Pro-Poor Libertarians and Occupational Licensing

One of the main problems with the libertarian movement gaining a bigger following is its seeming refusal to proactively address issues of entrenched poverty. While massive welfare spending clearly isn’t a panacea, it’s generally accepted that some level of government involvement is necessary to deal with poverty. Libertarians, if they want more support from outside the economically comfortable, should push forward with two issues. The War on Drugs/prison reform and occupational licensing. It’s clear how the War on Drugs is ineffective and its negative effects mostly fall on the poor and the black. But occupational licensing is another great example of how a libertarian policy instinct that generally wouldn’t get a ton of traction among the working class and poor - less government regulation - is unambiguously in their interest.

One of the canonical pieces of libertarian propaganda (in the good sense) is the story of the Louisiana florists. Louisiana is the only state in the nation that requires a license to become a florists. The exam is reportedly quite difficult, highly subjective, is administered only four times a year in Baton Rogue and has a passing rate of well below 50 percent. And who grades the test? Louisiana florists. Is there any mystery as to why it’s so difficult?

It’s unclear how licensing florists does anything for Louisiana consumers. Will an unlicensed florist threaten the safety of their customers? That seems unlikely. There’s a much simpler reason. Louisiana florists want to protect themselves from competition and have turned to the state government to serve as its monopoly enforcer. It is also very clear who loses out from such an arrangement. Louisiana consumers have to pay more for florists’ services because of the artificially low supply. Prospective florists too are also screwed, they simply can’t get in the business. This is a textbook case of regulatory capture: how certain special interests are able to manipulate regulation that is supposed to be in the public interest and instead use it to protect their own interests. Other cases of libertarian lore include limo drivers, hair braiders and casket sellers.

How to make things better is unclear. A ban on all occupational licensing isn’t the way to go. Not only is it unfeasible politically, certain occupational licensing probably does benefit consumers who have neither the time, information or ability to rate all sorts of services on their own. As of now, the best path for reform would be two-fold. In the short term, legal advocacy groups like the Institute for Justice should do their best to simply hassle state licensing boards and sue them. They’ve had some successes at striking down the more absurd laws, and through a strategy of attrition could do some real good. Along with that, libertarian bloggers, magazines and journals should be unceasing in reporting anti-competitive occupational licensing. Stories like those of the Louisiana florists, or the limo drivers of the casket sellers make great copy and get those who aren’t particularly libertarian (like me or Matt Yglesias) all fired up for the cause.

In the long/medium term, it would probably be best for states to pass laws stipulating that all occupational licensing schemes need an explicit statement of how they serve the public/consumer interest. While certain special interests with a motive in restricting competition and entry into their industry would probably weasel their way around this law, it could shame some of them and make legislators more aware of the perniciousness of these rules.

Babies and Farm Subsidies Bathwaters

Among the general populace, I am probably in the 99th percentile as far as detesting agricultural subsidies goes, but I think Jim Henley goes too far by expanding a criticism of agricultural policy into a larger critique of the regulatory state:

Three-quarters of a century of regulatory-state agriculture has left us with a system of subsidized corporate farms who deplete the soil, abuse animals and enjoy a coziness with state agents while the same state agents hassle independent operators and crusading eccentrics out of business…

If you believe that extensive government regulation and “support” of American agriculture is worth it, you believe that the state bigfooting small farmers on behalf of large ones is a cost worth the benefits managed agriculture delivers. But there’s no pretending that the cost is some odd thing that somehow happened and can be yanked out of the structure. It’s a load-bearing pillar of the regulatory state.

If one defines the “regulatory state” as the entirety of the federal government’s regulatory apparatus, including personnel, funding and fiscal extraction from regulated industries, then the greater agricultural regulatory infrastructure — tariffs, subsidies, quotas etc. — is a “load-bearing pillar of the regulatory state.” The problem for Henley is that it’s possible to imagine a world in which we had much of the regulatory state that liberals like, without the bad parts like our agricultural policy. The persistence of our pernicious agricultural policy has more to do with political dynamics — namely the absurd over-representation of rural states in both the electoral college and the Senate.

Henley’s conceptualization of the agricultural program is indicative of the way libertarians look at many problems of government over regulation (war on drugs and immigration are other examples), they always move on from criticizing a particular set of policies, to saying that we need overwhelming reform. This is a reason why liberals and libertarians make such bad allies even when we agree. Liberals think that we should probably focus on the more attainable goal — reforming ineffective and negative examples of regulatory overreach; libertarians, on the other hand, are rarely in a position to have meaningful input to the operations of government, and so can sit on the sidelines and complain about how we need to take the whole structure down.

Yes, Some on the Right Oppose the WTO

Max Bergman is amazed that many of the reasons the black helicopter crowd opposes LOST are also applicable to the WTO.  So, if the Right is so worked up about sovereignty, they should oppose the WTO, right?

