Nibbling Away at the American Dream

Arizona's Board of Cosmetology seems to have something to say about the make-up of the American dream.  George Will of the Washington Post recently highlighted the story of Cindy Vong, an entrepreneur with a dream of starting a beauty salon.

Armed with an idea and funding, she opened her new shop and waited for customers to arrive.  Business came, but so did a notice from the Board of Cosmetology, telling her that her most innovative offering didn't fit into their regulatory parameters and therefore must be stopped immediately (at a cost of over $50,000).

What was Cindy's pricey offence?  $30 fish pedicures.  The Board effectively compared toothless carp to sharpened razors by saying all pedicure instruments are to be sterilized.  Since it is impossible to ensure sterile fish, the Board decided against Cindy. What Cindy stumbled upon are so-called "certificate of necessity" (CON) laws.  Regardless of the merits of her case,  CON laws, once crafted to prevent monopolies, tend to stifle competition and innovation.  Rather than placing the onus on the regulator, the entrepreneur must make a case to the government and often to their competitors as to the necessity of their new business.

As George Will concludes,

"Such laws often are explicitly biased against new businesses. In Illinois, someone wanting to open a car dealership must get a certificate from the Motor Vehicle Review Board, and if any existing dealer objects, the board must consider, among other things, 'the effect of an additional franchise . . . upon the existing' dealers and 'the permanency of the investment of the objecting motor vehicle dealer.' When in March Florida’s legislature considered a bill to end licensing requirements for 20 professions, including interior design, the interior design cartel, eager to restrict entry into the profession, got a professor of interior design to ask legislators: 'Do you know the color schemes that affect your salivation, your autonomic nervous system?' In regard to her concern over unsanitary hospital fabrics, a Tampa interior designer warned the panel: 'What you’re basically doing is contributing to 88,000 deaths every year.' Fatal color schemes? Who knew. This overwrought designer should calm down, perhaps by having some fish nibble her feet."