Really? Try telling that to Esme relda Rodriguez. The Chicago resident spent an entire year trying to get the permission of Chicago’s bureaucracy so she could open a children’s play center. She spent months paying rent on a 760-square-foot storefront while she navigated requirements such as the city’s Public Place of Amusement license, which — because it usually applies to projects like stadiums and strip clubs — requires approval of the mayor’s office. Rodriguez ran out of money long before Chicago ran out of red tape, and she was forced to give up her dream.
Rodriguez’s tale is just one of the many horror stories compiled by the Institute for Justice, a libertarian outfit based in Arlington that crusades for economic and political freedom. The Institute — IJ for short — has just released a series of eight reports on how state and local regulations strangle business start-ups in the crib. They make for discouraging reading.
For instance: In Houston, you can’t cover more than 20 percent of a glass storefront with advertising without a government permit — for each separate sign. In Miami, new transportation companies have to certify they will not hurt existing ones. To run a used bookstore in Los Angeles, you need a police permit. You also need to record the personal information of every person who brings in a book for trade — along with the titles of the books. And, in certain cases, you need to get the patron’s thumbprints.
If these examples were outliers, that would be one thing. But they represent a depressing norm. And as the IJ’s Chip Mellor and Dana Berliner argued in a recent column for USA Today, while such onerous roadblocks to job creation would be troublesome enough in good economic times, “in a period of financial strain and high unemployment, [they’re] almost suicidally foolish.”
And yet, across the country, pointless — often absurd — regulations continue to prevent entrepreneurs from finding success. In Boston, New York, and most other cities of more than 50,000 residents, tightly controlled quotas on taxi medallions — essentially, permits to drive a cab — create artificial scarcity, drive up prices, and prevent newcomers from entering the market.
Medallions were introduced in Boston in the 1930s, when the number was set at 1,525. By the late 1990s, the number had risen to . . . 1,785. In 1995, New York finally got around to raising its decades-old ceiling of 11,787 by an underwhelming 400 medallions. Result? A permit to drive a hack in the Big Apple costs about a half-million dollars.
In such cases, local pols often are merely doing the bidding of powerful business interests that don’t want someone else horning in on what they consider their God-given turf. Economists call the behavior rent-seeking. A decade ago, Minneapolis allowed only 343 taxicabs to operate, until an immigrant, Luis Paucar, filed suit. The city council decided to let 45 more cabs ply the city streets — whereupon the existing cab companies sued, under the novel theory that they had a constitutional right not to face competition.
But you don’t have to be a corporate oligarch to join the fun. Just look at the hostility among public-school teachers’ unions to anything that smacks of competition with the education monopoly. Or look to New York, which has relaxed restrictions on so-called dollar vans. The Transport Workers Union Local 100 filed suit to stop the pilot program.
Twenty-two states have titling laws for interior designers, even though studies in five states have found that such laws produce exactly zero benefit. In Miami, it’s illegal to make drawings that show the placement of furniture unless you first undergo six years of education and apprenticeship. You can sell food and flowers from a vendor’s cart in downtown Miami — but nothing else. Vending licenses are awarded by lottery. In 2008-2009, Miami permitted all of 28.
Here in Virginia, until the Institute for Justice intervened, yoga schools that taught people how to become instructors had to jump through the same prohibitively expensive hoops (e.g., a $2,500 licensing application fee) as schools of postsecondary education.
Not all regulation is so onerous or absurd. Environmental rules help reduce the negative externalities that occur, for instance, when air pollution causes respiratory problems. This helps ensure that a company pays the true costs of production. Restaurant inspections help prevent people from contracting food-borne illnesses. But what possible good is served by taxicab quotas? Or Philadelphia’s demand that any business wishing to put up a sign must first pay a $500 fee? Or Milwaukee’s insistence that no more than half a garage can be used for home-based business storage?
If Jon Stewart really wants to help restore sanity, maybe he should start there.
Every joke is a tiny revolution. —George Orwell.