• Tag Archives statism
  • Occupational Licenses Are Killing Minority Entrepreneurship

    Image Credit: iStock

    Ashley N’Dakpri runs Afro Touch, a hair-braiding salon in Louisiana. She wants to hire more stylists to meet demand, but Louisiana’s strict occupational licensing regulations prevent her from doing so.

    Ashley legally isn’t allowed to hire new stylists unless they have a cosmetologist’s license, a certification that requires five hundred hours of training and thousands of dollars in fees to obtain. She notes that many potential employees are no longer interested in working for her once they discover the onerous occupational licensing requirements.

    State-level occupational licenses are a major barrier to minority entrepreneurship. These licenses prevent many minorities from starting their own businesses in fields across the economic spectrum.

    The beauty industry is perhaps the most egregious example of a field whose occupational licensing requirements prevent minority entrepreneurship, but these licenses are also found in many other industries popular with minority entrepreneurs, including construction, childcare, and pest control.

    Cosmetology licenses are often far more difficult to get than licenses for professions that deal with life and death. In Massachusetts, for instance, cosmetologists must complete one thousand hours of coursework and two years of apprenticeship before they are allowed to ply their trade in the beauty industry. Emergency medical technicians, by contrast, must only take 150 hours of courses to be allowed to work.

    What are these occupational licenses protecting consumers from? A bad hair day? These permits present an enormous entrepreneurial barrier to mostly minority women. According to a study by the Institute of Justice, Louisiana has just thirty-two licensed African hair braiders. In stark contrast, neighboring Mississippi, which has approximately four hundred thousand fewer black residents but doesn’t regulate hair braiding, has 1,200.

    California is the worst occupational licensing offender, according to IJ, putting up “a nearly impenetrable thicket of bureaucracy.” Basic trades such as door repair, carpentry, and landscaping require potential entrepreneurs to devote 1,460 days to supervised practice and spend up to thousands of dollars for a license before they can legally work.

    Nearly one-quarter of American workers hold a license, according to the Labor Department, up from about 5 percent in the 1950s. Unsurprisingly, a Federal Reserve Bank of Minnesota report concluded that minorities are significantly less likely to hold a license than whites.

    Research by economist Stephen Slivinski indicates that licensing requirements reduce minority entrepreneurship. He finds that states that require more occupational licenses have lower rates of low-income entrepreneurship.

    It’s already difficult enough for minority entrepreneurs to find a product that fills a gap in the market and outcompete established players without simultaneously worrying about the government hamstringing them through bad policies like excessive occupational licensing.

    With fewer government hurdles, minority entrepreneurs can more readily overcome racial economic gaps through their own inspiration and ingenuity.

    This column is adapted from the author’s new book, The Real Race Revolutionaries: How Minority Entrepreneurship Can Overcome America’s Racial and Economic Divides.”


    Alfredo Ortiz

    Alfredo Ortiz is the president and CEO of Job Creators Network.

    This article was originally published on FEE.org. Read the original article.


  • My Response to Time Magazine’s Cover Story on Capitalism

    [Editor’s note: The following is in response to the cover story, “How the Elites Lost Their Grip,” by Anand Giridharadas in the December 2-9, 2019 issue of Time magazine.]

    The inventor of the now-famous “Overton Window,” the late Joseph P. Overton, was my best friend and a senior colleague at the Michigan organization I headed for nearly 21 years (1987-2008), the Mackinac Center for Public Policy. The Window postulates that at any given time, public policy options are framed by public opinion. Politicians who operate within it can get elected or re-elected, while those who offer proposals outside of it run the risk of public rejection. Move the Window by changing public opinion, and what was previously a losing proposition can then become politically possible.

    The Overton Window concept is the springboard Anand Giridharadas uses in his recent Time article. He suggests that anti-capitalist candidates and proposals are now winning because the Window has shifted toward socialism.

    While I appreciate the personal citations of both Joe Overton and me in Mr. Giridharadas’s article, I’m compelled to point out a few of its questionable assumptions. In doing so, I feel like the proverbial mosquito in a nudist camp: I know what I want to do, but it’s hard to decide where to begin.

    Let’s start with the article’s assessment of the Democratic race for president. Polls showing that capitalist uber-critics Senators Bernie Sanders and Elizabeth Warren are “top contenders” are proof, Mr. Giridharadas suggests, that his wishful thinking about socialism is valid. This is a “window” that seems to have shifted markedly in the short interval between when the article was written and when it was published.

