Should You Need a License to Hang Curtains?
The latest example of liberty-reducing occupational licensing schemes comes to us from Florida, where a law restricts the practice of interior design to people the state has licensed. Those wishing to pursue this occupation must first undergo an onerous process ostensibly in the name of “public safety.”
In reality, the law serves as an anti-competition measure that protects Florida’s current cohort of interior designers. Our friends at the Institute for Justice have pursued a lawsuit against the law but lost their appeal in the Eleventh Circuit.
Cato has now joined the Pacific Legal Foundation on an amicus brief asking the Supreme Court to review that ruling. The lower court got it wrong not just with respect to the right to earn a living, however, but also on First Amendment grounds.
That is, interior design, as a form of artistic expression, is historically protected by the First Amendment. Indeed, interior designers are measured primarily on the value of their aesthetic expression, not for any technical knowledge or expertise. This type of artistry is a matter of taste, and the designer and client usually arrive at the end result through collaboration and according to personal preferences. Thus, the designer-client relationship has little in common with traditionally regulated professions such as medicine, law and finance, where bad advice can have real and far-reaching consequences—but even then, the Supreme Court has emphasized the First Amendment implications of placing “prior restraints” on expression through burdensome licensing schemes.
Instead of following that precedent, however, the circuit court carved out a constitutionally unprotected exception for “direct personalized speech with clients.” Florida’s “public safety” justification is similarly weak, given that the state has presented no evidence of any bona fide concerns that substantiate a burdensome licensing scheme that includes six years of higher education and a painstaking exam—instead relying on cursory allegations that, for example, licensed designers are more adept at ensuring that fixture placements do not violate building codes.
Finally, the Eleventh Circuit’s ruling disregarded the infinite array of auxiliary occupations the Florida law subjects to possible criminal sanctions: wedding planners, branding consultants, sellers of retail display racks, retail business consultants, corporate art consultants, and even theater-set designers could all get swept in. The state has already taken enforcement actions against a wide spectrum of people who are not interior designers, including office furniture dealers, restaurant equipment suppliers, flooring companies, wall covering companies, fabric vendors, builders, real estate developers, remodelers, accessories retailers, antique dealers, drafting services, lighting companies, kitchen designers, workrooms, carpet companies, art dealers, stagers, yacht designers, and even a florist. This dragnet effect also suggests that the law is too broad to survive constitutional scrutiny.
The Court will likely decide by the end of the year (or early 2012) whether to take this case of Locke v. Shore.
Monks Successfully Defend Their Right to Earn an Honest Living
Last week, a federal court in Louisiana ruled that a state law prohibiting sales of caskets by non-licensed merchants was unconstitutional. A monastery that has made caskets for over a century sued the state to protect their modest casket business. It should come as no surprise that our friends at the Institute for Justice were leading the charge against the law:
Under Louisiana law, it was a crime for anyone but a government-licensed funeral director to sell “funeral merchandise,” which includes caskets. To sell caskets legally, the monks would have had to abandon their calling for one full year to apprentice at a licensed funeral home and convert their monastery into a “funeral establishment” by, among other things, installing equipment for embalming.
The Honorable Stanwood Duval of U.S. District Court for the Eastern District of Louisiana ruled, “Simply put, there is nothing in the licensing procedures that bestows any benefit to the public in the context of the retail sale of caskets. The license has no bearing on the manufacturing and sale of coffins. It appears that the sole reason for these laws is the economic protection of the funeral industry which reason the Court has previously found not to be a valid government interest standing alone to provide a constitutionally valid reason for these provisions.”
Thus, even though merely economic liberty was at issue and therefore courts need apply only “rational basis” scrutiny to the regulation at issue, this regulation fails for being completely beyond any conceivable rational basis. And indeed, like so many regulations, this one was nothing more nor less than a barrier to entry for small businesses. Established funeral directors had used the power of the government to illegally control the market, eliminating competition and artificially driving up the prices of caskets. Not only was the funeral-director cartel denying the monks their right t earn an honest living, but they were taking advantage of the people they serve (ultimately, everyone in Louisiana) by extracting ill-gotten profit — often at the time of their customers’ greatest sorrow.
