A few years ago I wrote a piece for Bloomberg about the fight between the monks of St. Joseph Abbey in Covington, La., and the embalmers and funeral directors of that state. The monks have supported themselves by making and selling unadorned handmade pine and cypress caskets for years, and their competition doesn’t like it. Using state power, the funeral directors and embalmers have been trying to forbid the monks from making coffins without a license issued by the relevant state government board, eight of whose nine members work in the funeral industry.
The decision is St. Joseph Abbey v. Castille (5th Cir. Mar. 20, 2013), and it strikes down “rules issued by the Louisiana Board of Funeral Directors granting funeral homes an exclusive right to sell caskets.” The court concludes that “mere economic protection of a particular industry” is not “a legitimate governmental purpose,” and that the law is not rationally related to any other, more legitimate, purposes. On this, the court agrees with Craigmiles v. Giles (6th Cir. 2002) and disagrees with Powers v. Oklahoma (10th Cir. 2004). Here’s a quote that captures well the court’s reasoning (whether you agree with it or not):
“The great deference due state economic regulation does not demand judicial blindness to the history of a challenged rule or the context of its adoption nor does it require courts to accept nonsensical explanations for regulation. The deference we owe expresses mighty principles of federalism and judicial roles. The principle we protect from the hand of the State today protects an equally vital core principle –- the taking of wealth and handing it to others when it comes not as economic protectionism in service of the public good but as “economic” protection of the rulemakers’ pockets.”
Another big win for the Institute for Justice, which has shown a rare ability to win economic regulation cases on the grounds that the regulation lacks a “rational basis,” even though the rational basis test in economic liberty cases is usually extremely deferential to the government.
Let’s hope that this decision will be a lesson to others about how to treat businesses’ many attempts to use the power of the government to destroy or restrict competition.
Competition is good for consumers because it keeps prices low and increases the quality and choices available, but it’s hard work for businesses. They have to fight for customers by innovating and evolving in ways that consumers demand. It isn’t surprising, but it is sad that, to avoid the gritty work of fighting it out in a free market, organized private interests — such as Louisiana’s licensed funeral directors — lobby the government for special regulations, preferential tax treatment, and laws that freeze out competition. They lobby lawmakers to constrain the same free markets in which they originally achieved success. And sadly, the government is more than happy to serve these special interests.
If you need more evidence that the licensing laws’ main purpose is to protect special interests from competition, read this very good piece by Stephanie Simon, published in the Wall Street Journal a few years ago, in which she looks at the proliferation of professional licensing cartels across American state government. She also reports that “occupational licensing is estimated to add at least $116 billion a year to the cost of services, or about 1% of total U.S. consumer spending.”
This is even more reasons to celebrate this court ruling and IJ’s victory, and to cheer the consumers’ ability to buy cheap caskets from the monks of St. Joseph Abbey in Covington, La.
(Thanks to Tim Carney for the pointer.)