Burying Bad Regulation: St. Joseph’s Abbey Strikes Blow for Economic Freedom
The decision is a victory not only for the Abbey, but also for Louisiana residents and American citizens generally. The state denied equal protection to anyone in Louisiana who sought to sell caskets to another Louisianan without fulfilling burdensome regulatory requirements. The state also denied its citizens the opportunity to buy more affordable caskets, forcing grieving families to pay top-dollar to give a loved one an honorable burial.
The only folks who benefited from the law were the state’s funeral directors. Unsurprisingly, funeral directors and embalmers make up eight of the nine members of the Louisiana State Board of Embalmers and Funeral Directors, the state licensing agency. This insulated them from competition and allowed them to mark up prices.
Unfortunately, Louisiana’s economic favoritism isn’t unusual. States have traditionally used licensing requirements that restrict competition by creating unreasonable barriers to entry.
Since the demise of the U.S. Supreme Court’s decision in Lochner v. N.Y. (1905), courts have given broad deference to state economic regulation. The Fifth Circuit acknowledged that a state can show favoritism if it is in any way rationally related to a government interest in health and safety or consumer protection. But lacking that interest, the court said, favoritism constitutes nothing more than “a naked transfer of wealth” -- and the state can’t arbitrarily favor whomever it wants.
The court reasoned that “neither precedent nor broader principles suggest that mere economic protection of a particular industry is a legitimate governmental purpose.”
No level of government should be allowed to pick and choose favorites in the economic marketplace. The Fifth Circuit’s decision to bury Louisiana’s anti-competitive coffin sales restriction is a move in the right direction.
Now, if we could just get the federal government to move in the same direction.