That’s right. In Louisiana, you can’t sell flower arrangements unless you have permission from the government. How do you get permission? You must pass a test graded by a board of florists who already have licenses. To prepare for the test, you might have to spend $2,000 on a special course.

The test requires knowledge of techniques that florists rarely use anymore. One question asks the name of the state’s agriculture commissioner—as though you can’t be a good florist without knowing that piece of vital information.

The licensing board defends its test, claiming it protects consumers from florists who might sell them unhealthy flowers. I understand the established florists’ wish to protect their profession’s reputation, but in practice such licensing laws mainly serve to limit competition. Making it harder for newcomers to open florist shops lets established florists hog the business.

Other states are considering adopting Louisiana’s licensing law, but before any do, I hope that the law will be stricken. The Institute for Justice, a public-interest law firm, has challenged the licensing in court, saying it violates liberty and equal protection, and so is unconstitutional.

“One of the most fundamental tenets of the American dream is the right to earn an honest living without arbitrary government interference. What could be more arbitrary than saying who can and who cannot sell flowers?” IJ President Chip Mellor says.

Other states have their own sets of ridiculous  licensing rules. In Virginia, you need a license to be a yoga instructor. Florida threatened an interior designer with a $25,000 fine if she didn’t do a six-year apprenticeship and pass a test, at a cost of several thousand dollars. Fortunately, the Institute for Justice got that law overturned.

I’m rooting for IJ because licensing interferes with the freedom to make a living, harms consumers by limiting competition, and protects established firms. It’s an old story. Established businesses have always used government to handcuff competition. Years ago, small grocers tried to ban supermarkets. A&P was going to “destroy Main Street,” the grocers cried. Minnesota legislators responded to their lobbying by passing a law that forbade supermarkets to hold sales. Consumers were hurt.

What about Doctors and Lawyers?

Okay, while licensing of florists, interior designers, and yoga teachers is ridiculous, what about more important professions, like law? Surely people need protection from people who would practice law without a license. Again, I say no. The lawyers’ monopoly on helping people with wills, bankruptcies, and divorces is just another expensive restraint of trade.

David Price recently spent six months in a Kansas jail because he wrote a letter on behalf of a man who was wrongly accused of practicing architecture without a license. When Price refused to promise never to “practice law” again, a judge sent him to jail.

All he did was write a letter. Price didn’t misrepresent his credentials. However, he did save a man from paying $3,000 to a lawyer. Perhaps that was his real offense.

Competition is better than government at protecting consumers from shoddy work. Furthermore, licensing creates a false sense of security. Consider this: When you move to a new community, do you ask neighbors or colleagues to recommend doctors, dentists, and mechanics even though those jobs are licensed? Of course. Because you know that even with licensing laws, there is a wide range of quality and outright quackery in every occupation. You know that licensing doesn’t really protect you.

A free competitive market for reputation protects consumers much more effectively than government can. Today, online services like Angie’s List make it even easier for consumers to get better information about businesses than government licensing boards will ever provide. We do need protection from shoddy businesses. But it’s freedom and competition that produce the best protection.

No one can honestly believe that Louisiana’s flower cartel is necessary to protect consumers from renegade flower sellers. Rather, it is a classic case of protecting favored groups at the expense of consumers and entry-level entrepreneurs.

Such is the state of economic liberty in America today. Across the nation, the basic right to earn an honest living is under attack. Legislators and bureaucrats are teaming up with entrenched special interests to create needless obstacles to countless entrepreneurs’ pursuit of the American Dream. In the past few decades there has been a nationwide explosion of protectionist regulations—while there were about 80 occupations with such barriers to entry in 1981, today there are over 1,000.

An Institute for Justice (IJ) case that recently attracted international media attention vividly illustrates the uncontrolled growth of occupational licensing and the outrageous lengths that a cartel will go to protect all facets of its business from the most harmless of trades.

Mercedes Clemens was threatened with thousands of dollars in fines and criminal prosecution unless she stopped . . . massaging horses. In Maryland two powerful groups decided to monopolize the growing field of animal massage by requiring all practitioners to spend four years in veterinary school—where massage is not even taught.

