Entrepreneurs under Attack
December 27, 2010
Every day, federal, state and local governments stifle small businesses to privilege well-connected incumbent companies. It's a system of protectionism for influential insiders who don't want competition, says John Stossel.
Here are some examples.
Case No. 1.
- The monks at St. Joseph Abbey had to take the state of Louisiana to federal court to defend their right to sell handmade caskets.
- Funeral directors had managed to get Louisiana to pass a law decreeing that only "licensed funeral directors" may sell "funeral merchandise" like caskets.
- To sell caskets legally, the monks would have to obtain a funeral director's license, which requires a year-long apprenticeship, passing a funeral industry test and converting their monastery into a "funeral establishment" by installing embalming equipment, among other things.
Case No. 2.
- Hector Ricketts offers New York City residents an alternative to New York's public transportation.
- He employs drivers who offer commuters rides in minivans and typically charge $2 a head -- the subways and buses charge $2.25.
- The city's public transit union used its political connections to regulate the vans to death: The politicians have decreed that vans may not drive routes used by city buses or provide service to a passenger unless it is prearranged by phone; and the vans must keep a passenger manifest on board and enter the name of everyone to be picked up.
Case No. 3.
- Melony Armstrong of Tupelo, Miss., wanted to expand her African hairbraiding business, but was told that she needed a full cosmetology license.
- That required 1,200 hours of classes and a cosmetology instructor's license -- 2,000 more hours.
- The courses and license had little to do with her profession and were simply barriers to entry favored by her competition.
Source: John Stossel, "Entrepreneurs under Attack," Freeman Online, December 2010.
Browse more articles on Government Issues