Friday, May 4, 2012

The Permit Plague

Two scandals are currently in the business headlines.  The Justice Department is investigating Walmart for paying millions of dollars in bribes to Mexican government officials.  Such payments were made so that the Mexican officials would approve the permits Walmart needed to open stores throughout Mexico.  In addition, the Securities and Exchange Commission is investigating some major Hollywood studios who allegedly bribed Chinese government officials to gain permission to show movies in China.  Those payments are illegal under the Foreign Corrupt Practices Act and can incur fines of up to $5 million and 20 years in jail.
However, the untold scandal here is that businessmen, at home and abroad, are compelled to secure government permits.  When corrupt officials use this (illegitimate) power to shake down companies, one should blame not the businesses that are attempting to be productive, but the statist idea that such permissions are a proper function of government.  The way to eradicate such corruption is to fight for the complete separation of state and economics.
Once government assumes the power to permit, it arrogates the power to restrict, to coerce exactions, and to kill economic activity.  In downtown St. Petersburg, Florida, for example, it is impossible to secure a permit to operate a food truck.  In many cities where one can get a vendor's permit, the conditions amount to a hobbling -- where, for example, high-traffic areas are off limits, or there are time limits on how long you can stay in one spot, or you are compelled to stay at least 1,000 feet from any established business that sells similar products, or you are forced to navigate a labyrinth of incomprehensible (and often contradictory) regulations issued by, for instance, the Departments of Health, of Transportation, of Health and Mental Hygiene, and of Consumer Affairs.  A recent exaction, triggered by the need to secure a government permit, is that lawyers in New York are now compelled to perform 50 hours of pro bono work before being admitted to the bar.

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