Suggesting that only people with veterinary degrees are capable of massaging animals is like suggesting that only people with medical degrees are capable of massaging humans. Preventing Clemens—who is a licensed human-massage therapist and certified in equine massage—from working in her chosen trade has absolutely nothing to do with consumer or animal safety and everything to do with the financial interests of the veterinary cartel.

In 2004 the Tenth 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.” And for decades, following the instructions of the U.S. Supreme Court, federal and state courts have stood by while legislators engage in this “favored pastime” at the expense of consumers and entrepreneurs.

Government Protects Special Interests

In the absence of meaningful judicial supervision, politicians have gone to almost any imaginable length to protect special interests. When a powerful lobby demands protection from competitors, governments have been all too willing to invent—and courts all too willing to accept—patently ludicrous excuses for shutting down entrepreneurs. A court upheld Louisiana’s florist-licensing scheme, for example, because requiring florists to take a test, which would be graded largely on the subjective beauty of their floral arrangements, might help protect the public from “infected dirt.”

The true victims of this new “favored pastime” are people like Clemens and countless other Americans, honest individuals whose lives have been turned upside down solely to protect the politically powerful. Such examples are seemingly endless.

In Texas, all computer-repair technicians must now become private investigators. “If you’re investigating or analyzing data, then you should need a little more credentials than someone who just repairs computers,” the legislative sponsor said. The PI license requires a criminal-justice degree—or a three-year apprenticeship under a licensed private investigator. If a consumer knowingly takes his computer to get repaired by an unlicensed specialist, he faces thousands of dollars in fines and a year in jail. This law no doubt benefits special interests, but those benefits come directly at the expense of ordinary repair technicians and their customers.

A new law in Philadelphia will make it a crime in the coming weeks to talk about the Liberty Bell for money without the government’s permission. Unlicensed tour guides will be subject to hundreds of dollars in fines for talking about the place where the Declaration of Independence was written. Perhaps the most well-organized cartelization effort underway in the United States today is in the interior-design industry. A powerful faction of insiders has already put thousands of its competitors, mainly middle-aged and elderly women, out of work.

The American Society of Interior Designers (ASID) represents less than 3 percent of all designers, but its members have designated themselves as spokespeople for the entire industry. In over 30 years of lobbying, ASID has never presented a single shred of evidence to support its extraordinary claim that literally “every decision an interior designer makes affects life safety and quality of life.”

ASID has been relentless in teaming up with legislatures coast to coast in its strategy for total cartelization. IJ has documented these efforts in a study titled “Designing Cartels.”

Such laws exist today for one reason: Our nation’s judicial system fails to protect the right to earn a living. Courts have decided that this fundamental right—economic liberty—is simply not as important as other rights, and less-important rights are thus not subject to meaningful judicial scrutiny and rarely are afforded protection under the law. If the government can simply dream up a conceivable reason for violating economic liberties, even if that reason is based on no facts, the regulations are generally upheld. Amazingly, courts will even help by inventing their own hypothetical rationales for economic protectionism. This system does not just stack the deck—it gives the politically powerful a hand full of jokers.

Thankfully, entrepreneurs are fighting back. Taxicab drivers, African hair-braiders, sign-hangers, waste haulers, casket sellers, and others have battled the odds (with help from IJ) to strike down occupational-licensing schemes.

Mercedes Clemens’s lawsuit has already caused one of the licensing boards to backpedal. The Philadelphia tour guides, now represented by IJ, had a hearing in federal court on October 6. In Texas, computer-repair technicians and interior designers are standing up for their constitutional rights.

F. A. Hayek famously wrote that “the great aim of the struggle for liberty has been equality before the law.” That is precisely what the fight for economic liberty is all about.

Such is basically the tale of Lafayette, Louisiana, and it reflects what to many is a disturbing trend of municipalities offering broadband as if it were a public utility like water or sewerage. The story, now known as “The Battle of Lafayette,” also reveals the symptoms of “demosclerosis” — Jonathan Rauch’s term for government failure due to rapacious special interest.

We tend to associate what economists call “rent-seeking” with Washington, D.C., where parasites stand to gain by lobbying for either anti-competitive regulation or subsidies. Benefits accrue to only a few groups: those on whose behalf the lobbyists are working, the politicians (in the form of perquisites and happy district constituents), and the lobbyists and lawyers themselves. The costs are spread thinly over the rest of us in the form of higher taxes and/or a dead-weight loss to the economy.

