Adventures in municipal licensing

Yevgeny Shrago

For the next three weeks, I’ll be doing a clinical with the New Orleans City Law Department, which involves a deep dive into the city’s licensing regime. I’ll try to share some of the more entertaining things I’ve gleaned from my work and see what sorts of insights it might give for larger liberal policy.

In New Orleans, the city code thankfully ensures, in a single sentence, that bread flour not be mixed with any “unwholesome, deleterious substance.” There’s a little added definition, but decisions about what constitutes such a substance seem to be left up to the health inspector’s discretion. In the next three sections, the code specifies, in painstaking detail, not just the materials that the paper wrapping the bread must be made of, but the weight of the paper, and the minimum number of loaves that can be delivered to a restaurant while wrapped in this paper. Based on their relative treatments in the text, it seems like the New Orleans city council that passed these laws though that the paper needed to be more strictly regulated than what actually went into the bread.

Such weirdly specific regulation can be detrimental to the cause of positive government regulations. When small-government types scream about liberal invasions of the private sphere, they can easily point to silly laws, like the specific bread-wrapping regulations, as examples of “big government taking over our lives.”  The upshot of these movements, though, is not an effort to make the laws relate more rationally to actually legitimate objectives, but instead to dismantle all regulation, including things like pure food and drug laws. By focusing on “silly” regulations, committed opponents of government change the conversation from laws that everyone but a few specific interests support to things that only a few specific interests support.

The truly twisted part is that, of course, the reason for such frivolous regulation is usually not some well-meaning, but misguided desire to protect public welfare, but capture of the city council by corporate interests looking to raise barriers to entry, either by increasing complexity of complying with regulations, or raising the costs of production to make it impossible for new, small-budget investors to profitably comply.  This is a devastating two-step: first, corporate interests can use well-meaning government regulation to protect their own market position, and then, if they judge that the economics have properly shifted, they can use those same silly regulations as cover for repealing actually valuable laws.

What is to be done? Courts can’t strike down these laws: the regulation at issue in notorious anti-precedent Lochner v. New York was an example of exactly this kind of special interest legislation, an attempt to prevent immigrant bakers from competing on hours with union bakers. Courts have rightfully ceded the field to legislatures in economic regulation.  What liberals need to do is start combing through federal, state and local codes, looking for laws that make a mockery of progressive regulation, and pushing their legislators to repeal them.  It’s not a sexy issue, but beyond improving economic outcomes, it could make regulations that matter more secure.

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