Protecting the established, stifling the upstart

John Hood Contributing columnist

My wife is angry at the government. No surprise there, I suppose — we do have a great deal in common.

To be more specific, my wife is angry with the city of Charleston, South Carolina. For the better part of a year, she’d be planning a vacation to the historic city with her mother and sister. They’d lined up a beautiful and reasonably affordable place to stay — a private home offered online for rent.

But earlier this year, Charleston adopted new rules governing short-term rentals. The rules are strict. The property owner has to file site plans, arrange costly inspections, live in the house full time and, in fact, can’t vacate it during the rental period.

Those offering Charleston homes for rent had hoped to get the rules loosened, or that the city wouldn’t really enforce them. Their hopes have been dashed. My wife’s rental agreement, arranged months ago, went “poof.”

While some neighbors may complain here and there about parked cars or unfamiliar boarders, the true driving force behind municipal restrictions on short-term rentals, “granny flats” and other commercial uses of private homes is that existing providers — hotels, bed-and-breakfast owners, apartment managers — resent the competition. It shouldn’t shock you to learn that once Charleston restricted short-term rentals, prices for hotel rooms shot up.

Protection of politically favored business is a familiar story. In Washington, the protectionist lobby is experiencing a bit of a resurgence, thanks to a populist alliance of the labor-union Left and the Trump administration. At the state level, industries and professions routinely lobby for occupational licensing, which has the effect of excluding competitors from the market and of creating demand for training services that just happen to be provided by the very businesses lobbying for licensure.

North Carolina is, unfortunately, worse than the average state when it comes to occupational licensing. We have dozens of regulatory boards plus relatively onerous training periods and licensure fees. We license twice as many occupations as Virginia does and three times as many as South Carolina. Of course, our consumers aren’t two or three times safer. For most occupations, the only discernible effect of licensure is to raise prices.

Across local governments, the protectionist impulse isn’t confined to housing. The taxi industry resents and tries to squelch Uber and Lyft. Restaurants resent and try to quash food trucks.

Incumbent businesses do have some legitimate grievances. Compelling hotels to jump through governmental hoops and collect high occupancy taxes does hamper their ability to compete with short-term rentals. The answer, it seems to me, is to reduce significantly those regulatory and tax burdens before attempting to broaden their application.

Suppressing competition works only for a time. Protectionism is a losing proposition in the long run.

As for my wife, she remains angry at Charleston. But she’s still excited about her coming trip a historic Southern city.

They’re going to Beaufort.

John Hood
Contributing columnist Hood
Contributing columnist

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide at 7:30 p.m. Fridays at 12:30 p.m. Sundays on UNC-TV.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide at 7:30 p.m. Fridays at 12:30 p.m. Sundays on UNC-TV.