Category: Shepard

Crony Capitalism or Capitalism?  Licensing Requirements

Watchful folks watch for a tactic used in crony capitalism that works as follows. A businessperson named Goofus gets tired of competition, and rather than providing a better quality good or service or lowering prices, they think of an easier way to defeat the competition. They figure that if they can get the folks that control force to make rules that are good for them, they will be set! Goofus “lobbies” politicians with excuses the politicians recognize are not sound excuses, but all parties play along. Goofus complains that some of his competitors are not good and that maybe someday someone could be harmed.

Some time later, after “years of public hearings, community meetings and much public discourse” a rule or law if drafted. This rule “happens” to place Goofus in the position that makes him “legal” and “responsive to community needs.” Gallant, another person seeking to start providing that good or service is at a disadvantage, and because he is a start-up, can not afford the legal quagmire constructed by Goofus and his political buddies. This is called a “barrier to entry” and while some barriers are natural and good, this once is constructed by force.

Then, to make matters worse, the capitalist Gallant, is lumped into the same category as Goofus, they are condemned as “capitalists.” Gallant IS a capitalist, but Goofus is not, or at best is a “crony capitalist.” Capitalism is good. Crony Capitalism is bad.

Some say that without crony capitalism people without a year’s education would give bad haircuts, that there would be too many boats on the Snake River, that experienced nurses would not diagnose common colds properly, that cabs would be dirty, etc. Lifting rules would create chaos, some say. I disagree. While the buyer would have the responsibility being aware, and indeed, some folks would make lousy purchasing decisions, this true freedom would be best for humanity.

As a thought experiment, let’s examine one vocation, hair cutting. In the political sub-jurisdiction in which I live, Wyoming, a government license is required for a person to cut other folks hair in exchange for money. The alleged reason for this licensing requirement is to keep consumers same from the spreading of disease.

The minimum schooling needed to be eligible for a license is just under 11 months. This time includes classroom and working cutting hair under “direction” of government board approved professionals. After 11 months, a person is then “allowed” to cut other people’s hair.

What about Mary? Mary grew up on a ranch, and watched her mother cut her brother’s hair, her father’s hair and her own hair. In her early teens, she began helping her mom, and even cut and styled her mom’s hair. When busy season at the ranch brought hired help, she also did haircuts for them. By the time she got married at age 19, she had done hundreds of haircuts.

Mary moved to San Diego where her new husband was stationed while he was in the Navy. She cut hair for many of his friends, mostly buzz cuts and crew cuts. Mary watched a couple youtube videos about the danger of sharing diseases and rather than just doing a quick rinse under steaming hot water, she began dipping her tools into a professional grade solution. He husband even built her a black-light box. Not only was he intent on defending his family and neighbors from attack, he was also quite the handyman!

In 2014, Mary and her husband moved to Wyoming to begin their productive lives. They decided that Mary would work part-time and her husband full time. Mary set up a sign in her front yard, “Simple Haircuts for Simply 10 Bucks.” Within a couple weeks, she was contacted by a lady from the Wyoming Board of Cosmetology. She was told that the board had received several complaints and after checking their records they noticed she did not have a license on file. Mary confirmed with them that she did not have a government license. She was notified that she must stop cutting hair until she had the proper licensing documents in place.

Who do you think cared enough about Mary’s offerings to complain to the people with a monopoly on initiating force, the government? Who would be harmed by Mary’s entrepreneurial endeavors? Following the money would lead us first to her competition, the folks in her area that attended the 1-year school and paid for the testing and license. Perhaps the schools that teach hair cutting would be frustrated that she had not paid them to attend their school. Perhaps the government was sore that they had not been paid and given the power of OK-ing Mary’s vocation?

What should Mary and her husband do? Should they move to a freer country like Mexico where the government only requires a bribe of $20 a month to refrain from stopping her productivity?

This would certainly make it easier for Mary to pursue her entrepreneurial happiness, however she wants to remain in the community in which she was born and where her family and friends live. To comply with the extortionist’s demands, Mary would need to pay for a school far away from her home and spend 11 months away from her husband. This is not acceptable. Mary simply wants to use a skill she has developed to earn a bit of money. Mary contemplates the meanings of several words.

Extortion: The practice of obtaining something, especially money, through force or threats
Kidnapping: The crime of seizing and carrying away a person by force or fraud or seizing and detaining a person against his or her will with an intent to carry that person away at a later time.

Mary contemplates the probable outcome of doing what she feels is right, continuing to do as she pleases on her own property without harming anyone. She has received the verbal warning, so if she continues to operate her small peaceful business, the likely next step would be a cease and desist letter from the board. If she ignored this letter and kept running her small business, she would likely receive several more letters, each more threatening and more strongly worded.

The government board would then likely file a complaint against her in a government court, Like any extortion demand, Mary would choose to ignore this summons. This would result in more strongly worded letters from the government court and the government board, including charges of failure to appear, failure to comply, failure to pay etc. If Mary continued to pretend that she lives in a :free country” by ignoring the extortionists, government employees with guns would come onto her property to kidnap her and take her to a room and imprisoning her in it.

Because Mary and her husband do not allow armed violent people to kidnap peaceful people on their property, they would likely defend themselves, and the certain result would be either imprisonment with injury or death.

What about Mary? This thought experiment uses many strong and radical words like “kidnap” and “extortion” and assumes that Mary is trying to make some kind of point. Is any portion of the above thought experiment inaccurate? Is it misleading in any way?

One could argue that when a government does a thing, it is no longer a “crime.” For example, most definitions of laws written by governments (unlike laws written by scientists) include an exception for the government, often by using the word “unlawfully” or similar. Theft is the “unlawful” taking of another’s property… Murder is “unlawful” killing of a person…

Big problems occur when governments meddle in the affairs of those they exercise ownership over. Mary’s example of the cosmetology board is only one example. it is in fact very difficult to start or operate a business in the US. This is sad, because free trade is what makes society function well, and we do not have a free market system in the US. People are labeled criminal by the government for doing peaceful and productive things.

Conclusions:

• We do NOT live in a free country.
• We do NOT live in a free state.
• Government licensing requirements are bad, all of them.

Crony Capitalism or Capitalism?  Licensing Requirements