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"Sharing Economy" Reveals that Licensing Laws Are Really About Shutting Down the Competition

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Tags U.S. HistoryMonopoly and CompetitionPolitical Theory

The sharing economy has completely reshaped the way we do business with each other as well as expanded opportunities for those looking to go into business for themselves. While the rest of the world is celebrating the accessibility and affordability that the sharing economy has brought to numerous sectors, there are those who see this emerging market as “highly disturbing.”

Armand Lauzon was frustrated as he watched his cousin struggling to make it in the “brick and mortar” world of nail care. In the salon where Lauzon’s cousin worked as a manicurist, it was typical for the owners to take a 50-85 percent cut of its employee’s earnings. Additionally, the salon also enforced a strict scheduling policy that did not always provide convenient options for its employees.

Saddened to see so many of his cousin’s coworkers strive towards the American Dream with hardly anything to show for it, Lauzon decide to take matters into his own hands.

Lauzon created “Belle,” a website that promises “beauty and health where you are.” According to Forbes, Belle seeks to connect potential customers with professionals looking for work. Currently, Belle features a variety of professional health and beauty services including chiropractic care and makeup artists.

Belle has already helped facilitate the booking of over 500 appointments. Since Lauzon only takes a 15 percent cut of its professionals’ earnings, many have managed to triple their income. However, not everyone in the community was enthusiastic about Lauzon’s efforts.

A local brick-and-mortar nail salon felt threatened by Belle and wrote to the Tennessee State Board of Cosmetology and Barber Examiners complaining that Bell was creating “highly disturbing competition” for the cosmetology sector.

While consumers were pleased to have a variety of options to choose from, Belle’s competitors have tried to use the state to regulate Lauzon’s site in order to secure their own futures.

In July, Lauzon received a letter informing him that Belle was in violation of the state’s cosmetology laws. The Board claimed that Belle qualifies as a cosmetology shop and therefore needed to be licensed as such to be compliant with the law. However, Lauon contends that the company serves only to connect customers with health and beauty professionals; Belle is not providing a physical location where money is exchanged for these services. Monetary exchange is done according to the terms agreed to by the customer and the professional.

After threatening Lauzon’s livelihood and the livelihood of the professionals who relied on Belle for their income, the Board offered Lauzon a deal. If he would agree to pay a $500 fine, comply with the order to cease and desist, and waive “all rights to seek judicial review,” the state would exempt Lauzon from enduring even harsher penalties.

But Lauzon refused to take the deal and will not be backing down from this fight.

Lauzon’s attorney, Daniel Horwitz defended his client by saying, “regulating Project Belle under the Tennessee Cosmetology Act because it uses the internet to connect cosmetologists with consumers would be akin to regulating the Yellow Pages under the Tennessee Health Care Liability Act because the phone book contains listings for medical professionals.”

Additionally, since all of the professions listed on Belle are licensed, as per the terms of service create by Lauzon, the state’s case is belittled even further.

Summing up the egregiousness of the occupational licensing burden placed on business owners, Lauzon said, “The system as it is now is anti-competitive and anti-entrepreneur. Outdated regulations hurt everyday people and hinder the growth of honest and much-needed competition.”

Reprinted with permission of the author. 

Brittany Hunter is a Mises University alumna, blogger, and creator of digital content for Generation Opportunity.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
Image source: EventPhotosNYC www.flickr.com/photos/eventphotosnyc/

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