Press Release

Cooper Lawsuit Contains Irony

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RALEIGH — Attorney General Roy Cooper recently filed a lawsuit against a gasoline distributor for alleged price fixing, but if state officials were that concerned with restraints against trade, they would eliminate or modify state government’s many anticompetitive policies, according to a new report by a John Locke Foundation analyst.

Daren Bakst, legal and regulatory policy analyst at the Raleigh-based think tank, provided details of these state-imposed trade restraints in a Spotlight briefing paper. Under North Carolina law, for example, health care providers must petition the state for permission just to add a single bed to their facilities or replace outmoded equipment. State law also mandates that no more charter schools be built and requires occupational licenses for so many jobs that even barbers are required to get one — after attending 1,528 hours of barber school first.

Those laws protect current business and restrict competition by acting to keep out potential new competitors, thus damaging the interests of consumers, Bakst argued.

“When a business restrains trade, its effects will be limited to that particular market,” he said. “When a state such as North Carolina restrains trade, its effects are far-reaching and can reach across an entire industry. State-imposed trade restraints are much worse.”

Bakst cited North Carolina’s certificate-of-need laws as being especially anticompetitive. “In North Carolina, health care providers have their own monopolies, and the state prohibits new entrants into the market,” Bakst said. “How does this help consumers? It doesn’t, but it protects health care providers who are already in the market.”

Similarly, the cap on charter schools protects public schools from competition, the study shows, but it doesn’t help children or parents, the education consumers. The state’s occupational licenses also tend to reduce competition. “North Carolina’s barber license is so strict,” Bakst said, “that anyone who cuts a friend’s hair may actually be breaking the law. ”

“If the state is serious about reducing unfair trade practices,” he concluded, “then it should start eliminating its own anticompetitive laws.”

Daren Bakst’s Spotlight, “Government Trade Restraints: How N.C. Hurts Consumers by Restricting Competition” is available on the John Locke Foundation web site. For more information, contact Bakst at 919-828-3876 or email him at [email protected]

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We are North Carolina’s Most Trusted and Influential Source of Common Sense. The John Locke Foundation was created in 1990 as an independent, nonprofit think tank that would work “for truth, for freedom, and for the future of North Carolina.” The Foundation is named for John Locke (1632-1704), an English philosopher whose writings inspired Thomas Jefferson and the other Founders.

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