Tag: state

Naked economic protectionism — constitutional?
By Ryan Long

Naked economic protectionism — constitutional?

Many of us like certainty. Death and taxes are two things we can be certain about. But should our choice of who we buy our casket from, if we buy one, when we die be dictated by the state? No, says the New Orleans based Fifth Circuit Court of Appeals in its March, 20, 2013 decision in St. Joseph Abbey v. Paul Wes Castille, et. al. This is a good thing. It means the state cannot protect an industry from competition without justification. What implications, if any, the decision on has on similar federal laws remains to be seen.

A group of Louisiana priests brought suit against members of the Louisiana State Board of Embalmers and Funeral Directors because of a law that prohibited the priests from making, and selling, caskets. According to the law, the priests needed to be funeral directors to do that. But becoming a licensed funeral director in Louisiana is expensive and time consuming. The priests claimed that the law violated the equal protection clause because it had no rational basis to a legitimate government interest, and that it was an unconstitutional taking of property without due process.

The Fifth Circuit agreed. Louisiana, after all, allows anyone to build their own casket for personal use, and doesn’t even require a citizen to be buried in a casket at all. The state also allows its citizens to buy caskets out of state. In any event, the Court reasoned, the requirements to become a funeral director have nothing to do with casket making. Thus, there was no rational relationship between the law and a legitimate government interest.

The most important part of the Court’s ruling is its rejection of naked economic protectionism. Under this view, the state has a legitimate government interest in the protection of a particular industry from competition even when there is no corresponding benefit to the public interest or general welfare. The Court said Louisiana could not protect funeral directors from competition by the priests merely because, say, they have a stronger lobby in Baton Rouge.

It remains to be seen whether the case goes to the Supreme Court. If it does and is affirmed, some federal laws and regulations may be in greater danger of being invalidated as naked wealth transfers to a special interest with strong ties in Washington D.C.

Don’t put the regulatory cart before the entrepreneurial horse.
By Ryan Long

Don’t put the regulatory cart before the entrepreneurial horse.

“We cannot regulate our way out of this.” Mr. Charles Schwab makes this great point about the futility of using regulation as the silver bullet for our recession woes in Every Job Requires an Entrepreneur. And yet the WSJ reports in As Federal Crime List Grows, Threshold of Guilt Declines (“Threshold”), that criminal laws are burgeoning at break neck speed and that many teeter on strict liability. This means you can go to jail for violating an obscure law even if you didn’t know about it. Congress needs to regulate less, more clearly when it does, and with the need of a lot more mens rea.

As the Threshold article points out, mens rea is a Latin term that refers to “guilty mind,” which in the law means that you know what you are doing is against the law, like when you rob a bank. But when you kill an obscure fish in the middle of Maine and cook it for dinner, you may have no idea that the fish is on the federal list of endangered species. Unbeknownst to you, your dinner may subject you to criminal penalties and/or jail time.

The problem in discarding the mens rea requirement is that it makes it too easy for the government to make any one of us criminally liable for being an unintentional contributor to the demise of an endangered fish. We live in an increasing regulatory state that is saturated with statutes, regulations, and judicial decisions. The meaning of these sources of law is sometimes ambiguous to even the most well trained lawyers. As a result, entrepreneurs are operating in more uncertain regulatory times, which exacerbates the financial crisis.

That’s why Mr. Schwab’s statement is so apt. It seems many in Washington think that Washington is the answer. It is not. As Mr. Schwab points out, American entrepreneurs are the answer to our problems. To the extent we seek refuge in the labrynth of laws and regulations coming out of Washington, we are putting the regulatory cart before the entrepreneurial horse.

Bloomberg’s Gotham — where fun and freedom come to die.
By Ryan Long

Bloomberg’s Gotham — where fun and freedom come to die.

I hate when people smack their mouths when they chew gum.  But I wouldn’t want the Bloomberg administration to pass a law banning it in New York City. The city has better things to do with my tax dollars, such as improving public schools. And yet this is the path the administration seems to be on, as Mr. Moynihan points out in Bloomberg’s Nanny State Targets Street Food.

The Nanny State article shows why regulation can be very dangerous: entrenched competitors, in the form of brick and mortar restaurants, want to use the state to make it more difficult for trucks selling street food to do business. The city encroaches on individual liberty for a private purpose. This should not be the province of city government, or any government, for that matter.

Of course, regulation has another negative consequence: it limits liberty. Smokers were easier targets than the street vendors for the city. That’s why Bloomberg first targeted smokers with his smoking ban in not only bars, but in parks, too. While I am not myself a smoker, I think this was going too far, too. With bars, the argument is that you are in a closed space and so smokers shouldn’t be able to impose their externality on non-smokers. I get it. That is not the case with the park. And yet, unlike with the park, most people go to bars to drink booze and more often than not get drunk. Their purpose is not health. Quite the contrary. Secondary smoke is part of the package. Bars should be free to choose whether or not they outlaw smoking. That will leave the right to choose where it should be — with consumers.

In the case of New York City parks, smokers should have the right to use them, too. I am exposed to all sorts of pollution by choosing to live in New York City. Smelling some smoke in a park is not the worst of them. I hate when people smack their mouths when chewing gum, and when they blow loud bubbles, on the streets and subways. If I were mayor, I would pass a law banning those things, in addition to: sagging pants, tank tops on men, yelling in public, too much perfume (or cologne), too much popcorn eating, too many Yankee hats, live music on weekdays, impromptu music in parks, among others. At some point, such heavy handed regulation by the city will make Gotham the place where freedom and fun come to die.