Here’s a good example from the City of Philadelphia about how to kill jobs and regulate the economy to death during an economic correction—or any other time, for that matter. The city imposes a $300 “business privilege license” for any “activity for profit,” regardless of whether or not an actual profit was made. Thus, individuals who post blogs on their sites and collect some chump change from online ads that appear on the page must pay the fee, even if it far outweighs their earnings. Freelance writers are similarly subject to the city license fees, plus taxes on their profits, in addition to their state and federal income taxes.
Philadelphia is even going after people that simply blog as a hobby, not a full-time job. As related in an article from the Philadelphia City Paper,
For the past three years, Marilyn Bess has operated MS Philly Organic, a small, low-traffic blog that features occasional posts about green living, out of her Manayunk home. Between her blog and infrequent contributions to ehow.com, over the last few years she says she’s made about $50. To Bess, her website is a hobby. To the city of Philadelphia, it’s a potential moneymaker, and the city wants its cut.
In May, the city sent Bess a letter demanding that she pay $300, the price of a business privilege license.
“The real kick in the pants is that I don’t even have a full-time job, so for the city to tell me to pony up $300 for a business privilege license, pay wage tax, business privilege tax, net profits tax on a handful of money is outrageous,” Bess says.
If there was any doubt that government acts as a parasite on the productive (i.e., private) sector of the economy, examples of such licensing schemes expose their true nature. Far from acting to protect the lives and property of its citizens, this is merely a money grab for an insatiable government that can’t find enough money to spend and must find new and interesting ways to take it from its taxpayers.
Obvious examples of unfairness and a lack of common sense like the one above notwithstanding, the whole notion of a “business privilege license” is absurd and a violation of one’s right to earn an honest living. The ability to operate a business and provide for oneself is a fundamental individual right, not a privilege to be granted by government.
As economist and author Murray Rothbard explained in his “libertarian manifesto,” For a New Liberty, “If a man has the right to self-ownership, to the control of his life, then in the real world he must also have the right to sustain his life by grappling with and transforming resources.” In other words, if we are to have the unalienable right to life, then we must also have the right to sustain our lives through the use of our labor. Adds Rothbard, “Since each individual must think, learn, value, and choose his or her ends and means in order to survive and flourish, the right to self-ownership gives man the right to perform these vital activities without being hampered and restricted by coercive molestation.”
Business and occupational licensing regulations are just another example of such coercive molestation. If governments truly want to help improve the economy, they can best do it by simply removing these barriers to work and entrepreneurship and allowing greater economic liberty to naturally lead to greater economic prosperity.
(Thanks to Mark Hemingway’s Washington Examiner post for covering the Philadelphia bloggers licensing issue as well.)
For more information on how occupational licensing leads to higher prices and fewer choices for consumers, reduced economic liberty and job opportunities, poorer service quality, and reduced competition (for the benefit of existing businesses that want to keep out competitors), see the following:
- My policy study, Occupational Licensing: Ranking the States and Exploring Alternatives
- My book chapter, “Licensing Lawyers: Failure in the Provision of Legal Services,” in The Pursuit of Justice: Law and Economic of Legal Institutions
- “California Licenses Most Jobs in Nation,” an op-ed I wrote for the Los Angeles Business Journal