insurance for your employees and maybe we will put a carbon energy tax on you.
If I'm a business I say I might have $100,000 or more in new taxes every year on top of my $200,000. I'm unsure. Since I'm unsure what awaits me I'm going to hunker down and save money and not risk expanding at this point because there are too many unknowns.
-If you want to see economic growth implement the fair tax.
David M. at September 10, 2010 6:39 AM
David I am surprised noone on any of the licensing boards or anyone else has demanded you hire their wife/nephew/other person to a paid job they should never to be expected to show up to. I have 3 friends in Nashville who run thier own business. One cleanes apartment buildings and similar structures, another is a freelance programmer who works with a few people and another is an accountant. Well the 3rd never got to hire anyone for his own firm because of the hassle he was put through. They all had people ask
Them for jobs for family member before they would be able to get going. There is a word for what these people tried.. Well the first 2 spent loads of cash wriggling around the system and finally got going. The third is still working on his own. He would like to manage his own firm but says it isn't worth the BS he would have to go through.
Unfortunate really. He is a good guy and would no doubt be a fair employer.
JosephineMO6 at September 10, 2010 7:15 AM
I don't know what Rex Little has been reading but Mexico ranks below the US in every index of economic freedom (http://www.heritage.org/index ) except fiscial (overall taxation) and government spending. On corruption, property rights and labor it ranks way below. Also Mexico's economic freedom has improved over the past decade whereas the US has deteriorated.
Mexico is trying to come up from the bottom whereas the US is falling from the heights. There is a lesson there.
parabarbarian at September 10, 2010 8:33 AM
I've seen what Rex is saying about Mexico. Down there, it doesn't take half a lifetime to become a lawyer or a doctor. It doesn't take years to get a funeral director or a cosmetologist license. I've met many Mexicans that in Mexico had been lawyers or midwifes, yet up here they take manual labor jobs because they pay decent and are not judged because they don't have a fancy degree.
A lot of Mexico's problems are caused by America and our 'War on Drugs'. We encourage violence by making it a crime to sell substances that have been around since before the white man stepped on this continent. We also keep drug prices high, worth the extra murder and mayhem, so they can see gigantic profits. And it's those highly paid drug king pings that are keeping drugs illegals. Not to mention that the public doesn't generally see the violence that is rampant in Mexico.
Cat at September 10, 2010 11:38 AM
It's not just in America too. It's the government. Recently one of my favourite places (In South Korea) to hang out and sort of coffee shop/bar/hookah lounge has been forced to stop selling Shisha(flavored tobacco) BECAUSE their was a convenience store selling cigarettes was three meters too close to his place. In the process he has lost almost all of his business because every time somebody comes in he has to tell them sorry no shisha and at the most people leave. This lounge did not sell cigs just the shisha. The convenience store has no problems with the Shisha lounge.
How this got found out of a store being too close to another place I do not know. I think it was just some busy body complained (it is foreign owned and those people are always smoking DRUGS), government official came in found something to nitpick about and bam business lost. Also he will have to lay off his couple of Uni student workers.
Yep Regulations are their to protect us!
John Paulson at September 10, 2010 10:59 PM
I caught most of the casket one on the Stossel show. Hated how the funeral people kept going bac to, bu thats what the law says as their defense for the law. But my question would be, (not sure if was asked in the show) does your group support this law and did they lobby to get it put on the books.
Joe at September 12, 2010 8:59 AM
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