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FROMMER: D.C. entrepreneurs wrapped in red tape

Bureaucracy blocks attempts to start new businesses in the District

- The Washington Times - Monday, October 25, 2010

When most Americans think of Washington, D.C., they imagine the corridors of power. But there is another Washington, D.C., far from Capitol Hill and K Street. It's in neighborhoods like Anacostia, Columbia Heights and Cleveland Park - neighborhoods where people disconnected from the national political scene live, work and dream of becoming their own boss. These are people ready to work hard so they can create a better life for themselves and their children.

For many Washingtonians, however, those dreams of entrepreneurship never come to fruition, thanks in large part to the strongly held misconception by many officials in the city that there is no problem government cannot fix. As a result, the District has enacted one rule after another, creating a thicket of regulations and red tape that ensnares small businesses and stifles the entrepreneurial drive of countless residents.

Year after year, the District has been ranked the worst place in America to start a small business. As demonstrated by a new report released Tuesday, changing that dubious distinction could be as simple as the government doing one thing: getting out of the way. "Washington D.C. v. Entrepreneurs: D.C.'s Monumental Regulations Stifle Small Businesses," which I authored for the Institute for Justice, examines specific barriers to entrepreneurship in the District and explains precisely what the District must do to restore the sense of possibility that is vital to any thriving city.

Consider the city's mobile vending industry. James Tiu is a former lawyer who sold meatless burritos in the District. Although his burritos were safe and popular, the government shut Mr. Tiu down because his rice was not on the city's list of approved foods. It took Mr. Tiu 1 1/2 years of lobbying and having a food-safety expert test his burritos before he could resume his livelihood. As Mr. Tiu admits, "I couldn't have done it without the help of a lawyer. And I was the attorney."

The District is now trying to make things even worse for vendors with recently proposed regulations that continue the city's micromanagement. Worse, incumbent brick-and-mortar restaurants have asked the District to effectively ban the hip new food trucks seen around town. If the District wants to encourage economic opportunity, it must rebuff these protectionist demands and instead put together a simple set of rules that give entrepreneurs freedom to bring their wares to the public.

Vendors aren't the only entrepreneurs in the District's crosshairs. You may have heard that the District is one of the few cities in the nation that ban unauthorized talking: Before anyone may give a tour for money in the city, he or she must pass a government-mandated test. This is flatly unconstitutional; after all, no one would suggest that the District could force a reporter to get licensed before he wrote an article about D.C.-area attractions.

That's why Bill Edwards and Tonia Main, two area tour guides, have teamed up with the Institute for Justice to file a federal lawsuit to scrap this law once and for all. Consumers and entrepreneurs - not the government - should decide who may give such talks.

One thing the District historically got right was its open taxi market. Unlike in other cities that limit how many taxis can operate, anyone in D.C. who passed a safety exam could go into business for himself. That was a boon not only for drivers - particularly minorities and immigrants - but for would-be riders as well.

Unfortunately, the District is working to turn that success into a failure. The District Taxicab Commission for more than a year has not let any new applicants take its licensing exam. And for almost two years, the commission has prohibited any new taxicab companies or associations from starting up. These restrictions must be lifted immediately. Rather than shut down one of the District's few success stories, Washingtonians should learn from it.

The keys to success are clear: Provide would-be entrepreneurs with simple rules that legitimately protect public health and safety, keep licensing fees low, give civil servants an incentive to provide solid customer service and cut away the needless red tape.

By pruning away the complex and confusing regulations that stifle economic creativity, the D.C. government can let flourish the many flowers of entrepreneurship and economic growth.

Robert Frommer is an attorney with the Institute for Justice and author of "Washington D.C. v. Entrepreneurs," which is available at: www.ij.org/ citystudies/DC.

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