But Washington has no monopoly on rent-seeking. At the municipal level its consequences can be dire. The concentrated benefits and dispersed costs are more difficult to mask when you’re talking about a hundred thousand people versus three hundred million.

Parasites? Isn’t that a little unfair? After all, the people of Lafayette have legitimate concerns. They want to develop—that is, to keep up with the rest of the country technologically lest they be left behind. As they see it (and by “they” I mean the town council, the folks demanding broadband, and the government-controlled public utility), a $135 million investment is an investment in infrastructure—something that should be considered a public good for the people of Lafayette. They had been perfectly willing to let so-called “incumbents” (BellSouth and Cox Communications) come in and provide this good at a reasonable price. But Big Telecom didn’t. Therefore, shouldn’t the people of Lafayette have a right to connect more quickly? Shouldn’t they have broadband too?

The unfortunate aspects of this view are manifold. First, it fails to take into account the wider implications of municipalizing broadband (to which we’ll turn in a moment). Also, some of the best and brightest technologists on earth are behind these efforts, giving folks the impression that brilliant coders know what’s best for the economy simply because they might have worked on protocols for the Internet. But more unfortunate still is that the Lafayette scenario could set a precedent for other municipalities to work under the mistaken notion that government-owned and government-operated broadband is a good idea.

Intellectual honesty check: shouldn’t we wonder why Big Telecom didn’t come to Lafayette? Some say these companies are driven only by their lust for profit. Yes. But the better answer is that it was cost-prohibitive. In other words, no one thought he could do it without operating at a loss. If anyone in Lafayette really thought he could make money providing broadband, why didn’t he seize the entrepreneurial opportunity rather than see broadband as a good that should fall like manna from heaven or from the Lafayette Utility Service?

The Citizen’s Action Committee for Fiber-Optic Broadband (or whatever) knew exactly what Cox and BellSouth knew—that broadband in Lafayette was a losing proposition. Despite however many “market studies” the government and Chamber of Commerce can trump up, the proof is ultimately in the unwillingness of Cox and Bell South to move into the Lafayette market. Thus the only way for the interest group to get what it wanted was simply to take it from other citizens.

Lafayette isn’t walking this road alone. Other towns are doing it. And they’ve got the beginnings of a D.C.-sized interest group forming behind them as I write. In fact, the demand for immediate universal broadband was the dominant theme at the recent Freedom to Connect (F2C) conference in Washington. (Don’t be confused by the name. “Freedom to Connect” is a freedom in the same way that a “right to health care” is a right.) The “monopolists and duopolists”—goes the story—have priced most people out of the market. And the gross disparity between the broadband haves and have-nots is due to the profit-seeking behavior of the usual suspect—Big Telecom. So for adherents of the open-access movement to be “free to connect” amounts to varying degrees and means of broadband socialization. Here are a few of those proposed means:

• Encourage municipalization of broadband, exemplified by the Lafayette case. (In other words, allow local governments to begin entering the market.)

• Change the FCC’s framework from regulating the entire telecom service to focusing on companies’ horizontal layers, for example, content, application, network, or physical infrastructure.

• Use tried-and-true trust-busting in court.

• Appeal to legal precedents like ” nondiscriminatory” rules, such those used against railroads and seaports over a century ago, which forced property owners to lease their services to all comers. (The recent Brand X decision by the Supreme Court protected cable companies from being forced to open their lines to broadband competitors.

Curiously, all these nostrums are suggested in the name of greater competition.

But we should step back and ask: what creates big broadband duopolies? Sometimes it’s simple economies of scale. If you want a big, expensive project done, you need a big, expensive company to do it—of which there are not many. Barriers to market entry for smaller companies often come simply in the fact that the initial capital investment is too big. Even if we overlook other barriers to entry created by the current regulatory regime and costs such as city fees, we still have an expensive venture in building a broadband infrastructure. Entrepreneurs in Lafayette know this. But since the municipality will act with taxpayer money and spread both the risk and the costs over its citizenry, it won’t have to behave according to pesky market laws.