    Warren recently put a price tag on her Medicare-for-All fantasy, a policy that would ban private health insurance. Her support collapsed. Sanders is languishing in third or fourth place, nowhere near the support he had going into the last Democratic convention. All the talk now is about how the rank-and-file are fleeing to the center.

    Mr. Giridharadas points to the rise in membership of the Democratic Socialists of America—from 5,000 members in 2016 to at least 50,000 today. But that’s still half the membership (113,000) the Socialist Party claimed at its all-time high, which was in 1912. The Libertarian Party’s membership today is 10 times larger.

    Among young people, the story that Mr. Giridharadas completely misses is the explosion of membership and activity among groups friendly to liberty, private enterprise, and free markets—organizations like Young Americans for Liberty, Students for Liberty, Young Americans for Freedom, Young Americans Against Socialism, Turning Point USA, and the one where I serve as president emeritus, the Foundation for Economic Education. If Facebook following is any sign of relative popularity, it’s notable that the Democratic Socialists’ presence on that social media platform is a tiny fraction of that for those pro-capitalist youth organizations.

    If I were a socialist, I’d be worried that these and similar organizations are where the genuine and lively intellectual ferment is. While the Left seems absorbed in suppressing debate, these groups are quietly broadening discussion and nurturing the next generation of thought leaders.

    Meantime, reports the Pew Research Center, public trust in the government stands at historic lows. Pew finds that “Only 17% of Americans today say they can trust the government in Washington to do what is right ‘just about always’ (3%) or ‘most of the time’ (14%).” Mr. Giridharadas would do the American public a real service if he pointed out that this is the same government on which socialists want to bestow more power and money.

    Socialist rhetoric always scores higher than socialist policies, and both score much better than socialist outcomes. Telling people they’re entitled to free stuff, or assailing the rich generally, appeals to a certain number, but those figures shift when rhetoric meets reality. This is one reason nobody—socialists, least of all—is conducting any polling in Venezuela.

    The worst assumption in Mr. Giridharadas’s article, however, concerns what capitalism really is. Implicit throughout is his belief that capitalism is nothing more than cronyism, whereby the rich use political connections to line their pockets.

    Mr. Giridharadas ignores the fact that those of us he would surely label as pro-capitalist are just as much against cronyism and corruption as anybody, and likely more so than any socialists are. We understand that the answer to cronyism and corruption is not to give government even more power and money. We support not some corrupted, capitalist straw man but genuinely free markets, limited government, private property, and the rule of law. When will mainstream media learn this distinction?

    Moreover, to those of us who appreciate this distinction, the pursuit of money is not the principal objective in life. Critics of capitalism suggest endlessly that it is, but that’s infantile. The case for capitalism rests on something far more important than material wealth. It is not refuted by the occasional bad eggs who misbehave (socialism, by the way, produces bad eggs by the bushel and never creates anything resembling an omelet).

    The case for true capitalism is a moral one that’s rooted in human nature and human rights. To create wealth and add value to society through invention, innovation, entrepreneurship, production, and trade is a birthright. One cannot be fully himself—or even fully human—if he must live his life and conduct his affairs according to the dictates of those with political power. It speaks volumes that capitalism is what happens when peaceful people are left alone; socialism, on the other hand, is a Rube Goldberg contrivance with a lousy track record fueled by envy and class warfare.

    I’ve known a few business people who do indeed seem to worship “the almighty dollar” and will gladly cut corners or get in bed with government for money’s sake. For every one of those, I’ve known a hundred who are in business for the exhilarating fulfillment they derive from creating useful products, solving problems, and meeting the needs of happy customers.

    The Overton Window is a remarkable tool for understanding the connections between ideas and political reality. But it matters that those who invoke it do so with clear thinking, proper definitions, and no axes to grind.


    Lawrence W. Reed

    Lawrence W. Reed is President Emeritus, Humphreys Family Senior Fellow, and Ron Manners Ambassador for Global Liberty at the Foundation for Economic Education. He is also author of Real Heroes: Incredible True Stories of Courage, Character, and Conviction and Excuse Me, Professor: Challenging the Myths of ProgressivismFollow on Twitter and Like on Facebook.

    This article was originally published on FEE.org. Read the original article.


