Julie Murphy is only seven years old, but she embodies the classic American zeal for entrepreneurship.
She learned about lemonade stands after seeing one in a cartoon. She got excited and wanted to open one of her own. And so Julie’s mother worked with her to get everything together and set up shop at a fair in Northeast Portland, Oregon.
20 minutes after opening, a government official approached and asked for their $120 occupational license. Of course, they had no license.
And so 7-year-old Julie, the budding entrepreneur, was told to shut down her lemonade stand or face $500 in fines.
Julie and her mother were encouraged by others to keep the stand open and ask for donations instead. Business picked up, and the regulators returned. This time they made Julie cry. They also got their wish: Julie’s mom shut down the lemonade stand.
Unfortunately, this is not an isolated case of licensing gone wild. Rather it is a classic example of a national problem that affects countless people in America every day. Institute for Justice President Chip Mellor wrote this week in the Washington Times:
Mired in a nationwide jobless recovery, state and local governments have the power to create jobs and transform communities if they do one simple thing: Get out of the way of aspiring entrepreneurs.
Unfortunately for small businesses, however, laws restricting economic liberty are becoming more commonplace in America. Consider that since the 1950s, the percentage of occupations in the United States that require people to obtain permission from the government in the form of a license before they can pursue their chosen occupation has grown from a mere 5 percent to more than 30 percent.
Consider a few recent IJ cases:
- In Philadelphia, it is illegal to talk about the Liberty Bell for money without permission from the government. Unlicensed tour guides are subject to hundreds of dollars in fines for talking about the place where the Declaration of Independence was written.
- In Texas, eyebrow threaders are getting hit with $2,000 fines. Bureaucrats expect threaders with up to 20 years of experience to immediately stop working and spend approximately $20,000 obtaining 1,500 hours of instruction from government-approved beauty schools that do not even teach threading.
- In Maryland, Mercedes Clemens was threatened with thousands of dollars in fines and criminal prosecution unless she stopped . . . massaging horses. The state’s veterinary cartel said only veterinarians could work in the growing field of animal massage. All practitioners were forced to attend four years of vet school, where massage is not even taught, or shut down their businesses.
- Until IJ filed suit, it was illegal in Louisiana to sell and arrange flowers unless you had permission from the government. You had to pay for a special license, which required you to take a test that was graded by existing florists. When IJ first filed suit, it was harder to pass the flower test than to pass the Louisiana bar.
At best, these laws simply create pointless red tape. IJ recently profiled a series of entrepreneurs in a campaign called The Power of One Entrepreneur. These studies demonstrate that the best way for government to encourage economic growth and job creation is simply to stop preventing people from growing the economy and creating jobs.
At worst, these laws allow powerful insiders to protect themselves from competition. Sadly, federal courts have sanctioned this abuse of government power. In 2004 the 10th U.S. Circuit Court of Appeals wrote in Powers v. Harris:
[W]hile baseball may be the national pastime of the citizenry, dishing out special economic benefits to certain in-state industries remains the favored pastime of state and local governments.
Our courts should not allow such blatant protectionism to occur. And our legislators need to stop handing out special favors to politically connected groups–and do away with the needless barriers to entrepreneurship.
Does anyone really believe that Julie Murphy should be fined $500 for operating her lemonade stand?
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