ANALYSIS: How government licensing is used to hurt the poor

By Wyatt Bush

My stepmother earns her living by working her butt off as a florist.

Thankfully, in the state of Michigan, our benevolent overlords in Lansing have decided that it is okay to run a floral shop without acquiring a specific license to do so. After all, what is someone going to do, arrange flowers in a way that could injure people?

That is exactly what the government of Louisiana says is at stake when it decides to license its florists. They definitely do not do it to stifle competition of the well-established and wealthy florists of the state, but for the safety of consumers. Of course.

Think about it. Without a flower arrangement by a properly licensed florist, people would be gouging their eyes out on protruding rose petals or get migraine headaches when they see too many colors at once. You know, the things nations without civilized florists are always complaining about.

To become a florist in Louisiana, one must pass a five-hour test with at least a 70 percent score in both the one-hour written portion and the highly subjective “practical test” that determines whether one can cut it as a florist.

Of course, the 13-member Louisiana Horticulture Commission consisting solely of properly licensed florists from the state, which definitely is not a conflict of interest, administers the test and is responsible for determining if the examinees’ arrangements are proper for public consumption.

From 2000-2002, the Louisiana retail florist exam had a 40-percent passing rate.

In the same period, 67.4 percent of lawyers in the state passed their bar exam.

In other words, it is easier to become a lawyer than a florist in Louisiana due to occupational licensing, .

It is almost hysterical how blatantly obvious schemes such as licensing florists in Louisiana or interior decorators in Florida are enacted to benefit the higher-ups in the industry. It is also important to note how they screw over many hard-working and honest people who enter these industries to make ends meet, like my stepmom.

Speaking of which, my stepmother also administers pedicures at Charlotte Plaza Floral. In order to do so, she was forced by the state of Michigan to spend over 400 hours taking classes to ensure she wouldn’t accidentally melt people’s feet off, or something.

In a win-win for state and corporate interests, she also has to pay reoccurring licensing fees for this privilege.

Unfortunately, egregious licensing schemes like these are becoming more and more frequent across the United States.

In the 1950s, 5 percent of all American workers required a government license for their job. These professions largely consisted of highly-skilled jobs, such as being a doctor or lawyer.

Today, economists estimate 29 percent of American workers require a government license for their jobs. And low/middle income occupations are accountable for a larger proportion of those licenses.

Why is this happening?

Economic theory teaches that it is difficult in a competitive market, if not impossible, to make a profit over the long run. This is because over the long run, industries in which profit is widely available will gradually see more firms enter the marketplace until it is no longer profitable and it eventually becomes unprofitable. When the industry is unprofitable, firms will gradually shut down and move onto other things until it is once again profitable in the industry and the cycle repeats.

However, by limiting how many firms can enter the marketplace in the first place, those in the industry are able to mitigate this effect.

One of such practices is instilling barriers to entry that prevents competitors. Government-sanctioned licenses are the most easy way to limit entry. So, firms lobby for them, and government officials are in turn ecstatic to receive cash from said firms. Governments often use the opportunity to incorporate taxes on the licenses as well, because sometimes screwing people over with corporate interests just isn’t enough.

What a magnificent union.

There isn’t much stopping this marriage between firms and government. After all, the benefits are so heavily concentrated and the costs are so widely dispersed. How many people in Louisiana care that they face a mark-up of $1-2 on each of their rose purchases? Not many, but you can be damn sure the firms receiving said markups are ecstatic.

But, it is absolutely sickening to see cases like the 13 year-old in Holland who was left homeless after city officials shut down his entrepreneurial food cart for lacking proper permits or Georgia police shutting down a lemonade stand of three girls for lacking proper permits.

Such actions are often taken on behalf of public safety. But in reality, most are there for the benefit of the government and established businesses.

And as is virtually always the case, it is the worst off among us who are left hurting the most.


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