Center for Free Enterprise
Around the country, states have imposed licensure requirements on a large number of professions, effectively requiring workers to seek government permission—and pass through a number of bureaucratic hurdles—in order to practice their chosen profession. Whereas in the 1950s only one in 20 U.S. workers were required to obtain a license, that figure today stands at almost one in every three workers.
For each licensed profession, state legislatures usually authorize and empower a governing board, comprised in most cases of members of that same profession. For example, in Utah, the licensure of chiropractors is regulated by a board made up of four chiropractors and a token “public member” who is not a member of the industry. Nurses are regulated by a board comprised of nine fellow nurses and two public members. Direct-entry midwives are overseen by four licensed people from the profession and one “public member.” The trend holds constant for the other several dozen licensed professions in Utah.
That trend may soon change in light of a U.S. Supreme Court opinion issued in February that may put these boards on the defense. The case at hand, North Carolina State Board of Dental Examiners v. FTC, arose due to the dental board—comprised primarily of dentists—engaging in non-competitive behavior and being sued by the Federal Trade Commission. Specifically, the board attempted to prohibit non-dentists from providing teeth whitening services, presumably because this competition undermined their monopolistic hold on the market.
Governor Herbert declared November 29th as “Small Business Saturday.” This was a well needed reprieve from the anti-business Thursday just one week prior when the Utah Insurance Department attempted to shut down online HR startup Zenefits, or the previous anti-business Tuesday when the Salt Lake City Council decided to impose unnecessary regulations on ridesharing apps Uber and Lyft. When it comes to creating a business-friendly regulatory environment in Utah, government officials know how to talk, but do they know how to walk?
We applaud the Governor for his recent work to reduce administrative regulations on business but are left to wonder, in light of recent events, if the momentum is beginning to sputter.
In 2013, a San Francisco startup, Thumbtack, surveyed 12,000 small business owners around the country to find out which states provided the best environment for business. They found that Utah was the most business friendly state in the nation and subsequently decided to locate their customer support operation here where they are now growing rapidly. Utah received an A in the regulatory category in the 2013 survey and improved to an A+ in 2014, indicating low regulatory burdens on small business in Utah. Utah has also ranked as the number one state for business for three years in a row by Pollina Corporate Real Estate and tops the list in a number of other rankings.
Next Tuesday, the Salt Lake City Council will be voting on a proposed change to its ordinances regarding ground transportation services.
After Libertas Institute broke the news of $6,500 citations being given out to Lyft and Uber drivers operating outside the parameters of existing ordinances, which neither contemplate nor address ride-sharing services, heightened public attention brought significant opposition to the city’s treatment of this innovative new service.
Both of these companies have now publicly opposed the proposal, arguing that it imposes unnecessary and onerous burdens.
Earlier this week, a new audit of the Governor’s Office of Economic Development (GOED) was announced and discussed, in which the government agency was accused of manipulating data, misleading the public, and giving special treatment to certain businesses over others.
GOED’s own press releases support the latter allegation.
On August 14, GOED published a press release in which they announced a new tax credit incentive awarded to Overstock, a popular online retailer headquartered in Salt Lake County. Upon committing to creating 333 new jobs over the next 10 years, with wages and benefits at 200 percent over the county average wage, Overstock was awarded a 20% tax credit by GOED over 10 years.
Standing alone, this is likely a welcome incentive for Overstock and a reduction of their tax burden which will facilitate job creation and business growth. Stacked against another incentive, however, it becomes clear that Overstock (and many other companies competing for employees) has been placed at a financial disadvantage.
A newly released audit of the Governor’s Office of Economic Development—an institution of which we have often been critical—claims that their primary tactic to lure business into the state entails “questionable incentive awards.”
The audit also alleges corruption within the office in the form of manipulation of data. “GOED regularly reports inaccurately” on certain items, and “provided special treatment for some companies by altering post-performance assessments for companies that failed to meet GOED’s contractual threshold.” Further, the audit alleges that GOED has:
- used existing company employees to inflate wages of new employees in order to gain corporate incentive awards;
- used incorrect benchmarks to improperly issue an economic development tax increment financing award;
- removed low-paying jobs from averages; and
- handed out incentives to companies that failed to meet the wage criteria under their contracts with the state.
House Bill 105 from this previous legislative session had two important but distinct parts. The widely popularized portion related to legalizing cannabis extract for medicinal use, and earlier this year the Department of Health created administrative rules to implement this program.
The second portion of the bill, which few realize was included, authorized the Department of Agriculture, or any qualifying higher education institution, to “grow or cultivate industrial hemp for the purpose of agricultural or academic research.” Last week, the department issued its proposed rules to administer this program.
Upon review of the proposed rule, Libertas Institute has identified four problematic portions that deal with the department exceeding the authority they were granted under passage of H.B. 105. We have issued a letter, embedded below, to the Department of Agriculture seeking amendments to the proposal prior to its final enactment.
Salt Lake City, enforcing its arcane, anti-free-market transportation laws, has been imposing $6,500 fines on Lyft and Uber drivers. City officials argue that its laws are necessary for public safety, which is false.
To help ferret out drivers operating in violation of these laws, Salt Lake City employs secret shoppers to hire drivers and then report them to city officials. Correspondence obtained by Libertas Institute through an open records request includes numerous emails from these secret shoppers.
One such shopper, whose name was redacted, reported the following after her first experience using Lyft in April:
In an exclusive interview published last month, we broke the story regarding Salt Lake City’s heavy-handed fines being imposed on Lyft and Uber drivers operating without the city’s blessing. Citations amounting to $6,500 and more have been issued to drivers for daring to drive consenting passengers without the drivers having jumped through the city’s regulatory hoops.
Records obtained by Libertas Institute this week suggest more reasons why the city may be resistant to the innovative disruption that these ride-share companies bring. In the last fiscal year, Salt Lake City received $362,361.65 in fees from the three authorized taxi companies for the ~200 authorized vehicles operating throughout the city. This is in addition to license fees paid by the three companies to the city.
“Freedom in capitalist society always remains about the same as it was in ancient Greek republics: Freedom for slave owners.” —Vladimir Lenin
Labor Day is an interesting holiday for those that love liberty. For some, Labor Day reeks of the success of the socialist workers movement and should be eschewed; for others, it is merely a celebration of those whose labor is critical to our diverse economy. I propose that for those that love liberty, Labor Day can be a positive holiday that recognizes the importance of voluntary exchange in a free society. While we disagree with Lenin’s assessment of freedom in a capitalist society, we understand the source of his frustration.
Capitalism in Lenin’s view is more about individuals than about a system. Lenin and other socialists saw powerful individuals as “capitalists.” These were the individuals who owned capital or the means of production. By owning machines and factories the capitalists could leverage their ownership into profits by hiring wage laborers to carry out production. In Lenin’s view, this employment relationship was exploitative of the worker in the same fashion as slavery. However, there is a key difference. In the slave relationship the master literally owns the slave and can coerce the slave’s labor to the master’s profit. In contrast, the employment relationship in a capitalist system is voluntary. The worker owns their labor just like the capitalist owns their factory. Thus, a worker voluntarily offers their labor to the owner in exchange for the owner’s voluntary payment of wages. If the owner feels they can profit more from the worker’s labor than from the wages they offer to pay, then the exchange is beneficial for the owner.