NCPA - National Center for Policy Analysis

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.

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