The cover story of the new issue of Regulation magazine is my article on “Certificate of Necessity” (CON) laws, including the law that we’re challenging in the case of Missouri entrepreneur Michael Munie. CON laws are laws that require businesses to prove to a government agency that there’s a “public need” for a new business before they’re allowed to open their doors. Unlike occupational licensing requirements, CON laws don’t require a business owner or practitioner to know the trade or have any educational or skill requirements; they exist for the explicit purpose of stifling competition and protecting established businesses against newcomers.
As I explain in the article, these laws were originally devised about a century ago to govern railroads and other public utilities. But they soon expanded to encompass taxicabs, moving companies, and even hospitals—industries where their already dubious economic rationale really hold no weight at all. CON laws have no realistic connection to public health and safety; they raise the cost of living for consumers, and they bar the door to many of America’s potential wealth creating entrepreneurs. Worst of all, they violate the Constitution’s protections for the right to earn a living. They should be abolished entirely.