Category: Business and Society

Do you ever walk into a business and see a license on the wall and wonder if that specific industry really needs to be licensed by the state? I know I have thought that, if just a few times. John Fund of the Wall Street Journal looks at how licensing laws hinders low prices and competition in the marketplace. In a piece titled, License to Kill Jobs, Fund also explains how over regulation has stymied job growth and the ability of new entrepreneurs to become more self reliant.

Fund also notes in his column:

In the 1950s, only about 4.5% of jobs required a license to work. Today, that proportion is more than 20%. Many of the jobs that require a government stamp of approval don’t involve health or safety. Depending on the state, you need a license to be a hair braider, florist, auctioneer, interior designer or even fortune-teller.

The cost of the education for the license also hurts those who may have the necessary skills but can’t afford to meet all the requirements. Furthermore, sometimes the licensing requirements have little to do with the relevancy of the actual work performed. Another aspect Fund looks at is the arbitrary nature and requirements from state licensing, compiled by a major study by the Reason Foundation. California requires 177 specific business types to be licensed, while Missouri requires only 41. The “Live Free or Die” state of New Hampshire, requires a walloping 130 licenses for specific businesses types.

Another interesting point Fund makes is the licensing requirements hurt the very consumers it’s meant to protect. Fund notes just a few of the facts from the Reason Foundation study:

The higher prices such licensing bodies impose for services can also hurt consumers by creating incentives to do dangerous jobs themselves. “Electrocution rates are higher in states with strict electrical licensing requirements, as more consumers risk performing their own electrical work,” the study notes. “Similarly, states with stricter dental licensing laws also have the highest incidence of poor dental hygiene.”

In the Wall Street Journal piece, the author also declares how in some instances the courts have stepped in and found some of the licensing requirements completely unnecessary, and additionally acts as a regulatory infringement on the right to earn a living. Fund also declares, “Some courts are even citing the 14th Amendment’s due process and equal protection clauses in striking down protectionist government regulations.”

Which makes one wonder all the more: Are the over-zealous requirements and so called need for licensing helping the consumer or just perpetuating higher prices, and lack of competition, which can result in inferior products and service? Obviously licensing in some classes of business are needed. But does everybody, in say an interior design or the florist industry need to be licensed? There are large and powerful lobbying groups able to protect and strengthen certain businesses from more competition, but in some cases little help for newcomers trying to break into the market. In addition, we often overlook just how much the market can regulate itself.

It all reminds me a little bit about the stories you see in the news print and media about young children getting their lemonade stands shut down by bureaucratic governmental standards . Concerning the crackdown on lemonade stands, where are the “It’s For The Children” speeches when they are actually needed?

To hear the NYT tell it (and Sojourners, for that matter), the family farm is facing severe threats. With no small degree of dramatic flourish, the NYT editorial linked above concludes:

For the past 75 years, America’s system of farm subsidies has unfortunately driven farming toward such concentration, and there’s no sign that the next farm bill will change that. The difference this time is that American farming is poised on the brink of true industrialization, creating a landscape driven by energy production and what is now called “biorefining.” What we may be witnessing is the beginning of the tragic moment in which the ownership of America’s farmland passes from the farmer to the industrial giants of energy and agricultural production.

If federal subsidies for corporate agribusiness is a threat to the family farm, then so is extensive FDA regulation of homegrown products and the morass of complex zoning regulations, telling people what they can sell, when they can sell, it and where they can sell it.

As my colleague Kevin Schmiesing wonders within a similar context, is the problem that the government just doesn’t quite have the right approach nailed down yet, or that the unintended consequences of government intervention into the market (in various ways) inevitably will screw things up (because, perhaps, special interests, whether corporate or individual, will always have an undue influence in the formation of policy)?

This image haunts my darkest nightmares.

Time sure does fly. It’s been almost two years since I called Canada’s government-run health care system “The Sick Man of the Great White North” and wrote:

Canada’s system may be the gold standard for government-run health care, but only if you’re looking for a system that can’t provide essential medical services in a timely manner.

Sadly, nothing much has changed in the interceding time between that post and now. In fact, things are very much the same: Canadians still have a system that has an undeserved good reputation, and those on the left in America still hope to implement a Canadian-style system here in the United States. It was to that end that Michael Moore released his latest “documentary,” Sicko, which essentially serves as public relations for the pro-socialized health care camp.

The idea of “free,” government-provided health care is easy to like, because who doesn’t want everyone to have free health care? Unfortunately, it also seems that many people find that the major problems with socialized health care are easy to dismiss, because, well… who doesn’t want everyone to have free health care?

So it’s important for those of us who see this idea for what it is – a very bad one – continue to remind Americans that while socialized health care is no doubt well intentioned, good intentions are not enough:

Sickoholds the Canadian system out as a model for proponents of universal coverage where health care costs are lower and everyone has free care at the point of service. “While many proclaim Canada’s Medicare program to be one of the best in the world, or suggest it should be the model for reform in the United States,” says one of the Fraser Institute’s study authors, “the reality is that health spending in Canada outpaces that in most other developed nations that, like Canada, guarantee access to care regardless of ability to pay, and yet access to health care in this country lags that available in most of these other nations.”

