May 23, 2012

Insiders, outsiders, and the American dream

By Insiders, outsiders, and the American dream

My article, “Insiders, Outsiders, And The American Dream,” has been published in the latest issue of the Notre Dame Journal of Law, Ethics, & Public Policy. You can read it online here. The article deals with Certificate of Necessity laws—rules that bar a business from starting operations unless it can prove that there’s a “public need” for a new business of that sort. I argue that these laws aren’t just unwise as an economic matter, but that they violate basic ethical principles that underlie our constitutional and social order. Protections for the right to earn a living are a critical part of the promise of citizenship. Here’s a taste:

In 2007, college student entrepreneur Adam Sweet and his brother co-founded a moving company called 2 Brothers Moving in Portland, Oregon. What they did not know at the time was that to get the mandatory state license, they would first be required essentially to get permission from the state’s existing moving companies. Under a seventy-year-old state law, whenever a person applied for a license, the Oregon Department of Transportation (“ODOT”) would notify existing movers of the application and give them the opportunity to object to the issuing of a license. Once the inevitable objection was filed, Sweet would be forced to prove to ODOT that there was a “public need” for a new moving company…. Sadly, Sweet’s situation is typical of a type of licensing restriction called the “certificate of necessity” or “certificate of need” (“CON”) requirement. Unlike traditional occupational licenses, CON laws are not meant to protect consumers or the general public by requiring practitioners of a trade to demonstrate expertise or education. Instead, these laws exist to restrict competition and to boost the prices that established companies can charge. This cartel system…restrict[s] economic opportunity for entrepreneurs and raise[s] costs for products and services that consumers need, simply to protect existing businesses against legitimate economic competition. They have accordingly been subject to powerful economic critiques…[but] I want to discuss the deleterious effects that CON restrictions have on citizenship values and social philosophy…. [T]he use of CON laws in these competitive, entry level industries imposes major social and moral costs—infringing the individual liberty of, and denying economic opportunity to, precisely those people who most need meaningful constitutional protection

Read the rest…

What to read next