The Senate Judiciary Committee’s Subcommittee on Oversight, Agency Action, Federal Rights, and Federal Courts is holding a hearing Tuesday called “Opportunity Denied: How Overregulation Harms Minorities.” I’ll be testifying about how occupational licensing laws and Competitor’s Veto laws exclude would-be entrepreneurs from the marketplace—with disproportionately negative consequences for members of minority groups—and how Congress could act today to protect the fundamental human right of economic liberty against unjust state interference.
Licensing laws tend to have particularly harsh consequences on members of minority groups for a couple reasons. First, if a law requires a person to have, say, a college degree to practice the trade of interior design (which is the law in Florida), people who have less money and time to spend in college will find that avenue of opportunity closed to them. Since black and Hispanic Floridians are about 30 percent less likely to have a college degree, they will suffer more from this absurd licensing requirement than others will. Competitor’s Veto laws that forbid a person from practicing a trade unless they get permission from the businesses already operating in that industry are also very likely to create a sort of Old Boys Network, and to exclude entrepreneurs who lack political connections. Second, in a more general sense, any law that restricts economic opportunity for some to benefit others—as licensing laws tend to do—are likely to benefit those who have more political influence and can therefore get the government to regulate in ways favorable to them. Since members of minority groups have less political influence, they tend to be the ones excluded.
Among the reforms Congress could enact immediately to protect economic liberty against unjust interference by states:
1) Civil rights legislation to protect economic liberty. Sadly, the right to earn a living is America’s most neglected civil right. Civil rights legislation that made crystal clear to state governments that they may not abridge this fundamental human right, and which armed citizens to defend themselves against government exploitation, would be the best thing Congress could do today. We would never tolerate states riding roughshod over free speech or freedom of religion—yet today the federal government tends to ignore its responsibility under the Fourteenth Amendment to protect economic liberty against state depredations.
2) Spending Clause legislation conditioned on the reduction of barriers to economic freedom. If the federal government is going to spend money on state job-creation programs, it should condition those funds on the states agreeing to reduce its restrictions on the right to earn a living. As the White House recently recognized, about a third of all Americans need government permission to do their jobs—and many such restrictions are patently ridiculous, like the Louisiana law requiring a license for florists, or the Florida interior design licensing requirement. These restrictions don’t protect the public—they protect existing businesses against competition. That’s unjust and unconstitutional. Congress could enact an Economic Freedom Restoration Act modeled on RFRA to protect economic freedom.
3) Reduce antitrust immunity for state government entities. Sadly, states frequently create cartels that can prohibit their own competition—and then are exempt from federal antimonopoly laws. Congress should reduce or eliminate the Parker immunity doctrine so that the antimonopoly laws target the real monopolist: the government.
You can read more about these and other proposals in my written testimony here.