The fact is that the WTO regulates global trade and polices its member’s adherence to WTO regulations. If maintaining all aspects of U.S. sovereignty is the right’s number one priority than they simply can’t support the WTO. And if they don’t support the WTO, than you have to question the right’s commitment to free trade, since the whole purpose of the WTO is to enable free trade. If the right is really so scared about the erosion of U.S. sovereignty than they should join all the left wing anti-globalization activists and protest the WTO.  That would be quite a sight.

Well, Max, sorry to break it to ya, but the populist-nationalist right opposes both the WTO and LOST.  Pat Buchanan isn’t a big WTO fan, nor are Alan Keyes and Phyllis Schlafly.  60 percent of Republicans think free trade has been bad for the economy.  What we have in both the LOST and the WTO/free trade debates in the GOP is a split between the corporate elites and the populist masses.  The corporate wing just wants more markets to sell stuff, and a steady regulatory infrastructure to facilitate the selling of their wares and expansion of their businesses.  Thus, the WTO and LOST.  The populist-nationalist wing is more concerned with America’s sovereignty and generally being incredibly skeptical of anything having to do with foreigners. It’s a very uneasy alliance, and I imagine that big portion of Ron Paul supports comes from the populist-nationalist wing of the party, which overlaps significantly with the anti-Iraq war wing.

If you asked me before the primary got heated up, I would have expected someone like Tom Tancredo to be the Ron Paul like insurgent candidate.  Bashing Romney, Guiliani and Bush as “globalists” who will sell out America to illegal immigrants, international trade and international organizations could probably garner around 10 percent of the primary vote.  Too bad Tancredo is absolutely nuts.  But I assure you that in the coming years, the populist-nationalist wing of the GOP will realize , much like the Religious Right, that it’s the corporate paymasters who ultimately control the GOP and that there isn’t really much of a place for them in the coalition.

Full Circle Libertarianism

Brad Plumer sees the light on regulatory capture:

The Washington Post reports that smaller farmers are chafing at many of the federal and state safety regulations you need to follow to get your food “certified organic.” Richard Bean of Virginia complains that produce shipped from New Zealand by big industrial giants gets certified, while his sustainable local farm can’t pass muster, because he doesn’t slaughter his animals in “inspected” facilities. (In fact, he got arrested for not doing so.) Long story short, small farmers are pissed at regulations that penalize them and benefit the big, industrial producers who kill people with contaminated spinach in the first place.

The libertarian in me is screaming out, “Brad, don’t you realize, this is a problem with ALL industry regulation! It’s just an excuse for the big boys who have a big stake in the regulatory structure of their industry to permanently fix the rules so that the government is now doing their bidding by eliminating or disabling their competitors.” You rarely hear people from the left side of spectrum talk of regulatory capture, but we all certainly should — in an effort to make regulations we advocate for more effective.

A great example of lefties using the langauge and methods developed by libertarians to criticize massive regulatory efforts is Brad’s critique of the Warner-Lieberman cap and trade bill

Lucky for them, though, the coal industry can always turn to Congress for help. I see that the new Lieberman-Warner cap-and-trade bill in the Senate would give away, for free, nearly half of its CO2 allowances to coal companies—handouts that will be worth anywhere from $62 to $375 billion in 2012. Now, the ideal “green” alternative would be to auction all of the credits off (in which case the cap-and-trade would work just like a carbon tax), and then use the proceeds to ease the burden on low-income folks or invest in stuff like public transit. It seems the Democratic front-runners are all, at least, moving toward this position.

Meanwhile, a dozen major utilities—including Duke Energy—are now lobbying Congress to weaken the Lieberman-Warner bill further by putting a price cap on emission allowances. They call it a “safety valve.” The way it will work is this: Utilities and coal companies will ask Congress for billions more in R&D subsidies to look into clean coal and carbon sequestration and other harebrained schemes that may never work. And if these schemes don’t, in fact, work, well, the safety valve will ensure that they don’t get penalized too badly and will live to fight another day. Yes, I’m shrill, but this is all by way of saying: The Lieberman-Warner bill is an OK start, but hot damn it needs improving.

Despite the fact that, theoretically, a cap and trade system which involved auctioning off carbon credits would be basically identical to a carbon tax, in reality, any scheme that isn’t a straightforward tax of X dollars per Y ton of carbon will be open to manipulation. Representatives from Kentucky, West Virginia, Virgina and Illinois as well as their coal company paymasters will always have more resources and greater incentives to tweak an easily corrupted cap and trade system than those who honestly want to reduce US carbon emissions.

Common Carriers

Verizon is taking heat for rejecting a text message program by NARAL as being too controversial:

Saying it had the right to block “controversial or unsavory” text messages, Verizon Wireless has rejected a request from Naral Pro-Choice America, the abortion rights group, to make Verizon’s mobile network available for a text-message program.

