Burdensome Barriers: How Excessive Regulations Impede Entrepreneurship in Arizona

Posted on December 08, 2003 | Type: Policy Report
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Executive Summary

In Arizona, occupational licensing requirements and regulations stifle competition, diminish quality of service, and drive up prices. Thousands of laws restrict entry into occupations for persons wishing to serve consumers as cosmetologists, barbers, African hairbraiders, taxicab drivers and street vendors. State agencies and occupational licensing boards act as gatekeepers, restricting competition and ensnaring entrepreneurs in thick layers of red tape.

Arizona municipalities also create burdensome barriers. If a Phoenix business owner wants to remodel or change the use of an existing structure, the city requires him to pay $630 to meet with its Development Services Department. Then the applicant must ensure the proper application is filed, which costs at least $1,200. Once final site approval is obtained, an applicant must obtain several other permits and pay applicable fees, including sewer and water fees, a new development impact fee, signage fees, and depending on the occupation, a licensing fee. In Tucson, would-be entrepreneurs must navigate a 17-step process that the city's own Small Business Commission has described as "seemingly never ending." And those are just two small tips on the regulatory iceberg floating in the way of Arizona entrepreneurs.

While regulatory boards and commissions are frequently defended on the grounds of alleged health or safety concerns, the principal effect of many occupational licensing schemes is to promote the vested interests of those already engaged in regulated professions, creating government-sanctioned cartels. To the extent that regulation adds marginal protections for consumers, that protection comes at a significant price in lost productivity and lost economic dynamism. When government regulation is necessary, regulations should be highly circumscribed, easily understandable, and narrowly tailored to achieve legitimate goals such as preventing fraud.

Arizona's legislature, judiciary, and elected officials at all levels have a duty to protect economic liberty and an obligation to allow for a dynamic economy for the people of the state. If set free from burdensome and needless regulations, Arizona entrepreneurs would find it easier to open new businesses. Among their ranks would be hundreds of low-income and minority entrepreneurs who would be climbing the first rung on the proverbial economic ladder.

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