Blog author: John MacDhubhain
by on Thursday, July 19, 2012

It’s hard to think of anything more onerous than preventing enterprising people from entering the market. To do so is to interfere with their ability to serve others and engage in their vocation. It keeps people poor by preventing them from improving their lives. And one of the worst barriers of this kind is a type of law known as occupational licensing.

And that’s exactly what a group of monks in Louisiana ran into in 2010 when the state government tried to prohibit them from selling handmade caskets to their fellow Louisianians. Kevin Schmiesing wrote on that issue in 2010 on the PowerBlog.

It’s the coffin business that got St. Joseph’s in trouble. By selling its pine boxes without a funeral director’s license, the monastery violates state law. So the abbey is suing the State of Louisiana in federal court.

It’s a classic case of what economists call “barriers to entry”: regulations put in place by existing businesses or professionals to limit competition and thereby drive up prices and compensation. Usually the vested interest posits some rationale concerning the public good (e.g., not just anybody should be allowed to practice medicine…), but frequently enough the reasoning is pretty thin (e.g., should you really need a license to cut hair or drive a taxi?).

The monks are represented by the libertarian public-interest group, Institute for Justice. They won their case in 2011 and appeared last month before a Federal Appeals Court. A decision won’t be out for several months.

This all started when the Benedictine monks at Saint Joseph Abbey started receiving several requests from their community to sell caskets that the monks had constructed for their own deceased members for many years. In a hard hit post-Katrina Louisiana, this seemed like a reasonable way for them to serve their community and bring in some money to the abbey. Unfortunately, they ran into occupational licensing laws, which forbid non-funeral homes from selling caskets. The Institute for Justice argued that such laws could only serve to reduce competition and drive up the prices of caskets. The BBC has a good video on their troubles with the state.

Occupational licensing laws make sense in some cases (such as highly technical fields such as law or medicine), but in more basic enterprises they serve as an exclusionary measure to reduce competition. Take another example of work that the Institute for Justice has done in Louisiana. For years, you had to be licensed to be a florist. As in, a person who arranges flowers. This isn’t brain surgery, it’s art. A background on the issue is available here. One of the most shocking things about the whole scheme is just how difficult it was to get a license in Louisiana. IJ tells of one of their plaintiffs, Debby Wood.

After completing all the necessary paperwork and obtaining a tax ID number, she discovered it was illegal to arrange and sell flowers in Louisiana without a license.  Debby spent $2,000 on a two-week, 80-hour course, an additional $150 on a refresher course the Saturday before the exam, and hundreds of hours studying.  She was shocked when she found out she had failed the test.

Whether its hairdressing, floral arrangements, or casket making, a clear pattern emerges. Those that are in the business, try to keep enterprising people out of the business. These rules are ostensibly to protect consumers, but shouldn’t consumers’ own taste for these goods do an adequate job of this?

Experiments showed that florists could tell no discernible difference in quality between floral arrangements in licensed-Louisiana and neighboring unlicensed-Texas. In fact, the licensed florists complain that the test is focused on outdated arrangement styles (I recall reading once that Vidal Sassoon, who revolutionized women’s hairstyles, had a similar complaint about New York state’s cosmetology tests). The point is,  endeavors that are based on the subjective tastes of consumers should not be a matter of state regulation.

What these laws accomplish is driving up prices for those in the market and keeping people poor. All that a person should need to do these basic jobs is the necessary equipment and some customers. Let’s pray that the Saint Joseph monks win their case in the Appeals Court so we can take a step closer to realizing the economic liberty needed to allow the poor to work, start businesses, and exit poverty.