Government bureaucrats and elected officials abuse their power to give special privileges to corporate interests. Special carve outs in the tax code give an unfair advantage to some businesses over others while small companies and start-ups can’t afford a team of lobbyists and lawyers to navigate the miles of red tape forced on them by out-of-touch government bureaucrats in collusion with established industry insiders. Increasingly, economic opportunity is only available to the wealthy and the well-connected. Young Americans deserve an open marketplace where equal opportunity and real competition fosters both economic growth and personal fulfillment.
Corporate interests use the political process at every level of government to create tax advantages that limit competition and raise prices for consumers. Special exemptions, deductions, and credits will cost nearly $2 trillion this year at the federal level alone. Many of these special provisions give those with political power more profits at the expense of their competitors. Many of these special tax provisions also raise prices for consumers on things like housing and health insurance. Taken together, the effects of preferential taxation make it harder for young Americans to achieve financial stability and economic independence.
Federal, state, and local governments give billions of taxpayer dollars every year to private companies. Just one federal direct subsidy program spent $14 billion of taxpayer money to prop up agribusinesses in one year. Indirect subsidies in the form of cheap rent for coal companies on federal land has cost nearly $30 billion over the past 20 years. These are just two examples of the hundreds of programs that politicians use to dole out favors to special interests. These subsidies raise prices to consumers and make it harder for entrepreneurs to compete.
Governments have been granting power to established industries and holding back competition for centuries. What Adam Smith called “apprenticeship” and “incorporated trade” in the 18th century are now called board standards and occupational licensure. In America today, occupational licensure is a form of state-level government regulation that prohibits anyone but designated license holders from operating in the state. Most licensure laws don’t outlaw the practice of a trade outright for non-holders, only the right of an individual performing that trade to collect payment. In order to receive an occupational license, applicants are often mandated to meet excessively burdensome requirements in the form of education, apprenticeships, fees, and testing. Licensing boards generally establish these hurdles and are the final arbiter of market entry for a licensed profession. These boards are usually comprised of a combination of industry insiders and state bureaucrats. Industry licensing boards are granted the authority to impose sanctions on consumers, businesses, and other individuals that are seen as a threat to their monopoly power. Businesses not approved by the board of their competitors are subject to legal reprisal in the form of fines, property seizure, and closure, and even jail time. These legal penalties are imposed not for perpetrating fraud or engaging in unsafe practices, but solely for operating a business without the permission of the other business owners in the industry. The punishments for safely and responsibly operating a business without the permission of industry insiders and government bureaucrats include fines, seizure of business property, and jail time. These punishments are often enforced by police officers, rather than state health or safety inspectors. Since the 1950s, licensure has grown from encompassing around one in twenty professions to now covering roughly one in three. This shift in policy has been bipartisan; governors and legislators of both parties all over the country allowed the imposition of occupational licensure to explode. Over 8,750 occupations require a license in at least one state, with most of those being low to moderate income professions like plumber, barber, truck driver, veterinary assistant, interior designer, or optician. All of this makes it much harder for young Americans to find work, as the White House noted in a 2015 report and the academic research showed job creation is reduced by 20% because of licensing laws. Uber is a perfect example of entrepreneurs rejecting an overly burdensome licensure law and creating new value for consumers.
Local governments impose antiquated zoning laws that reduce affordable housing according to research by the Federal Reserve and New York University. Additionally, zoning laws are used to bludgeon homeowners who choose to use software like AirBnB or HomeAway to make some extra money. Zoning prevents entrepreneurial food truck owners from going where customers are and raises prices for office space that could be used by new start-ups. Zoning laws favor established interests and most cities have “grandfather” clauses, allowing the politically connected to be exempted for no other reason than they were there first. If zoning was really meant to prevent unsafe building practices or dangerous activity, it would be applied equally. Instead, zoning is used to prevent young Americans from competing with the establishment, raising prices and limiting opportunity in the process.