Today’s Washington Post features a front-page article on “A legal case that’s not so open and shut,” featuring a challenge to a Louisiana state law requiring casket sellers to obtain a license that, inter alia, demands a layout parlor, an embalming room, and the employment of a state-approved funeral director. Plaintiffs are monks at St. Joseph’s Abbey, which lacks any and all of those accoutrements. Still, the monks find both economic and spiritual fulfillment in building caskets. It’s what they do when they’re not in prayer or lounging around the pool: blessed are you a monk swimming. (Belated Catholic joke alert.) What the monks demand to know, along with the rest of us, is where the heck the state gets off passing a law like that.
Plaintiffs are represented by the redoubtable Institute for Justice, which has fought with great valor and some success against licensing laws for barbers, hair braiders, interior designers, flower arrangers, and other professions which, but for stringent public oversight, would rain death and destruction on us, the people. Or so say the public servants who enact and enforce licensing laws. IJ and its clients say otherwise. Economic regulation, they insist, demands a rational basis, and a bare desire to protect incumbents against market entry and competition can’t be it.
I’m four-square behind this campaign. (As Jeff Rosen has reliably reported, I’m the Napoleon of a “Constitution in Exile” with full-blown judicial review of economic regulation.) Still, I worry about its prospects. The Benedictine monks won in district court, and IJ has scored important victories in several similar cases. And today’s AEI blog features a piece by Thomas A. Hemphill on one state legislature’s (Michigan’s) attempt to deregulate professions. But then, there’s the enormous headwind: a depressing (though hilarious) Wall Street Journal article chronicles the explosion of licensing laws from 1950 to this day.
How is that possible? Aren’t we supposed to become more competitive all the time? Sure we are; and the local protectionist laws are a predictable response to increased competition. They tend to sprout in service sectors that are insulated from remote, out-of-state or foreign competition. (You can’t order a tattoo over the internet.) They also tend to sprout in sectors with low entry barriers and entrants with idiosyncratic utility functions—Korean families with a “taste” for self-exploitation, for example; or Benedictine monks. When they hammer and saw away at their caskets, they have a very particular carpenter in mind. Every product will be as good as they can possibly make it, and they don’t really care about the return on equity in this life. Hard to compete with that business model.
Query: suppose the much-heralded, job-creating, salt-of-the-earth, GOP-voting small businesses depend in some measure on their ability to earn supra-competitive returns: what’s the true and correct response? For constitutional purposes, should an averred (though poorly pursued) purpose to protect small business pass rational basis review?