NCPA - National Center for Policy Analysis

Government in the Marketplace

April 1, 2004

Liberals often claim that government regulation of the marketplace is necessary to protect the interests of consumers. In contrast, economists would argue that government rarely offers solutions to market problems, but rather makes matters worse.

A new report by the Pacific Law Foundation (PLF) further underscores the notion of government as a creator rather than a solver of societal problems. The report describes a host of outrageous examples of bureaucratic meddling in the marketplace, most of which yielded little or no societal benefit. For instance:

  • In Tampa, Fla., it is illegal to charge people less than $40 per hour for a limo ride, even for serving disabled clients.
  • The State of Oklahoma requires those wishing to sell coffins to obtain an undertaker's license, even though they will not officiate at funerals.
  • In Massachusetts it's against the law to have barbers work in the same room as cosmetologists -- in other words, one can get a hair cut or have it styled, but one cannot get both under the same roof.

The report concludes that such laws serve only to protect companies from fair competition by making market entry by rivals more costly. Ultimately, government provision of preferential treatment to its political favorites comes at the expense of consumers through higher prices and lower quality products.

Source: Timothy M. Sandefur, "Bureaucrats Punish Entrepreneur For Charging Too Little," Pacific Law Foundation, December 2003.


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