Licensing to Kill - WSJ.com

Review & Outlook: Licensing to Kill - WSJ.com

When most people think of occupations requiring fingerprints and police reports, corner bookshop owners don't spring to mind. Try telling that to Los Angeles, where many used booksellers are required by law to get a police permit and take a thumbprint from every 40-something trying to offload his collection of French poetry.

That's one scene from a study to be released this week by the Institute for Justice, which has collected dozens of examples of regulations choking economic growth by taxing and over-licensing small businesses. In a survey of eight major cities, the study found that entrepreneurs routinely face obstacles of bureaucracy and red tape that deter them from otherwise promising opportunities.

In addition to the economic cost of such inanity, the regulations take a personal toll on many aspiring small business owners, often immigrants who thought America was still a land of opportunity. Consider the case of Muhammed Nasir Khan, who lost most of his family's savings thanks to Milwaukee's messy regulations and the whim of a local alderman.

Despite following all the rules, his food license was retracted at the request of Alderman Robert Bauman, who suggested he would rather see a place "with a little class" in the location, instead of Mr. Khan's restaurant. Reopening Judy's Red Hots, he argued, would somehow encourage crime and disorder and stall the redevelopment of the community. The real crime is how easily an entrepreneur's dream was destroyed by the caprice of a politician and the regulations that empower him.

Politicians of all stripes like to celebrate "small business" while running for office, but the reality is that they often strangle entrepreneurs once they get in power. Read the Institute for Justice study and you'll better understand why the business of America is no longer business. It's bureaucracy.