Opinion: Daily Journal

Talk About A Restraint of Trade

RALEIGH – Ever feel like you are the victim of forces beyond your personal control? That some big institution is taking advantage of you to line the pockets of well-connected special interests?

Well, you certainly aren’t alone. Such feelings are commonplace. Only, don’t assume that you can take your concerns to someone in state government for redress, because it is state government itself that is often the culprit.

Daren Bakst, the John Locke Foundation’s policy analyst for legal and regulatory issues, took notice of a lawsuit filed recently by Attorney General Roy Cooper alleging a “restraint of trade” by a gasoline distributor. No big news here, of course. Oil-price spikes cause otherwise-sensible politicians to lose their rational faculties. What is interesting about this case is what Bakst chose to do next: detail the many ways that state government, through manipulating access points to markets and professions, pushes up prices for consumers.

“When a business restrains trade, its effects will be limited to that particular market,” Bakst wrote. “When a state such as North Carolina restrains trade, its effects are far-reaching and can reach across an entire industry. State-imposed trade restraints are much worse.”

Government-mandated restraints of trade come in many forms. Take haircuts — but don’t try to give them without a license!

Because North Carolina imposes licensing requirements on the barber profession – a practice that is at best outdated and at worst ridiculous – the supply of barbers is artificially restricted. The result is that haircuts cost more than they otherwise would. If the law didn’t forbid it, would you consider going to a barber who had fewer than 1,528 hours of formal training in barber school if it would save you several dollars? I certainly would. In fact, I’d prefer an experienced barber with no formal training to a new graduate of the Massachusetts Institute of Trimology.

Another example is the state’s certificate-of-need regulations. Supposedly imposed on medical providers to reduce health care costs, these rules do little more than give exclusive monopolies or oligopolies to providers who happened to be in the right place at the right time. (Dr. Roy Cordato, JLF’s vice president for research, will summarize the deleterious consequences for patients and competitors in an upcoming policy report.)

Not only is the attorney general’s office failing to challenge these anti-consumer regulations in court, it is actually charged with enforcing them in cases that necessitate legal action. It’s time to change the presumptions here. The General Assembly should subject all existing policies to rigorous scrutiny. “If the state is serious about reducing unfair trade practices,” Bakst concluded, “then it should start eliminating its own anti-competitive laws.”

Hood is president of the John Locke Foundation.