Because health care is largely free in Canada, demand is likely to exceed supply. It’s just human nature. Thus, waiting lists become the principal way of rationing medical care and holding down spending. And after 16 years of tracking growing waiting lists, the Fraser Institute observes that the problem is probably not a temporary one that can be fixed with a little more money or time. They note that provinces with higher spending per capita do not experience shorter wait times.

Just as we saw in the old Soviet system with its long lines for food and basic services, government central planning does not efficiently match supply with demand. And human beings will always seek more of something that is free. As one free market advocate states, “Long waits and widespread denial of needed care are a permanent and necessary part of government-run systems.”

That link comes via Hugh Hewitt.

Incidentally, how do you think Sicko is doing? Perhaps I’m just out of the movie loop at the moment, but it seems to me to have been as close as Moore has come to an outright flop, at least in terms of media chatter generated for his pet issue.

More: Jordan Ballor passes along a link to the Scriptorium, which provides a solid analysis of what a proper Biblical position on universal health care would be:

Jesus was angered at moral teaching that emphasized outward conformity to rules without moral action flowing from a heart of compassion and virtue, even if such conformity produced good results. Now the state cannot show compassion in the arena of economic justice, because a necessary condition for compassion is that it is freely given and not coerced. The state forces people to conform to rules. It takes their money and gives it to others. But this is not the sort of compassion of which Jesus taught.

Well worth a read in full.

No doubt feeding the fears of those who believe that global corporations pose the greatest threat to the future flourishing of humanity, such multi-nationals are beginning to hire their own economists, much like governments have their own financial and economic experts.

See, for instance, this interview on the WSJ Economics Blog with UC-Berkeley economist Hal Varian, who has taken a position as chief economist with Google, Inc.

Where will Varian be focusing his attention? In his words, “I think marketing is the new finance.”

Chuck Colson locates the perennial problem of human unhappiness with the inability to perceive where happiness truly comes from. There’s the economic argument that while “increased prosperity can’t make you happy, it can, ironically, contribute to unhappiness,” an argument which Colson says, “doesn’t tell us anything about what makes people happy in the first place. Thus, it can’t tell us why increased prosperity doesn’t translate into increased happiness.”

As I’ve noted before, the economic argument is helpful for locating a source of our unhappiness: our fallen, selfish nature. Colson is addressing the ontological question of where happiness comes from. The economic argument is addressing the epistemological question of where humans think happiness comes from. The two answers are related and complementary.

And Colson is ultimately right. As long as humans look only to material concerns for the questions of happiness, we’re doomed to miss the mark. A new monograph from the IEA, Happiness, Economics and Public Policy, underscores this, concluding that “measured happiness does not appear to be related to public spending, violent crime, property crime, sexual equality, disability, life expectancy or unemployment.”

“The stark fact is that, as Helen Johns and Paul Ormerod demonstrate, the difficulties in measuring society’s happiness are insurmountable, and policymakers should not claim that they can control and increase happiness through public policy decisions.”

For more on happiness (subjective well-being) research, check out the World Database of Happiness (HT: the evangelical outpost).

I have argued for many years now that free markets are intrinsically good. I have tried to engage this issue with Christians but many are either not interested or do not see any importance in the pursuit. I know markets can become bad masters when people lack virtue. I also know that the alternatives to free markets have littered the twentieth century with more death than any single cause in human history. (Think socialism, fascism and Marxism.) And representative democracy, a republic of just laws, is not perfect either but it sure beats the alternatives. Shared power is always better than control by the one or the few. Social engineering and economic planning by an elite and powerful few strips us of both human dignity and true freedom.

Bryan Caplan, an economics professor at George Mason University, is the author of a new book, The Myth of the Rational Voter: Why Democracies Choose Bad Politics, that has a significant bearing on how we should think about the political side of economic concerns in America. Professor Caplan concludes, in words that are not at all comforting to me personally, that most Americans cast their votes on the basis of irrational biases about economics. This, he reasons, is why candidates who oppose free markets, free trade, profits and immigration win. Sadly, I am quite sure that he is right about this point.

Creators Syndicate writer John Stossel, in reviewing the professor’s new book, says: "People tend to acquire wrong opinions about economic policy packaged in worldviews they inherited while growing up." Since people resist, and often strongly, having their own worldview challenged or changed they will vote for those candidates who make them feel good. Stossel concludes that this means "They will vote irrationally." I have long sensed that this was true on an intuitive level but the professor’s argument tends to fortify what I had only sensed but not quite had a handle on how to argue my case well. Simply put, most voters see no compelling reason to vote otherwise since their choices in elections bear no direct consequence on their lives, at least as they understand their lives. Gloomily Stossel concludes, "When irrationality is free, people will indulge their biases." (more…)

Acton’s Sam Gregg looks at the plight of Middle Eastern Christians in ‘Business flight will hurt Arabs,’ a commentary published today in The Australian. Their plight is also the Middle East’s loss as the continuing out migration of Christians saps the economic vitality and entrepreneurial spirit of the region. Sam asks:

So where are these Christian migrants going? The vast majority are migrating to commercially oriented, business-friendly countries such as the US and Australia. In 2002, 63 per cent of Arab-Americans identified themselves as Christian. Given their entrepreneurial history and culture, they quickly start businesses, build their wealth, create jobs and are invariably successful. Welfare dependency is scarce in these communities.