Commentary: Local senator helps state overcome an inconvenient lawSen. Steve Murphy certainly knows that just because a law is pro-business, it doesn’t mean it is pro-free enterprise.
By: By Lee McGrath, Institute for Justice, The Republican Eagle
Sen. Steve Murphy certainly knows that just because a law is pro-business, it doesn’t mean it is pro-free enterprise.
Such is the case of a 1950’s regulatory scheme that artificially limits the number of in-state household goods movers in Minnesota. The scheme gives existing movers a veto in the form of a “public convenience and necessity test” that requires applicants for new permits to prove to a judge that existing movers are unable to meet all the demand in a specific market.
Common in the transportation industry since the 19th century, the PC&N test allows existing movers to defeat a future competitor’s application by doing as little as showing that they have an available truck ready to meet any incremental demand identified by the applicant.
Preventing entrepreneurs from entering the market has absolutely nothing to do with avoiding redundancies in capital equipment or helping consumers. Instead, it has everything to do with protecting the profits of a politically powerful special interest: intrastate household goods movers.
The law’s results after 50 years is clear: Minnesota consumers pay the highest rates in the nation for moves within the state — 30 percent higher than those paid for similar moves in neighboring Wisconsin and Iowa. Further, countless entrepreneurs are denied the ability to freely work in their chosen field.
Entrenched moving companies also enjoy the ability to sell their government-issued permits for as much as $40,000 to entrepreneurs willing to short-circuit the administrative process. A new mover can rationalize this absurd cost because paying it ensures entry and avoids the legal expenses and hassles of going before a judge to plea for a permit. Sadly, this process turns new entrants into defenders of the oligopoly.
Thankfully for consumers and the free market that benefits them, Murphy would have no part of such a system and led the effort with Rep. Ron Erhardt (R-Edina) and me to include dramatic changes in the Omnibus Transportation Policy Bill.
On May 23, Gov. Tim Pawlenty signed into law reforms that end Minnesota’s use of the PC&N test and open the market to entrepreneurs. The new law goes into effect Aug. 1 and puts to rest furniture movers’ use of the PC&N test to veto new entrants’ applications.
Some industry members opposed the legislation and argued that Minnesotans currently enjoy reliable service from moving companies that have earned a reputation for honestly moving Minnesotan’s most personal valuables. According to them, Minnesota’s laws have kept unscrupulous providers out of the industry.
But there is no connection between blocking entry into an occupation and consumer protection. If consumer protection were the real issue, the Legislature could enact requirements that pinpoint that problem and require background checks, packing lists or increased bonding-regulations the industry opposes. The industry’s argument puts a consumer-protection disguise on anti-competitive regulations that increased rates to the highest in the nation.
The Institute for Justice Minnesota Chapter successfully secured economic liberty for African-style hairbraiders, taxi drivers, family wineries, sign-hangers and trash haulers in our state, but unfortunately, the work to free entrepreneurs from occupational permits and licenses is far from over. More than 40 state agencies in Minnesota make a mockery of the right to pursue honest enterprise free from senseless government interference by requiring more than 500 different types of permits and licenses.
And the number of workers licensed has grown from 5 percent of the workforce in the 1950s to nearly 30 percent today. Such regulations cause Minnesota’s consumers to pay a premium in excess of $1 billion annually with virtually no evidence of increased quality or consumer protection. They often amount to nothing more than naked protectionist schemes.
Simply put, powerful interest groups abuse government power for a one-way transfer of billions of dollars from the pockets of consumers into their own. This needs to stop.
Fortunately, there are people like Senator Murphy willing to team with IJ to vindicate the right to own and operate businesses free from abusive regulations such as the “public convenience and necessity tests” in transportation laws. We are all better off for such toil to move our economy toward a genuinely free and open market.
Lee McGrath is executive director of IJ-Minnesota, a public interest law firm with offices at 527 Marquette Ave. Suite 1600, Minneapolis, MN 55402-1330.