  • 30 Years After the Fall of the Berlin Wall, Misconceptions Still Drive Socialism


    One thing everyone remembers about the October Revolution of 1917, which brought Vladimir Lenin to power, was that the Bolsheviks toppled the tsar, an incompetent monarch who had run Russia into the ground.

    The problem is that’s not what happened.

    First, the event happened on November 7, according to the modern calendar, not in October. Second, and more importantly, Lenin and his insurgents did not overthrow the tsarist regime. Few seem to remember that Tsar Nicholas II had been dealt with in February 1917. When Lenin cooly ordered Nicholas and his family to be executed without a trial in Yekaterinburg in July 1918, the Tsar had been out of power for more than a year. What the Bolsheviks actually toppled was something resembling a modern democracy with an elected parliament and government.

    That the rise of 20th-century socialism began with a falsehood is fitting since its modern foundation is also built largely on fiction.

    More than a century after the Bolsheviks took power—and 30 years after their experiment failed for all the world to see—the misconceptions continue.

    New surveys show as many as 70 percent of millennials would vote for a socialist, no doubt because they’ve heard how equitable and fruitful the system is. Few today seem to understand just how awful life under socialism was.

    As someone born and raised on the wrong side of the Berlin Wall, let me tell you: Everyday life was bad. I’m not talking about secret police, censorship, forced adulation, or KGB agents among students (my mother was labeled an “anarchist,” which meant she had no prospects for a career). Even the most mundane activities, like buying food, were a challenge. Shortages, deficits, and lines, lines, lines. If you saw a queue, you‘d automatically join it without asking what people were queueing for. It must have been good!

    “Good“ had a completely different meaning under socialism. The absolute majority of consumer goods were awful knockoffs of Western merchandise. The waitlist to buy a car was around seven years. Permission to buy a color TV was often granted by trade union raffle. Those with connections to the Communist Party or union bosses were given preference.

    Anyone who studied economics might be tempted to think that perhaps goods were mispriced; the prices were set too low, demand exceeded supply, and therefore—queues. But the prices the socialist government set for consumer goods were ridiculously high. A TV cost something like 600-700 roubles, while your average monthly salary was about 150 roubles. Modern estimations of how long one had to work to purchase consumer goods in the Soviet Union run as follows: a TV was 713 hours (4.4 months), a refrigerator 378 hours (2.3 months), a raincoat was 77 hours (nearly two weeks), shoes were 33 hours (nearly a week).

    A typical American, on the other hand, had to work 86 hours to afford a TV, 83 hours for a refrigerator, and eight hours for shoes.

    Perhaps under socialism there was more income equality? Actually, no. Sure, you can measure official income inequality, which was around 0.3 GINI—a method of measuring income inequality—not much different from current Western countries.

    But how do you factor in things like special shops for Party members, which regular people were not allowed to enter? Or raffles where Party members were given preference?

    What do these recaps of high school history and memories of those who actually lived under socialism have to do with today? Call it a reaction to horror when one hears elected American politicians spouting statements that socialism is a good thing—that America needs socialism. It‘s like being a very old German and being told that dressing young hooligans in brown shirts and setting them loose on the streets will improve public safety. It’s like being a survivor of Chernobyl and hearing that nuclear safety is for hippies.

    Socialism was, is, and will continue to be an utter failure in everything except keeping people behind Berlin Walls, iron curtains, and barbed wire. Poverty, inequality, disregard for human dignity and human life—that was the everyday life under socialism, not brotherhood and equality.

    There is a reason people tore down the Berlin Wall with their bare hands the moment they realized they would not be shot. Let’s not repeat these mistakes 30 years later.


    Zilvinas Silenas

    Zilvinas Silenas became President of the Foundation for Economic Education (FEE) in May 2019. He served from 2011-2019 as the President of the Lithuanian Free Market Institute (LFMI), bringing the organization and its free-market policy reform message to the forefront of Lithuanian public discourse. In that role, he and the LFMI won two prestigious Templeton Freedom Awards (2014 and 2016) for Municipality Performance Index and the Economics in 31 Hours textbook, now used by 80% of Lithuanian high school students. Silenas holds degrees in economics from Wesleyan University and the ISM University of Management and Economics, and has served in numerous teaching and advisory roles. He and his wife Rosita live in Atlanta where they enjoy exploring the outdoors, attending social functions, and the occasional pickup basketball game.

    This article was originally published on FEE.org. Read the original article.