Rescuing the right to earn a living in Missouri

January 17, 2012 | By TIMOTHY SANDEFUR

Today we filed this motion in the case of St. Louis entrepreneur Michael Munie, asking the court to strike down a Missouri state law that essentially forbids anyone from going into the moving business without first getting permission from the existing moving companies. To be more precise, it’s illegal to run a moving company without getting a state license, but when you apply for a license, the Department of Transportation notifies the existing companies and gives them the chance to object. When they object, you’re required to go through an expensive, time-consuming hearing process to determine whether there’s a “public need” for a new moving company. Yet there’s no law or regulation that defines “need,” so the entire procedure becomes a roadblock in the way of hardworking people like Michael Munie, who only want an opportunity to run a business to support themselves and their families.

The facts in this case reveal an especially stark example of legislative protectionism. Since 2005, most people who have applied for licenses have asked for only a narrow range of operations—say, within the city of St. Louis, or within a 25-mile radius of Columbia—and no objections were filed. But anyone requesting authority to operate a moving company statewide, or in large geographical areas, has received an objection from one or more existing moving companies. There are 16 such cases, and in each, about four or five companies filed such objections, for a total of about 110 objections filed since 2005. None of these objections were filed by members of the general public; every one was filed by an existing moving company, and none has ever even claimed that granting a license to a new moving company would somehow threaten the public health or safety. On the contrary, every single intervention filed in the last 7 years has been based explicitly and solely on protecting existing companies from potential competition.

Here’s an example of one of these objections. As you can see, it says nothing about the public health, or safety, or welfare. It only asserts that allowing a new moving company to operate would cause “diversion of traffic” from the existing company. That’s a dysphemism for competition: allowing a new business would “divert traffic” by enabling consumers to shop somewhere else, just like Wal-Mart “diverts traffic” from Target or vice-versa.

Because businesspeople know that this is how the game is played, they usually back down whenever an objection is filed. For example, in 2010, Billy Holloway, Jr., applied for a license to operate within a 75-mile radius of rural Salem, Missouri. That upset three existing moving companies, and they objected, until Holloway agreed to reduce his request and operate only within a 50 mile radius of Salem. Then they withdrew their objections.

Since 2005, only a single applicant has ever insisted on requesting statewide authority even after anti-competitive objections were filed. That was D. Gaines, Inc.—and on May 3, 2005, the state denied Gaines a license solely because he would have competed against existing companies. You can read that decision here: “Gaines is in compliance with applicable safety requirements…[and] with applicable insurance requirements,” wrote the hearing commissioner. But “Intervenors showed that they already cover the market sufficiently and that more competition would divert traffic and revenue from them.” So Gaines was barred from operating his business, not because he was a threat to the public in any way, but merely because established companies didn’t want competition. (Gaines was eventually given permission to operate in Columbia, Missouri.)

Even if an entrepreneur did decide to go through the hearing process, he would find that there are no standards or rules or guidelines or laws or regulations or precedents defining a public “need” for moving services. Instead, “public need” means whatever the government says it means. And since corporations like Michael Munie’s ABC Quality Moving, or Billy Holloway’s Another Smooth Move, or D. Gaines, Inc., are legally required to have an attorney present at a hearing, the whole process can be very expensive.

Perhaps most remarkable of all, the government has admitted that this objection procedure doesn’t protect the public. In a series of interrogatories, the state admitted that allowing existing moving companies to object to new licenses does not protect public safety, promote efficient transportation, prevent fraud, or serve the interests or convenience of the public. Which, to be fair, is the truth.

Missouri’s licensing law for moving companies, like all “certificate of necessity” requirements, is really a “Competitor’s Veto” that bars legitimate competition not for the public good, but for the private benefit of existing companies. It simply exploits government power for the benefit of private interests. But it is unconstitutional to use government’s regulatory power in this way. The purpose of government is to protect individual rights—not to protect the market share of clever businesses that cannot compete fairly, and instead want to illegalize entrepreneurship to keep up their prices.

You can read more about Michael Munie’s fight for economic liberty here.

(You might recall that last year, the Missouri legislature repealed this licensing law, but unfortunately, the Governor vetoed that bill and the legislature was unable to muster an override vote.)