You can read the full opinion here and watch a video that tells the monastery’s story below. Congratulations to the monks of St. Joseph Abbey and the great attorneys at IJ!
We Aren’t Exaggerating When We Rail Against Threats to Economic Liberty
Oregon officials told a 7-year-old with a lemonade stand that she needed to obtain a temporary restaurant license or incur a fine.
I’m rendered speechless, but Josh Blackman exploits the “teaching moment”:
If you are generally opposed to any notion of the right to pursue an honest living, ask yourself, why does it bother you so much that this little girl cannot sell lemonade. Then, ask yourself what you think about other regulations that stifle the entrepreneur. This story does not tug on our heart strings simply because she is adorably selling lemonade for 50 cents a cup (suggested price) at a fair. It tugs on our heart strings because the state is unnecessarily clamping down on this little girl’s ability to make some money.
More from Tim Sandefur.
Sure, You Can Get a Business License — If Your Competitors Approve
Our friends at the Pacific Legal Foundation have filed another important suit in the battle for the right to earn an honest living. PLF senior attorney (and Cato adjunct scholar) Tim Sandefur has the scoop:
Michael Munie is a St. Louis businessman who’s been in the moving business since he was 16 years old. He has a federal license that lets him move people’s household goods from one state to another. And he has a state license that allows him to move things within St. Louis. But he’s not allowed to move things from St. Louis to anywhere else in Missouri unless he gets permission from his competitors first.
That’s right—Missouri law dictates that whenever a person applies for a license to run a moving business, the state’s Department of Transportation must notify all the existing moving companies and give them the chance to object. If they do—which, of course, they always do—the applicant must prove that there’s a “public necessity” for a new moving company. What does “public necessity” mean? Nobody knows. There are no standards, no rules of evidence, no nothing.
Read the rest and find out more here. Cato doesn’t litigate, of course — other than filing amicus briefs – but we certainly support those that do, including PLF, the Institute for Justice, the Goldwater Institute, the Mackinac Center, and many others.
Was There a Libertarian Golden Age?
Recently I wrote an article arguing that there never was a golden age of liberty and that in particular libertarians should not hail 19th-century America as a small-government paradise, at least not without grappling with the massive problem of slavery. Jacob Hornberger, author of an article that I criticized, responded in Reason, and I then responded here. Meanwhile, an interesting discussion took place on a email list of libertarian scholars, and I’m pleased to have gotten the permission of several participants to include some of that discussion here:
Earth Day Links
Today is the 40th anniversary of Earth Day, a time to highlight and discuss ways to work toward a cleaner planet. Cato’s energy and environment research promotes policies that would help protect the environment without sacrificing economic liberty, goals that are mutually supporting, not mutually exclusive.
- Why we should thank capitalism for environmental gains: “It is businessmen — not bureaucrats or environmental activists — who deserve most of the credit for the environmental gains over the past century and who represent the best hope for a Greener tomorrow.”
- Finding the right balance: “Today, America’s environment is cleaner—and Earth Day has indeed helped ensure that. …We should renew our promise to keep the environment clean—without adding to human misery or stalling improvements in the human condition.”
- Want clean air? Try this.
- Is high-speed rail really an environmentally friendly alternative to driving and air travel? “Planners have predicted that a proposed line in Florida would use more energy and emit more of some pollutants than all of the cars it would take off the road.”
Weekend Links
- How unions will get a sweetheart deal if the health care overhaul passes — and everyone else the shaft.
- Is it time to put Social Security reform back on the table?
- The mysterious ways of Fannie and Freddie.
- The G.O.P.’s next move on health care: “The challenge for Republicans is not to try to ‘do’ things just like the Democrats but a little less expensively or with a little less bureaucracy, but to present an agenda of personal and economic liberty as a positive alternative… [Republicans] will have to show that this time they are in favor of something positive. It’s called freedom.”
