The Real Problem with Regulation


Unfortunately, we live in a world in which pedicures and funeral parlor bathrooms are serious issues for state government.

Last week, the Regulatory Review Task Force, established by Gov. Nikki Haley earlier this year, met at the State House to hear comments and concerns by citizens. Among the citizens were representatives of the South Carolina Board of Funeral Service and the South Carolina Board of Cosmetology.

The essential problem is this: Pressure from industry groups has led lawmakers to add onerous regulations that limit competition and increase costs for everyone. Take cosmetology. If you want to be a nail technician and join a business offering nail services, you’re faced with licensing fees, 300 hours of coursework (compared to 200 hours for ambulance specialists), an exam administered by the Board, and continuing education.

The regulations become costlier and even more intrusive for aspiring estheticians and cosmetologists. They limit the market to those who can already afford the charges and required educational courses, thus not only raising prices across the board but also, in the long run, stifling social mobility.

These regulations are symbolic of how intertwined politics and lobbying have become in our state. Special interest industry groups know that less competition means they will be able to charge their customers more, and so they try hard to convince lawmakers that more regulation is good for public welfare. A case in point: At last week’s task force meeting, a spokesman for an existing cosmetology school in Columbia admitted that the existing industry “really doesn’t want to be unregulated” but that the government should ban private, independent apprenticeships. In effect: Regulate our competition, not us. This is the opposite of how a healthy, free market should run; businesses should be successful based on the quality of their products, not on how well they can get government to stifle their competitors.

And that’s just one industry.

A representative from the Funeral Consumers Alliance of South Carolina also spoke at the meeting. He described the hardships placed on the casket-making industry by yet another government bureaucracy – the South Carolina Board of Funeral Service, which regulates embalming practices, funeral products, and crematoria. The Board is made up of eleven members, nine of whom have close connections and personal friendships with owners of leading funeral companies in the state, according to the Funeral Consumers Alliance and other watchdog groups.

Woodworkers who want to try their hand at making caskets can’t do it without incurring government-imposed costs that run almost as high as those in the cosmetology sector. Casket-makers in South Carolina are required to go through an extensive checklist of requirements that have no bearing on public safety or the quality of their products. Among these conditions are the following: six adult caskets on display at all times, a public bathroom and water fountain subject to periodic inspection, and a $400 nonrefundable fee to pay for a license.

Established companies (many of which, as mentioned above, have close connections with policymakers – indeed some are owned by policymakers) can meet these prerequisites. Local fledgling businesses find that the regulations drain their tight budgets and make it impossible to compete. Consequently the only winners of regulations are the existing businesses – and of course lawmakers, who often receive campaign contributions or other favors as rewards.

And it’s not only small business owners or consumers who shoulder the costs for a government-backed barrier to entry. The General Appropriations Bill for 2013-2014 provides for over $15 million to fund the professional and occupational licensing agencies, up from $11 million dollars seven years ago. The regulatory beast keeps growing. (In an ironic twist, the Department of Labor, Licensing and Regulation itself has – for the last two years – asked the legislature to eliminate regulators like the Cosmetology Board, a request that our representatives have continually ignored.)

If the legislature and the governor are serious about reducing our debt and budget, they should start with eliminating unnecessary regulatory agencies and let the free market do what it does best: boost job growth and drive down prices for everyone.

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