Cut Out the State, Free Entrepreneurship

The state often imposes enormous regulatory hurdles like licensing fees and time-consuming and expensive classes on people trying to carve out a basic living. And it’s all done by the state for our supposed safety. But this is time and money that Achan Agit, a hair-braider from Iowa, simply didn’t have. Her case is particularly egregious. One of Iowa’s regulatory requirements is, according to Forbes, “finishing at least 2,100 hours of coursework, or roughly 490 days,” which is, “more burdensome than the training requirements for dental assistants, bus drivers, emergency medical technicians, animal control officers, child care workers, security guards, pest control applicators and animal breeders — combined.”

Unbelievably, Iowa does not require this $20,000 school to actually teach braiding. Which means that the time you spend there gets you little more than a certificate of good standing from the state, and an enormous financial hole to dig out of.

When Agit became pregnant and fell ill, she decided to go underground and do what she loved informally. She had to rely on neighbors and friends to supplement the support she continued to provide her family, who still live in South Sudan. For Agit, however, the matter has now become a pursuit of justice. In late October she, a fellow braider, and the Institute for Justice (IJ) sued the Iowa Board of Cosmetology Arts & Sciences. Together, they argue that Iowa’s laws prohibiting unlicensed hair-braiding amount to a “burdensome, arbitrary, and irreparabl[y] harmful” restraint of trade. Punishment for a violation of Iowa’s onerous laws include criminal penalties, such as prison time up to one year or fines of up to $10,000.

These barriers to entry and heavy-handed threats of violence and pecuniary penalties for violations of the law are just a few of the ways that the state reinforces class divisions. The state does this through its harsh regulatory apparatus, which, intentionally or not, reinforces the dominance of larger firms who can more easily bare the litany of regulatory fees. For newcomers with limited financial capital, these regulatory costs effectively place a “do not enter” sign in front of the prospective entrepreneur.

None of this is an isolated incident. As Charles Johnson notes (“Scratching by: How Government Creates Poverty as we Know it,” The Freeman, December 1, 2007), “[I]n many states, anyone found braiding hair without having put down hundreds of dollars and days of her life to apply for a government-fabricated cosmetology or hair-care license will be fined hundreds or thousands of dollars.” Johnson also points out how other things like the medallion system for taxis and licensing to be a private cook — to name just a few — similarly harm the poor.

Although IJ’s work here is laudable, it’s unlikely that most people trampled upon by the state will have the necessary time or money to challenge these laws. And IJ can only assist a small fraction of the aggrieved. In addition, the state and more well-established businesses who benefit most from these laws have a mutual interest in maintaining the status quo.

The process of challenging laws, removing corporate influence from politics, and reforming regulations is a time-consuming and costly one. One can only imagine what Achan Agit is spending in time, energy, and money, even with IJ’s pro bono legal aid. Even without legal fees, Agit’s costs in transportation, missed work, etc. are likely mounting. They are unnecessary costs that an honest, eager entrepreneur ought not have to bare.

If we want entrepreneurship to flourish, let’s treat it as a type of direct action. Direct action subverts the state’s supposed legitimacy without its approval. Entrepreneurship does much the same. And it reaffirms the importance of freed trade and the crucial role it plays in allowing people upward mobility. The work IJ does is important, but it need not be our main avenue of liberation.

To that end, let’s encourage entrepreneurial direct action built through networks of trade, mutual aid and solidarity, even if they must begin within black markets. That way if the state decides to fight back, the poor can get neighborhood power on their side.

Citations to this article: