License to kill competition

Opinion: March 19, 2013 at 12:00a.m.

By Glenn Garvin

Miami Herald

A Minnesota funeral home owner is having to sue his own state government for the right to keep prices low.

Verlin Stoll operates a funeral parlor in St. Paul where the basic charge is just $250, about one-tenth the city’s going rate. No hearse, no chapel, just simple service for working-class folks who can’t afford to spend a lot of money to die. His no-frills business has been so successful that he wants to expand, opening a second parlor.

But Minnesota law says that every individual funeral parlor has to have an embalming room on the premises — even if it isn’t used. Which most of them aren’t. For one thing, more than half of Minnesota’s dead are cremated. The reduced demand has led most funeral-parlor chains to do all their embalming at a single site or even outsource it.

No matter. They’ve all got to have that embalming room. When Stoll complained that the $30,000 cost of the useless room would have to be passed along to his customers, needlessly jacking up their expenses, state officials sensitively replied: Tough luck for them. And the rest of the industry, already incensed at Stoll’s price-cutting, cheered.

The other funeral homes didn’t offer even a pretense that the embalming-room controversy is anything but an attempt to squash a renegade challenger. The executive director of the Minnesota Funeral Directors Association labeled Stoll — contemptuously — as an “entrepreneurial dynamo.” In an industry that thrives on government protection from competition, those are much dirtier words than the kind with four letters.

Political clout

Stoll, recognizing that common sense and consumer interest were no match for corporate political clout, has gone to court to get the embalming-room requirement overturned. He’s getting help from the Institute for Justice, a Washington-based public interest law firm that defends not just free speech but free markets as well.

Sadly, it has no shortage of cases. “Using business and professional licenses as a barrier to competition is definitely on the increase, and has been for a long time,” says Dick Carpenter, the institute’s director of strategic research. In the 1950s, only about one of every 20 American workers needed a government permit to do his job; now, the number is nearly one in three, and growing all the time.

And we’re not talking about rocket scientists and brain surgeons. Hair-braiders, upholsterers, home-entertainment-installers — you name it, there are states that require a license for it. Stuff you’ve been doing literally all your life, probably after about 15 minutes of instruction from your mom, turns out to be so technical and potentially dangerous that it requires a government permit. You think that’s hyperbole? Five states require licenses to give shampoos.

These licenses are not just a matter of filling out your name and address on a government form and handing over $50, either. Extensive — and expensive — training is inevitably required. Yelling out, “I have $200, do I hear $250,” in the opinion of 10 state governments, is so dangerous and complex that it requires an auctioneer’s license. Average training requirement: 100 hours. Louisiana, until recently, forced florists to pass two different exams before they could sell flowers, though in a burst of ruthlessly Reaganesque deregulation, the state now just requires one.

Daffodils

Louisiana’s concern that peonies and daffodils might fall into the wrong hands without strict government oversight caused Carpenter to laugh out loud last year when he encountered it while co-authoring an Institute for Justice study of licensing. Other stuff caused him to scratch his head.

“The disparity in requirements from one profession to another was just amazing,” he recalls. For instance, licenses for emergency medical technicians, who literally hold life and death in their hands, require an average training of just over a month. Cosmetologists, who in a worst-case theory might really botch your bangs, must train for more than a year. And let’s not get started on interior decorators, who in four states (including Florida — our politicians may be half-wits, but our foyers are exquisite) must have licenses that require six years of training.

The contrast in the training and testing expected of EMTs compared to that of beauticians and interior designers makes it clear that licensing has nothing to do with health or safety and everything to do with restricting competition. A 2004 state government report calculated that the Minnesota consumers were paying between $3 billion and $3.6 billion a year more for services because of diminished marketplace competition brought on by occupational licensing. “Licensing is one of those rare public policies that actually does what it’s intended to,” observes Carpenter. “It keeps people out of the profession.”

Glenn Garvin is a columnist for the Miami Herald.