Berke, Obama say they see licensing as burden on entrepreneurial poor

Vendors at the Lookout Farmers Market in St. Elmo (Chattanooga), Tenn., largely escape the  grasping claims of the state upon their free market economic callings and for-profit activities. (Photo Lookout Farmers Market on Facebook)

Vendors at the Lookout Farmers Market in St. Elmo (Chattanooga), Tenn., largely escape the grasping claims of the state upon their free market economic callings and for-profit activities. (Photo Lookout Farmers Market on Facebook)

By David Tulis

The ideals of capitalism and the free market have receded from view and so when we see a glimmer of it as a prospect, a thing in the future, a celebratory frame of mind asserts itself.

City government in June acknowledged that startup businesses face hurdles from the administration. It has assigned staff to simplifying the application process for business licenses for those who need them.

“User-friendly licensing and permitting are also powerful predictors of a state’s perceived warmth toward small businesses,” notes a report in “It’s a more powerful predictor than a state’s tax regime, according to a 2014 survey sponsored by the Kauffman Foundation.”

“I want to see more new businesses formed in our city,” Mayor Andy Berke says. “Being an entrepreneur is a great way for anyone to improve their life and work toward a middle-class income.”

Implied in the coverage about business licenses and occupational licenses is the a priori claim by states and their subdivisions (cities, counties) to own occupations.

Business licenses are bad enough. Worse are occupational licenses that even the Obama administration is making a show of viewing as a problem. Occupational licenses impose a pretended duty upon a person engaged in a line of work to prove himself worthy of it by obtaining a certification of performance or skill.

Tennessee ranks low in a study about how occupational licensing damages the prospects of the poor. Citing a libertarian-oriented study, the White House is joining the free market critique of licensing rules that it says cost millions of jobs across the U.S. and increase consumer costs by an estimated F$100 billion a year.

The average state licenses 43 occupations, says the Goldwater Institute and Clint Bolick, its litigation vice president.


The group says licensing damages minorities and the poor the most.

“Any state policymakers looking for an obvious lever to pull to make their state business climate more conducive to entrepreneurship generally — and low-income entrepreneurship in particular — should look closely at the occupational licensing regime in their state. *** A better broad-based reform would allow a more decentralized form of achieving the beneficial goals of occupational licensing — basically, allaying the public’s concerns about health and safety—while simultaneously providing a mechanism that can experiment with the best ways of certifying someone in a trade or acknowledging types of experience that may not be currently recognized by a state licensing agency or state law. A regime of voluntary private certification would fit this bill.”

“The states that license more than 50 percent of the low-income occupations had an average entrepreneurship rate that was 11 percent lower than the average for all states,” the group says in a February paper,

and the states the licensed less than a third had an average entrepreneurship rate that was about 11 percent higher. Even after including control variables for demographic and economic factors that may explain the rates of low-income entrepreneurship, the association holds up and is statistically significant. Reforms to state occupational licensing laws are vital to improving the rate of entrepreneurship among low-income workers. Those reforms should include the sunsetting of existing licensing arrangements and the creation of a private certification system to replace the current government-driven one.

The national executive branch’s interest in the burden of licensure is disingenuous if not intended to confuse as regarding its sympathies. The Washington government has no concern whatever about any local economy or any damage the progressive state causes to individuals or lines of work.

Its sympathies lie wholly elsewhere. We can take for ourselves as Tennesseans and local economy advocates the interest in callings and professions and their having been stolen by the federal government.

Tennessee is a mess when it comes to the free market in occupations, callings and trades. The state presumptively claims many areas as its own that are apart of the occupational licensing described by Goldwater Institute. The licensing of any occupation is a violation of the spirit of the free market. 

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“Bootstraps tangled in red tape; how state occupational licensing hinders low-income entrepreneurship,” Feb. 23, 2015.

A White House paper on the topic runs 66 pages with another 10 pages of cites and references.


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