As in many other efforts to save the world by distorting the laws of supply and demand, advocates of “open access” say that within the United States there are a number of “digital divides,” between rich and poor, between urban and rural, and between white people and certain minorities. To bridge this divide, government must take action. To illustrate this, they go on to cite broadband-access rates in other countries to show that U.S. per capita broadband access is lagging. (My own statistics come from the Congressional Budget Office.)

So why aren’t the rates greater in the world’s richest nation? The reasons are numerous , but require only a modicum of common sense. Consider the size and population density of the United States. Now consider the size and population density of the world’s broadband leader, South Korea. The economies of scale for offering broadband to every person in South Korea are considerably different from those in most of the United States.

According to CountryStudies.us , “South Korea was one of the world’s most densely populated countries, with an estimated 425 people per square kilometer in 1989—over sixteen times the average population density of the United States in the late 1980s.” One will find that other, more-densely populated and culturally homogenous counties are “ahead” of the United States in Internet access, since (naturally) it’s cheaper and less risky to invest in broadband infrastructure in densely populated areas.

Even in a large country like Canada (said to rank number 2 in the world behind Korea in broadband adoption), 90 percent of the Canadian population lives within 100 miles of the U.S. border, government broadband subsidies notwithstanding. Again, common sense says that as the technology matures and as the price goes down, access rates will increase—even into the thickets of rural America and the public-housing blocks of Detroit.

Why the Divide?

Great. But why is there a broadband divide between ethnic groups in the United States? Aren’t poorer people priced out of the market by monopolists? Or is it creeping racism? Maybe. But if such were true, wouldn’t people similarly be crying foul about other divides?

With other technologies, divides hardly exist, if they exist at all. Consider mobile phones, which are comparably priced to broadband connections on a monthly basis. What about videogame consoles? Aren’t Xbox and Playstation the products of a duopoly? Television sets, cable, and DVD players? Again, divides here are virtually nonexistent. Why the difference?

The reason may be that people place different values on these things, and those values can be an ethnic and cultural phenomenon. As unfortunate as it may be to middle- and upper-class America, a family in the inner city may place greater value on a Playstation or a cell phone than on broadband. Someone living in a rural area may be more likely to invest in a satellite dish than an Internet connection. We all face opportunity costs.

We can’t assume that a bar graph about broadband access can tell us anything other than what groups of people are more or less likely to value. “Well,” one might say, “they ought to value broadband because it can provide so many more opportunities for them.” Fortunately, markets don’t work by what intellectual elites think people should have.

And what about the satellite dish? Isn’t this another example of a competitive technology that filled the void in the lives of rural people that cable was unable to fill? Given another year or so, analogous technologies will begin to fill any broadband void that might be out there—especially if the U.S. government will let go of more of the spectrum.

The speed of innovation is blinding. Before World War II, Stalin built state-of-the-art factories in Russia. By the time the Soviet Union collapsed in the 1990s, the people of Russia were still using post-World War II factories. The point is that government projects are notoriously bad at keeping up with the pace of technological change.

Have you ever heard of Minitel? If so, probably only as the butt of a techno-geek’s joke. Minitel was the French government’s proto-Internet—a communication device designed for use by every French citizen. Of course, Minitel was soon forced into virtual obsolescence by the Internet and arguably never paid itself off (even by the standards of state utilities). The mantra of the tech market is: Better. Faster. Cheaper. Now say it again fast.

The irony in all this is that for the Louisiana case, poor, hard-working taxpayers will have to shoulder much of the burden to subsidize the more well-to-do people of Lafayette who want broadband. There are some vital questions the city leaders should be asking: Are we making the best possible use of other people’s money? Given a finite set of tax revenues, are there more important things that we could be investing in? Is the water clean? Are the police and firemen adequately equipped? Are we going to hang the town on too risky a venture? If the city is wrong about this broadband bet, Lafayette can kiss sewage treatment and police cruisers goodbye.

Tierney says that among Louisiana officials, “there’s even been talk of letting Wal-Mart take over FEMA’s job. The company already has its own emergency operations center, where dozens of people began preparing for the hurricane the week before it hit by moving supplies and trucks into position. . . . I’m afraid the Wal-Mart Emergency Management Agency will be a tough sell on Capitol Hill. But I’d vote for WEMA.” At the least, he suggested, Wal-Mart chief Lee Scott should run FEMA.