Not surprisingly, net neutrality advocates are using this as just another example of what happens in a non net neutral world.   And it’s true, the spirit of net neutrality regulation would certainly prohibit this type of selective allowance of Verizon’s network.  But the thing is, for voice transmissions, Verizon’s behavior would be illegal — and would have been for decades.  Common voice carriers — like Verizon’s phone service — can’t block voice data they transmit on the basis of its content.  For some reason, this regulatory structure hasn’t caught up with text messaging.   It wouldn’t require some new regulatory apparatus to ensure that Verizon couldn’t engage in this behavior, the government just has to extend the common carrier protection for voice transmission to text, and voila, political groups can use SMS to get their message out.  Pretty simple stuff.

The Luvin Airways

Litbrit, in an otherwise entertaining and informative harangue against the past and present tension between the paramount discomfort of air travel and the occasional sexist nature of airline advertising, misses a rather basic point about Southwest Airlines particular focus on Love at 30,000 feet.

This didn’t stop Southwest Airlines from trying, though. In fact, as recently as 2004, the airline marketed itself as the Match.com of the clouds:

But hark, what’s that in the air? Pheromones? Cupid? No, just Southwest Airlines, which is trying to bill itself as a flying matchmaker. Is it working? At the very least, Southwest says so. With its open-seating policy, it claims, people can check each other out at the terminal and then choose to sit next to each other during the flight. It’s really playing the angle up — in-flight snacks are called “love bites,” in-flight drinks are “love potions,” and its stock ticker symbol is LUV.

Well, this would normally just be some silly advertising gimmick, but in the case of Southwest Airlines, it’s because they’re based in Love Field, Texas. If Southwest didn’t take advantage of this and put into some sort of marketing strategy, it would be downright disappointing. On a related note, everyone should read up on the (now repealed) Wright amendment, one of the most absurd and blatant cases of rent seeking in recent regulatory history. It’s enough to make you drop everything and give money to the Institute for Justice. Long story short, in 1978, Congress mandated that you couldn’t fly planes with more than 56 seats from Love Field to airports outside four states adjacent to Texas. It was passed to protect the then new Dallas-Fort Worth airport and since evolved into one of the biggest hampers on the most consistently profitable airlines. So yes, it was acceptable for Southwest to Fight for the Right to Love.

Politically Advantageous, Yet Intellectually Iffy Framing of Net Neutrality

I wrote a long piece about net neutrality for my wonderful high school newspaper and in the process of researching it I realized that it’s probably a pretty good idea. This generally means that I’m pretty happy with Open Left’s campaign in support of net neutrality legislation. Via Matt Stoller, we learn that the Justice Department ruled in favor of allowing discriminatory access to content at the discretion of ISP. In English, they came out against net neutrality. Stoller links us to the Media Access Project’s press release. Here’s the nut:

“It would seem that the President and the Justice Department cannot do enough for AT&T and the other companies that agreed to spy on the American people. Without network neutrality, companies are free to turn over user information without a warrant or block users from desired content ­ as AT&T recently did ‘accidentally’ by blocking Pearl Jam’s criticism of the President during a concert performance carried on AT&T’s broadband service.”

While it is difficult to whip up popular fervor in support of some obscure regulatory issue, I feel that Harold Feld is conflating a few separate issues.

The issue of net neutrality is whether internet service providers should be able to prioritize certain traffic (generally services that the same company provides) or charge a fee to access certain sites. The matter of telecom companies’ complicity with warantless wiretapping is a wholly separate issue, legally speaking. The wiretapping has been authorized under the AUMF and the President’s “inherent” power to conduct operations against an enemy in a time of war. Additionally, the phone company wiretapping — specifically the construction of the NSA call database- really has nothing to do with net neutrality. The voice packets are still getting to the terminals over dumb “pipes” — ie it’s still, strictly speaking, neutral — AT&T is just intercepting the data and handing a record of the calls over to the NSA . Even if congress passed basic net neutrality legislation, it would probably have to explicitly instruct the NSA to discontinue the call database for said legislation to have any affect on wiretapping. Even in a world of net neutrality, phone companies would be “to turn over user information without a warrant.”

It’s also unclear if the basic net neutrality standards enshrinement in law would have any affect of AT&T’s notorious Pearl Jame censorhip. Again, legislation would have to be specific towards the transmission of television information that could be censored. We already allow TV shows to broadcast on delay to edit the content and censor out anything untoward. Again, the legislation would have to be greater than just net neutrality to ensure that Pearl Jam’s anti Bush comments could go out to the masses unfettered.

I suspect Stoller and Feld know all of this very well. This strategy of conflating everything bad that AT&T and other data providers have done — wiretapping, censorship, non neutrality — and using that populist energy against them in support of a narrow legislative goal, net neutrality, is probably a good one. For most, the issue of net neutrality really has no gravity unless there are clear examples of ISP malfeasance, like wiretapping and censorship, even if those really have nothing to do with net neutrality per se.