Posts tagged with: regulation

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. (more…)

I saw Joe Carter’s post on Entrepreneurship and Poverty earlier today, and it got me thinking back to a subject that has been nagging at me for quite a while. It seems to me that starting a business is simply too hard these days, and for rather artificial reasons. But perhaps I’m just biased, and it’s not as hard as I thought? Seeking the truth, I did what any millennial would do and consulted google.

What I found was a fascinating article from John Stossel. In it, he details all the regulatory hoops he would have to jump through in order to engage in the most basic from of entrepreneurship in Americana: the lemonade stand. (more…)

Blog author: jcouretas
Friday, August 27, 2010


Can you explain why you are not recycling, tovarich?

In “Recycling Bins Go Big Brother on Cleveland Residents,” writer Ariel Schwartz reported that the city is introducing a $2.5 million “Big Brother-like system next year to make sure residents are recycling.”

Chips embedded in recycling carts will keep track of how often residents take the carts to the curb for recycling. If a bin hasn’t been taken to the curb in a long time, city workers will go rummaging through the trash to find recyclables. And if workers find that over 10% of the trash is made up of recyclable materials, residents could face a $100 fine.

The system isn’t entirely new. Cleveland began a pilot program with the carts in 2007, according to … Alexandria, Virginia has a similar system, and cities in England have been using high-tech trash systems for years. But if the chip system works in a city as big as Cleveland, other small to medium sized cities will probably take note.

The program makes sense as long as cities don’t go too far. San Francisco, for example, has threatened to fine residents who don’t compost their waste. A chip system installed in San Francisco compost bins could probably make the city a lot of cash–and cost residents dearly.

Well, yes, there is a certain bureaucratic logic to it. It’s just the off-hand concern about going “too far” that leaves me a little uneasy.

Mark Steyn took it to the next logical step. He’s skeptical, as you can discern from the title of his blog post, “Gullible eager-beaver planet savers”:

In 2006, to comply with the “European Landfill Directive,” various municipal councils in England, Scotland and Northern Ireland introduced “smart” trash cans—“wheelie bins” with a penny-sized electronic chip embedded within that helpfully monitors and records your garbage as it’s tossed into the truck. Once upon a time, you had to be a double-0 agent with Her Majesty’s Secret Service to be able to install that level of high-tech spy gadgetry. But now any old low-level apparatchik from the municipal council can do it, all in the cause of a sustainable planet. So where’s the harm?

And once Big Brother’s in your trash can, why stop there? Our wheelie-bin sensors are detecting an awful lot of junk-food packaging in your garbage. Maybe you should be eating healthier. In Tokyo, Matsushita engineers have created a “smart toilet”: you sit down, and the seat sends a mild electric charge through your bottom that calculates your body/fat ratio, and then transmits the information to your doctors. Japan has a fast-aging population imposing unsustainable costs on its health system, so the state has an interest in tracking your looming health problems, and nipping them in the butt. In England, meanwhile, Twyford’s, whose founder invented the modern ceramic toilet in the 19th century, has developed an advanced model—the VIP (Versatile Interactive Pan)—that examines your urine and stools for medical problems and dietary content: if you’re not getting enough roughage, it automatically sends a signal to the nearest supermarket requesting a delivery of beans. All you have to do is sit there as your VIP toilet orders à la carte and prescribes your medication.

In “The New Despotism of Bureaucracy” on NRO, the Heritage Foundation’s Matthew Spalding wrote:

The United States has been moving down this path in fits and starts for some time, from the Progressive Era reforms through the New Deal’s interventions in the economy. But the real shift and expansion occurred more recently, under the Great Society and its progeny. The expansion of regulatory activities on a society-wide scale in the 1960s and 1970s led to vast new centralizing authority in the federal government, such that today the primary function of government is to regulate. The modern Congress is a supervisory body exercising oversight of the true lawmakers — administrative policymakers.

And not just just at the federal level, of course. Now, the distant disembodied “administrative state” may be more and more personified in your neighbor in town and township. And when he strolls up your driveway to talk to you, it won’t be about your interest in coaching Little League or to borrow a weed whacker but to ask: Why did you put those old newspapers in the trash?

Bruce Tinsley’s comic strip Mallard Fillmore has long been an excellent examination of conservative principles, current events, and problems associated with government interventionism. The strip appears in over 400 newspapers across the country. Yesterday featured a particularly simple and poignant strip humorously pointing out early attempts to crush the entrepreneurial spirit and the free market. The December 13 strip simply speaks for itself.

Right before I saw the strip yesterday I just finished reading a proposal in Michigan that has the support of Lt. Governor John Cherry for a new tax on bottled water.

In his new encyclical, Caritas in Veritate, Pope Benedict XVI calls for an international political authority, “so that the concept of the family of nations can acquire real teeth.” He tasks it with issues like human rights, ensuring access to necessities including food and water, and managing the global economy. What might an effective international governing body look like?

The Nobel laureate economist Friedrich Hayek asked the same question in 1944 in his book, The Road to Serfdom. Seeing his beloved Europe torn apart by war and gross economic inequalities, Hayek wrote, “we cannot hope for order or lasting peace after this war if states, large or small, regain unfettered sovereignty in the economic sphere.” He was referencing World War II, but it sounds like the Pope feels the same way about hoping for order and prosperity after this recession.

Neither Hayek nor the Pope have utopian visions of the world. The Pope reaffirmed the value of subsidiarity many times in Caritas in Veritate. Subsidiarity is the principle that decisions should be left to the smallest competent authority. In questions of politics and economics, this is often a local authority; it is rarely an international organization. Hayek said the same thing when he noted that “the problems raised by a conscious direction of economic affairs on a national scale inevitably assume even greater dimensions when the same is attempted internationally.”