But Tierney misses an important point. Wal-Mart did so well precisely because it is not a government agency or contractor. There is no reason to believe that Scott could run FEMA better than a political appointee or career bureaucrat. This is not meant as an insult. Rather, it’s a comment about bureaucracy. There’s an old conservative idea that government can be run like a business, but years ago Ludwig von Mises, in his 1944 classic, Bureaucracy, showed this to be a misconception.

In that little book Mises contrasts the essential nature of a government bureau with that of a for-profit enterprise. As he points out, these forms of organization could not be less alike. An enterprise can prosper only if it pleases consumers, who are free at any time to take their money and search for satisfaction elsewhere. Thus business owners have an infallible guide to how well they are doing: the profit-and-loss sheet based on market prices for both inputs and outputs.

This combination of consumer sovereignty, free competition, and the price system—which all flow from the same thing: individual liberty—enables enterprises to perform efficiently. That is why market-based societies are far more prosperous than socialist societies and why freer economies do better than more-regulated economies.

A bureaucracy, in contrast, is missing the feedback so essential to capitalist success. It gets its revenue not through the free choices of consumers, but rather from coerced taxpayers who must pay for “services” whether they use them or not, or like them or not. Competition is barred (or hampered), and the “services” are not priced on the market. As a result, a bureaucracy has no need to please consumers and faces no profit-and-loss test. It cannot calculate as a business can. The pro-consumer rule of business, “Make a profit,” cannot apply to a bureaucracy, so it instead is required to follow pages of procedural regulations that bear no relation to “customer” satisfaction.

A key implication of the difference between bureaucracies and enterprises is that the former’s problems are not merely matters of personnel. Thus what ails a bureaucracy cannot be cured by turning it over to a businessman. Mises writes, “It is vain to advocate a bureaucratic reform through the appointment of businessmen as heads of various departments. The quality of being an entrepreneur is not inherent in the personality of the entrepreneur; it is inherent in the position which he occupies in the framework of market society.”

In other words, the businessman won’t change the bureaucracy; the bureaucracy will change the businessman. If we want agencies responsible for emergency services to perform as well as Wal-Mart does, they must be where Wal-Mart is: in the marketplace.

***

Hurricane Katrina illustrated not only the damage that nature can wreak, but also the damage that government can wreak. Most people would find it counterintuitive that we’d be better off with “price gouging” and without the Federal Emergency Management Agency, but as Dwight Lee shows, in this case the counterintuitive is correct.

One of the few constructive parts o f President Bush’s unprecedented pledge to rebuild New Orleans and the rest of the wracked Gulf Coast was his short-lived suspension of the Davis-Bacon Act, a legal wage-fixing scheme for federal construction. George Leef explains why the President should have stuck to his guns.

Eighty years ago this month a man was born who would grow up to be a great educator for the freedom philosophy in his country, Guatemala. Donald Boudreaux tells the inspirational story of former FEE trustee Manuel Ayau, who’s still going strong.

Stripped of economic jargon, import quotas and tariffs are nothing but forcible interference with individuals’ peaceful exchange across national borders. What, asks Manuel Ayau, could be more presumptuous?

After the terrorist attacks of 9/11 the federal government stepped in to bail out the struggling airlines. How did it do? Paul Cleveland and Michael Tucker look at the record.

A Chinese government-owned oil company tried to buy Unocal, but a coalition in Congress made sure the acquisition would not occur. Was that a good thing? See what James Dorn has to say.

With the Labour Party firmly in control and Gordon Brown set to succeed Tony Blair as head of the party, what’s in store for Great Britain? Norman Barry reports from the scene.

Here’s what our columnists have come up with: Richard Ebeling makes the case for monetary freedom. Lawrence Reed optimistically describes liberal activities in Africa. Thomas Szasz explores the meaning of mad genius. Burton Folsom relates tales from the annals of unpredictable entrepreneurship. Walter Williams continues his Economics for the Citizen series. And Robert Murphy, irked by the claim that Hurricane Katrina proved that government is too small, booms, “It Just Ain’t So!”

Books undergoing examination by our reviewers deal with the persistence of poverty in Latin America, energy, economic rights, and global warming.

This being our December issue, we wind up, as usual, with the year’s index.