Minnesota Lawyer
Margaret Martin
Last year I wrote about an exchange in the 2010 session between now retired Rep. Larry Haws, DFL-St. Cloud, and Rep. Mark Buesgens, R-Jordan. Haws sponsored legislation to allow students to transfer credits between MNSCU campuses; Buesgens was incensed that it took an act of the Legislature to do something so common-sensical.
This year, courtesy of the shutdown, we have been revisiting government-created obstacles to people’s daily lives — in a big way.
We have learned that some businesses cannot legally operate without direct and constant government licensing, permitting and inspections. And when government cannot — or refuses to — perform its duties of licensing or inspections, these businesses are prevented from operating.
We have all heard how the state regulates alcohol, not just for the purchaser at the point of sale but at multiple levels. Producers, distributors and sellers could be prevented by the shutdown from buying or selling any liquor in the state. A similar issue is involved with the selling of cigarettes. In part these problems have to do with the way that the state collects taxes on these items, but the regulation goes far beyond that reasoning. Truckers, loggers and milfoil cutters have all felt the ill effects of the shutdown due to the restrictions on their businesses.
In some cases there is a public safety argument for these rules; in others, the link is more tenuous. And even when there is a public safety reason, why does it require three separate government actions to allow an activity instead of, say, one? Each layer creates a time and money cost to that business, often with no additional benefit to the business or the public. In these cases, government and its employees are the only winners.
It is up to each state to decide whether some activity should be a government monopoly. But we all pay a price when government has crowded the private sector out of those activities. When there is a failure, it is a spectacular failure. We are not at the point of being helpless and dependent on government action to move our lives forward, but some areas of our state economy are so inextricably linked with government they do face paralysis if government cannot act.
We should be asking whether this is a good thing, and the answers may differ depending on the type of activity. As difficult and contested as it no doubt will be, we are overdue for a review of our licensing and regulation systems.
The Pawlenty administration’s Drive to Excellence initiative, headed by former Rep. Dan McElroy, pushed for easier online licensing, something that is not yet complete throughout the state system. That’s a start, but looking at what licenses and permits are necessary is even more contentious — as seen in the debate over HF 1, sponsored by GOP freshman Dan Fabian of Rouseau, which dealt with simplifying environmental permitting. Gov. Mark Dayton eventually saw the wisdom of limiting these obstacles in order to help create jobs and signed the bill into law.
In countries with truly dysfunctional governments, a phenomenon I studied years ago in graduate school, people do find a way around government. They create their own systems to avoid or supplant government action where governments are malevolent or simply obfuscatory. Hernando DeSoto’s book “The Other Path” documents how people got around government in Peru. Some stories are refreshing accounts of community action and individual entrepreneurship. The dark side is vigilantism, a loss of respect for the rule of law and a diminution of social trust when it is reserved for a tighter and tighter circle.
Getting back to Minnesota, the Department of Natural Resources has recently dealt with an attempted end run around their rules by Crow Wing County, which saw its summer fishing tourism slipping away with visitors unable to buy licenses during the shutdown. They passed a temporary license ordinance that allowed fishing in their lakes on the pledge that those fishing without a license would get one within five days of the resumption of state-provided licenses. The DNR quickly shot back that such temporary licenses were against Minnesota law.
But sometimes, as Mr. Bumble said in Dickens’ “Oliver Twist,” “The law is an ass.” It doesn’t pass the test of common sense with most people to have enforcement without any way, practical or otherwise, to obey the law. To put citizens in that position is to invite disrespect for the law that could have long-term consequences for our state. Even sheltered bureaucrats and governors should think twice about going there. Sometimes the best exercise of power is not to exercise it at all, and to rely on practicality and fairness in such cases. To do otherwise is to invite challenges to our most basic institutions.
Nevertheless, we also learned last week that some basics of Minnesota life can happen without government intervention — the State Fair could go on during a shutdown since state food inspections were deemed critical (although vendors who failed to get licenses may have been out of luck). Government entities outside of the University of Minnesota wouldn’t be staffing informational booths, but Jim Sinclair, the deputy general manager of the State Fair, said when interviewed by WCCO that rides and games would be unaffected since no state employees inspect those; inspections are done by independent contractors.
This experience of having government obstacles to private business activity revealed one at a time should make us think twice about how many layers of regulation the state has and how, in changing them, they might better serve the public.
David Lillehaug, the attorney representing the Dayton administration in the shutdown hearings, said this episode would reveal how important government was to people and refute Republicans’ belief in smaller, more limited government. Instead, people may see how, in some cases, you can’t do anything without government intervention. And they may ask “why?”
