Permits, Protection, and Protectionism

Another summer day, another kid’s lemonade stand gets shut down by the government. This time, in upstate New York, where a 7 year old and his dad had the temerity to undercut the prices posted by vendors at a fair. Somebody narced out the kid, the health department showed up, and shut him down for lack of a permit. Much confusion ensued, but eventually the kid’s dad had to buck up thirty bucks for a permit. This isn’t a one-off, as stories from California, Colorado, Iowa and Texas, to name a few, attest.

Why?

Why have we descended into such lunacy?

The answer lies in understanding the consequences of ceding power to the government, even when it’s done with good intent and high purpose. In the New York case, the power was wielded by the vendors at the fair, who engaged in the rankest of cronyism in siccing government goons on a 7 year old. In other cases, it’s either mirthless government killjoys, or cover-your-ass types who fear that THEY will get in trouble if they don’t clamp down on the perils of juvenile lemonade pushers run amok.

Permitting and its nefarious sibling, occupational licensing, are sucking the life out of free enterprise, market efficiency, entrepreneurship, and individual self-improvement. That they do so in order to “protect the public” doesn’t make it any less odious. “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive.” — C.S. Lewis.

Is permitting/licensing a tyranny? Is it so odious and infringing on liberty to require someone to do some paperwork in order to engage in commerce? Before you wave this off with some argument about “reasonableness,” refer back to the lemonade goons, and ask if that is reasonable.

Maybe I shouldn’t leap to a conclusion about what you find reasonable. After all, maybe you’d prefer that someone confirm the sanitary state of the product you wish to buy.

Let me ask you this: What responsibility do you bear when making such a purchase? Do you bother to check whether a lemonade stand (or restaurant, or convenience store, or news stand, or florist, or hair salon, or home goods retailer, or paint shop, or crafts store) has a permit to operate? Do you confirm that the person handling your lemonade has received food protection training, or is supervised by someone who has? Or do you simply assume that the government has ensured that all this is the case?

Have you handed off all responsibility to the government? Do you rely solely on the government to protect you from all bad things? Or do you look both ways before you cross the street, judge the state of cleanliness of a lemonade stand by looking, and not give a crap if the news stand hasn’t paid the government for the right to sell you gum and magazines?

Here, you might clamor for a middle ground, a system where the government engages in basic care taking, but doesn’t go after little kids’ lemonade stands.

Allow me, then, to offer you the middle ground. If you want to see permits, licenses, and certifications, look for them. Moreso, don’t simply assume they must come from the government. Ever see a UL imprint on a piece of consumer electronics? That’s a private certifying agency. Ditto for USP on medicines, supplements, and the like, ANSI, ASTM, NSF, the Snell Memorial Foundation, and many other private entities. Those exist, and would exist, apart from government, driven by producers’ desire to have a marketing edge over competitors, and by consumers’ desire to buy stuff that’s safe, reliable, and up to standards.

If you see things you like, including those certifications, you can choose to do business with someone. If you don’t see what you like, don’t buy the product and take your business elsewhere. A teeny tiny whit of personal responsibility assumed, and you preserve liberty, combat government’s excesses, and make the world a better place.

What about protecting the public, though? What about those who are too stupid, too disadvantaged, too ill-informed, and too reckless to know what to look for and how to take responsibility for themselves? Who will look out for them?

First, it’s mighty condescending of you to decide that you should have the power to deny others the right to buy what they want from whom they want, simply because you’re smarter. Second, maybe you’re not right about everything, and maybe someone else has no problem patronizing an unlicensed hair braider. Third, realize that you cannot force utopia, that your good intentions and noblesse oblige are what create the system that shuts down kids’ lemonade stands.

Finally, the abdication of some responsibility in favor of government control and oversight fosters the abdication of more responsibility and opens the door for more government control and oversight. In the 1950s, about 5% of jobs required an occupational license. Today, it’s one in three, and a large number of those make no sense. Florists, hair braiders, travel guides, horse massagers, landscape architects, librarians, packagers, auctioneers, locksmiths, interior designers, casket makers, shampooers, fortune tellers, teeth whiteners, home entertainment installers, travel agents, upholsterers, and gas pumpers all require, in some states and localities, licenses to do their jobs.

Worse, getting those licenses can often be an absurdly arduous process. Often, licenses serve more as protectionism for those who already have them than for the public that’s supposedly being protected. Artificial scarcity created by a significant entry barrier is great for those already in, but not so good for the public, who ends up paying more and having fewer options. And, not so good for those looking to start a career.

All because some of us think that all of us should be prohibited from buying from and selling to each other without government’s blessing.

Again, you have options. You can tell someone that you won’t buy from him if you don’t see some sort of validation or certification. Even absent government mandates, certifications will happen if consumers want them, and private certification organizations, when they don’t have the protection of government compulsion behind them, will live and die by their reputations, and so will probably do a better job than the government does.

Government permitting and licensing may sound like a great idea, but it has run amok. Just ask the 7 year old New York kid. And, if you don’t trust his lemonade, just go buy it from someone else and leave the rest of us alone.