IJ's New City Studies: Want to Create Jobs? Remove Red Tape.
The Institute for Justice’s city studies feature real-world entrepreneurs from eight different cities across the nation. Chicago entrepreneur Dee Busch, left, says requiring her to obtain a landscape architecture license would only raise the cost to consumers; it would not raise the quality. When Nick Harris started Nick’s Towing Service, he could work anywhere in the city of Houston. But the city gave just 11 towing companies the exclusive right to freeway tows, and now Nick is shut out of the freeway market.
By Dana Berliner
Since our founding in 1991, the Institute for Justice has litigated to free would-be entrepreneurs from arbitrary and abusive government action. In that span, we have represented hairbraiders, casket sellers, computer repair techs, book peddlers, florists, vacuum vendors, interior designers, bagel and doughnut shop owners, eyebrow threaders, taxi drivers, limo drivers, van drivers, tour guides, people who file horses’ teeth and even a person who massages horses for a living.
Watching the alarming growth of regulation and red tape imposed on small businesses, we recognized that even more needs to be done to protect the rights of small business-people. IJ launched a nationwide campaign to promote economic liberty, which, of course, includes more litigation. But we also thought it was vital to expose how government barriers affect individual entrepreneurs throughout the country. And so, thanks to a grant from the Diehl Family Foundation, the Institute for Justice spent the past year conducting studies identifying barriers to entrepreneurship in eight cities around the nation—Chicago, Houston, Los Angeles, Miami, Milwaukee, Newark, Philadelphia and Washington, D.C.
Cities and states throughout the country hamper entrepreneurship and job creation at virtually every turn, burying them in mounds of paperwork; lengthy, expensive and arbitrary permitting processes; pointless educational requirements for occupations; or even just outright bans.
In every city we studied, overwhelming regulations destroyed or crippled would-be businesses at a time when they are most needed. For example, to operate a used bookstore in Los Angeles, the government demands that the owner get a permit from the police; record the personal information of everyone who brings in books for exchange or resale, including their names, addresses and book titles; and make this information available to the police. In some cases, the bookstore owner even has to thumbprint patrons who bring in books and file daily reports with the police. In Washington, D.C., to give sightseeing tours for compensation, the city requires you to first get a government-issued license. Similar requirements exist in Philadelphia and elsewhere. So, as tour guides pass the National Archives, which houses originals of the Constitution and the Bill of Rights, they don’t have the freedom to describe those charters of freedom without first getting the government’s permission.
Time and again, these reports document how local bureaucrats believe they should dictate every aspect of a person’s small business. Government officials want to choose who can go into which business, where, what the business should look like and what signs will be put in the windows. And if that means that businesses fail, or never open, or can operate only illegally, or waste all their money trying to get permits so they have nothing left for actual operations, that’s just too bad. This attitude would be bad enough in prosperous times, but in a period of financial strain and high unemployment, it’s also incredibly foolish.
The studies were released in October and have already received significant media coverage, including an editorial from The Wall Street Journal, an op-ed I co-authored with Chip Mellor for USA Today online, and op-eds and news pieces in the cities studied.
In the coming months, we will use these studies as a source for new litigation, to advance the cause of entrepreneurs nationwide and to remove some of the barriers that crush entrepreneurs struggling to start or grow their businesses.
Dana Berliner is an IJ senior attorney.
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