- Shattering the conventional wisdom: “Evidence is now flooding in from both America and England that obesity is the epidemic that never was.”
- Podcast: “Health Care Reform Do-Over” featuring Michael F. Cannon.
Michigan Court Inexplicably Tosses Suit, Endorses Forcible Enlistment of Day-Care Workers into the State Government
When lawyers and other commentators say that a court did not properly explain its decision, it’s typically for hyperbolic effect. But, in a bizarre move, a court in the failed great state of Michigan has dismissed an economic liberty case brought by our friends at the Mackinac Center Legal Foundation for reasons the court quite literally did not explain. The court simply denied the plaintiffs’ complaint and that was that.
Home-based day care owners Sherry Loar, Michelle Berry, and Paulette Silverson have all been taxed by the Michigan Department of Human Services because, according to the state, they are somehow employees of the state and (further!) must pay union dues. because this baseless assertion comes directly from the state DHS, an executive department, among the significant constitutional objections to the case presents separation of power problems. (Ok, I haven’t studied the Michigan Constitution, but I assume they separate their powers there.) Enough ridiculous laws are passed by state legislatures — more than 40,000 last year alone – we don’t need state executive agencies getting into the act.
Yet, the Michigan Court of Appeals has nothing at all to say about the case.
Inexplicable — and unpardonable.
A Georgian Constitution of Economic Liberty
The former Soviet Republic of Georgia is a late economic reformer, having started such liberalization after the Rose Revolution in 2004. But it is one of the most successful post-Soviet reformers, and it may be the country that has implemented the largest range of serious market reforms in the shortest period of time. Its growth rate from 2004 through 2008 averaged 7.6 percent per year (which includes the comparatively low 2.1 percent rate of 2008 that resulted from the global financial crisis and the war with Russia).
Last month, the government submitted a draft act to Parliament that calls for amending the country’s constitution so that it would safeguard various elements of economic freedom. The amendments would put caps on public debt, spending and deficits; and ban any kind of price controls, state ownership of banks and financial institutions and restrictions on currency convertibility, and any kind of control over the movement of capital. New taxes or increases in tax rates would require approval through a national referendum.
With the possible partial exception of Hong Kong’s Basic Law, I’m not aware of any other constitution that explicitly enshrines economic freedom. I’m told by Georgian colleagues that prospects for passage of the law looks good, with the constitution being amended as early as next month.
What Is ‘Unreasonable’ Compensation? And Who Gets to Decide?
As could be expected, the effects of the financial crisis — and people’s reaction thereto — are starting to make their way to the least political branch of government, the judiciary. The Supreme Court this term will be hearing several cases that could have serious repercussions on our economic recovery, one of which led us to file an amicus brief. Here’s the situation:
The Investment Company Act of 1940 places on investment advisers a fiduciary duty with respect to the compensation they receive for the services they provide their clients. In the case of Jones v. Harris Associates, shareholders in various mutual funds contend that their adviser fees were excessive and violated the ICA. The Seventh Circuit, the federal appellate court based in Chicago, affirmed the judgment of the district court that the fees were not excessive but also expressly disapproved of the methodology for evaluating such claims used by the Second Circuit (based in New York). Judge Frank Easterbrook’s opinion explains that the ICA creates a fiduciary duty but does not act as a rate regulator, and that judicial price-setting does not accompany fiduciary duties. Judge Richard Posner, writing for five judges, dissented from the denial of an en banc rehearing. The Supreme Court agreed to review the case to settle the circuit split.
Our brief supports the investment adviser and makes three arguments:
- All persons have a fundamental human right to whatever compensation their contracting partners freely and honestly choose to pay them.
- Courts have no power to second-guess the reasonableness of any salary or compensation agreement honestly and freely signed by both contracting parties.
- The ICA’s fiduciary duty requires only fair dealing, not any particular outcome.
Thanks to Cato adjunct scholar Tim Sandefur for spearheading this effort, and to Cato legal associate Matthew Aichele for helping with much of the attendant busywork.
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