Last week, the Supreme Court struck down a Tennessee law that requires an individual to be a resident of the state for two years before he can obtain a liquor license. This is a small victory for property rights.
The right to property means the freedom to create, attain, use, keep, trade, and dispose of material values. The Tennessee law restricted this freedom by imposing an arbitrary barrier to those who wanted to open a liquor store.
Of course, requiring an individual to obtain a government license before opening a liquor store (or any business) also restricts this freedom. So, the ruling leaves in place restrictions on the freedom to trade values while removing one small condition for obtaining a license.
Government licensing, whether of liquor stores or barbers, interior designers or dentists, restricts the freedom to trade. Such licensing requires individuals to obtain government permission before engaging in the profession of their choosing.
Defenders of licensing claim that it protects the public. But as Justice Alito stated in the Court’s opinion, the Tennessee law protect incumbent liquor store owners from out-of-state competition. The same is true of all licensing schemes–they protect incumbents from competition.
Consider the uproar when Uber comes to a new city. Existing taxi companies and their employees are the most vocal critics, demanding that government officials do something to stop Uber from offering lower prices and more convenient service. The public–which taxi licensing is supposed to protect–welcomes Uber.
Licensing implies that consumers are too stupid to make decisions on their own. Consumers need government oversight, or else they will fall victim to fraudsters and the incompetent. But such oversight didn’t protect the public from Bernie Madoff.