Michelle Freenor's business almost failed before it began.

That would have been a loss, since her Savannah, Georgia, walking tour gets only good reviews from customers. "Top notch tour guide giving us a lot of history of Savannah's Historic District," said one five-star Yelp review. "Great, informative," said another.

But that didn't matter to Savannah politicians. They said she had to get a government license if she wanted to charge people for tours. And getting the license was difficult.

She had to pay $100 and then "pass a college-level history exam with tons of obscure gotcha questions," Freenor told us. Passing required "three to five months of studying because it was about 120 pages. I had to map out where I was standing, what I was saying."

It's one more example of abuse of licensing rules. Dick Carpenter, author of the book Bottleneckers, lists how these regulations strangle new businesses.

"She also had to do a criminal background check, which meant she had to give a urine sample and a blood sample." Carpenter told me. "She also had to go through a physical fitness test."

No matter, said the city, you must pass the test and you must pay the fee.

"The city was making a nice bit of money," says Freenor.

A Stossel.com video producer went to Savannah to confront the licensing rules' biggest promoter, Alderman Bill Durrence. "A lot of people think that this fee is just another money grab by the city," he admitted, "but I hear a lot of tour guides saying things that make me cringe."

So what? Some of the more popular Savannah tours are "ghost tours." Those tour guides must take the test, too, although it includes no questions about ghosts. The city even had some wrong answers on its test. It claimed "Jingle Bells" was written in Savannah. Most people say it was written in Massachusetts.

The test also misidentified the city's largest square.

Savannah's politicians demanded aspiring tour guides pass a test that included rules about horse-and-buggy and tram tours, even if the guides only intended to walk.

Freenor took the exam and passed it on her first try. But then she got sick; she has lupus.

"When I told them, hey, I don't think I can pass the physical this year, I was actually told by a city official, well, I guess you're going to have to find another occupation."

Durrence admits, "There were a couple of points that maybe went a little too far in the licensing process, (like) having to have a physical exam periodically, maybe the cost of the test."

Yes—politicians routinely go too far.

Fortunately, the Institute for Justice, the libertarian law firm where Carpenter works, helped Freenor sue Savannah, and the city backed down. Robert Johnson, one of Freenor's lawyers, points out that such licensing laws violate the guides' right to free speech. "What tour guides do is talk for a living. They're just like stand-up comedians, journalists or novelists. In this country, you don't need a license from government to be able to talk."

An Institute for Justice lawsuit got rid of the Washington, D.C., tour guide test, too.

Will terrible guides start giving terrible tours because of that?

No, says Freenor. "The free market is taking care of itself. Bad tour companies don't last."

She's right. Competition is the best way to decide which tour is good. In fact, a recent Institute for Justice study—using Trip Advisor review data—found that tour guide quality was no different after Washington's test was eliminated.

Alderman Durrence doesn't like the fact that the market, rather than government, determines consumer service: "Little by little we've managed to get control of some things, but we still don't have control over a lot!"

Give me a break. Government control is everywhere and always growing.

Freenor says, "It's the free market that made us successful, not the city of Savannah. You shouldn't have to pass a test to be able to tell people where the best ice cream in Savannah is."

Watch the video below:

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