Nowadays more and more people are paying attention to the abuse of occupational licensing laws that block people from earning a living without the government’s permission. But there’s a particularly nasty type of licensing law that we call the Competitor’s Veto: laws that allow existing businesses to block you from opening a new business unless you first get permission from your own competitors.
In today’s Real Clear Policy, I explain how these absurd and unconstitutional laws work in practice:
The Constitution’s guarantee of “due process of law” prohibits states from using licensing laws solely to benefit cronies. That guarantee, as the Supreme Court has explained, “forbids arbitrary deprivations of liberty,” but a law that blocks some people from practicing a trade merely to increase the profits of those with more political clout arbitrarily violates the right of those less privileged to earn a living. That’s why the Court declared in 1957 that licensing laws “must have a rational connection with the applicant’s fitness or capacity to practice” the trade. My colleagues at the Pacific Legal Foundation and I sued on Bruner’s behalf, arguing that Kentucky’s CON law deprived him of his constitutional right to earn a living. Last February, a federal judge struck down the law, labeling it a “Competitor’s Veto” that allowed established firms to “essentially ‘veto’ competitors … for any reason at all, completely unrelated to safety or societal costs.”
That victory was only the first step. As part of our nationwide campaign against Competitor’s Veto laws, my colleagues and I are now challenging CON requirements in Montana, Nevada, and other states, and previous cases persuaded Oregon and Missouri to repeal similar restrictions. Such laws make no pretense at protecting the public; they exist to protect businesses who don’t want to compete economically and want to outlaw entrepreneurship instead.