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Oh, What a Tangled Web We Weave
by Timothy Keller , The Institute for Justice, special for The Goldwater Institute
2 December 2003

Institute for Justice staff attorney Tim Keller describes how burdensome state, county and city regulations cut many would-be entrepreneurs out of the market. The op-ed is related to a new Goldwater Institute report on the topic.

Is Arizona really a “Land of Opportunity?"

For three years, 23-year-old Essence Farmer, an Arizona native, earned an honest living in Maryland working as an African hairbraider, braiding hair for 40 or more clients per week. Prior to moving to Maryland to go to college, Essence braided hair semi-professionally from her parents’ Arizona home, so she found hairbraiding to be the perfect occupation to help her work her way through school.

Upon returning to Arizona, Essence decided she would open her own hairbraiding salon, Rare Essence, in downtown Phoenix. It looked like smooth sailing at first, but her dreams have run aground on Arizona’s occupational licensing laws.

The State Board of Cosmetology requires anyone who wants to so much as style hair (and charge for it) to attend 1,600 hours of classroom instruction and pay $10,000 in tuition. But the cosmetology curriculum does not teach African hairbraiding. And braiding is an all-natural technique that requires no chemicals. So the cosmetology training provides Essence with virtually no additional skills to enhance her hairbraiding practice.

And that is just the tip of Arizona’s regulatory iceberg.

A new Goldwater Institute report, Burdensome Barriers: How Excessive Regulations Impede Entrepreneurship in Arizona, examines the entrepreneurial atmosphere in Arizona and exposes the many invisible obstacles to free enterprise. The study examines entry-level businesses, those that need very little capital and no formal training, that should provide market access to the economically disadvantaged, including young women like Essence Farmer.

From taxicabs to street vendors and from cosmetology to childcare, the state, counties, and cities have erected a regulatory morass of overlapping jurisdictions that confuse even the most sophisticated of entrepreneurs.

Barriers that impede entrepreneurship infringe on one of our most precious, but oft-forgotten, civil rights: the right to engage in the occupation of one’s choice without arbitrary or irrational government interference.

Proponents of occupational licensing laws typically justify them on health and safety grounds. But such concerns are often a cover for protecting vested interests in regulated industries, and regulations often achieve little more than the creation of government-imposed cartels.

Americans disfavor cartels because they allow producers and service providers to join together to manipulate prices, restrain competition, and obtain monopoly power. A prime example is recent legislation creating a massage therapy board to license massage therapists. The new law requires would-be massage therapists to take 500 hours of classroom instruction covering a wide range of healing modalities that many therapists never utilize. To put those 500 hours in perspective, look at one senior therapist at the posh Scottsdale Princess, who excels with only 200 hours of training.

Massage therapy schools were some of the strongest proponents of the new regulations. Of course, those schools have a vested interest in adding to their enrollment. It is hard to buy the arguments of massage schools when they say that regulations are necessary to protect public health and safety. After all, the harmful activity typically cited by the massage industry--prostitution--is already illegal. Why not enforce existing laws rather than impose new costs on honest entrepreneurs?

Stories of young entrepreneurs like hairbraider Essence Farmer demonstrate the tangible benefits of liberty. Without the state’s irrational licensing scheme, Rare Essence Hair Salon would be an exciting start-up venture, providing much-needed jobs and generating payroll tax revenue.

Unfortunately, state-sanctioned cartels such as the State Board of Cosmetology protect the special interests of those already licensed rather than protecting consumers from harm. The cosmetology licensing scheme also protects the interests of cosmetology schools. Those 1,600 hours mean increased tuition and increased profits for such schools.

It is time to untangle the mess made by occupational licensing laws. Arizona could start by immediately exempting African hairbraiders from the cosmetology licensing regime. But the state should conduct an honest evaluation of all occupational licensing boards to determine if those schemes truly benefit consumers and not just the licensing agencies and special interests.

If Arizona governments set businesses free from burdensome and needless regulations, they will open the way for hundreds of low-income and minority entrepreneurs who would be taking the first step up the proverbial economic ladder.

Tim Keller is a staff attorney at the Institute for Justice Arizona Chapter and the author of a new Goldwater Institute report, Burdensome Barriers: How Excessive Regulations Impede Entrepreneurship in Arizona, available online at http://www.goldwaterinstitute.org/article.php/378.html.

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