These constraints make international governance difficult, and they all but rule out any effort by a world body to coordinate economic activity. Real problems still remain with a nationally-divided world, though. Hayek said that “it is neither necessary nor desirable that national boundaries sharp differences in standards of living,” and the Pope refers to the “scandal of glaring inequalities” in Caritas in Veritate. What, then, is to be done?

First, it is necessary to ask what stands in the way of people having their rights respected and their needs met. All too often, it is the state. The Pope criticizes much government-to-government foreign aid on the grounds that corruption and bad economic policy need to be fixed before money will do any lasting good. He also calls for Western countries to end the subsidies to agriculture that block farmers in poor countries from having fair access to global markets. When it comes to accessing investment, food, and water, poor governance has done much to hold back the world’s most impoverished people.

As an Austrian who witnessed the rise of Nazism, fascism, and communism in Europe, Hayek shared a similar critique of the unwillingness of many governments to give their people the freedom they need to flourish. His experiences impacted his vision of the international order, and Hayek ultimately proposed that “there must be a power which can restrain the different nations from action harmful to their neighbors, a set of rules which defines what a state may do, and an authority capable of enforcing these rules… it must, above all, be able to say ‘No’ to all sorts of restrictive measures.”

Perhaps Pope Benedict XVI could draw inspiration from this perspective. In order to promote general equity and a search for the common human good among nations, an international authority with the ability to check irrational and cruel decisions made by governments may be the best way to proceed. An international body with the ability to veto rights abuses, tariffs, excessive inflation, corporate welfare policies, agricultural subsidies, and other harmful laws might be the best way to encourage the solidarity of the “family of nations.” It would let markets tap into the ability of every person to create wealth and meet their own needs through the dignity of their own work. By promoting openness and checking destructive policies without trying to take on the job of managing everything in the world, such an authority could also meet the Pope’s requirement that global political authority be organized in “a subsidiary and stratified way.”

The United Nations may or may not be the best organization to carry forward this vision, and it is possible that some other body might be the future of internal governance “with teeth.” Between Hayek, the Pope, and everyone looking for the best way to heed the challenges of Caritas in Veritate, hopefully a productive framework for governing globalization so that it works for the benefit of everyone can emerge.

Posted at the Center for a Just Society (notice courtesy the National Humanities Institute), Dr. Mark T. Mitchell asks a series of questions focused on the intersection between morality and economics in light of the recent financial crisis. In “Ten Questions and a Modest Proposal,” Dr. Mitchell invokes the institute’s namesake and this blog’s tagline.

In question number 9, Dr. Mitchell says,

Lord Acton’s hoary saying is pertinent: “power tends to corrupt.” If so, then we should make efforts to decentralize power. Such a sensibility is behind the separation of powers written into the fabric of the U.S. Constitution. We should be concerned, then, when big corporations get into bed with big government. The off-spring will be ugly and, we can rest assured, it will be big. This bailout represents a stunning consolidation of corporate and government power. Of course, we are promised that the government will regulate the corporations, but the conflict of interest is glaring. Could it be that the problem is not de-regulation but regulations that favor big corporations over small businesses?

Recent reports have placed the economic impact of a shutdown of one of the Big 3 automakers could cost 3 million jobs and $60 billion in 2009. Now Detroit automakers are apparently “too big to fail.” (Update: Ford has announced significant 3Q losses this year, and plans to cut 10% of its salaried workforce in North America.)

The other questions are prescient, as well, and Dr. Mitchell’s “modest” proposal is well worth considering: “The American way of life is sustainable only if we acknowledge that publicly and privately we are called to lives of responsibility. Hubris is only countered when we recognize limits.”

What is the root cause of the sub-prime crisis shaking the global economy? We need to know so we don’t allow it to screw up our economy even worse.

Many point to dishonesty and poor judgment on Wall Street. There was plenty of that leading up to the near-trillion dollar bailout, and even now the stock market is busily disciplining stupid, dishonest companies.

Others point to the many people who falsified loan applications to get mortgages beyond their means. That too played a role.

But dishonesty and poor judgment are as old as Adam and Eve. Something more was at work in the present crisis, a crisis of unprecedented scope. Why didn’t profit-minded loan companies run thorough credit checks? Why did they keep pumping out low interest loans to high risk borrowers, ignoring the risks?

It’s as if somebody spiked the financial system’s punch bowl with stupid juice, driving normally prudent financiers to dash, en masse, over the cliff.

It seems that way because it is that way. The brewers of the stupid juice were largely (if not exclusively) politicians in Washington who sought to redistribute wealth from the rich and middle class to poor people with bad credit. These politicians fostered various laws and institutions that directed, cajoled and legally bullied mortgage companies to extend big loans to people with little credit.

A case in point is a group called ACORN—Association of Community Organizations for Reform Now. Stanley Kurtz explains in an Oct. 7 essay at National Review Online:

“You’ve got only a couple thousand bucks in the bank. Your job pays you dog-food wages. Your credit history has been bent, stapled, and mutilated. You declared bankruptcy in 1989. Don’t despair: You can still buy a house.” So began an April 1995 article in the Chicago Sun-Times that went on to direct prospective home-buyers fitting this profile to a group of far-left “community organizers” called ACORN, for assistance. In retrospect, of course, encouraging customers like this to buy homes seems little short of madness.

… At the time, however, that 1995 Chicago newspaper article represented something of a triumph for Barack Obama. That same year, as a director at Chicago’s Woods Fund, Obama was successfully pushing for a major expansion of assistance to ACORN, and sending still more money ACORN’s way from his post as board chair of the Chicago Annenberg Challenge. Through both funding and personal-leadership training, Obama supported ACORN. And ACORN, far more than we’ve recognized up to now, had a major role in precipitating the subprime crisis.