Congress Snuffs Out a Legal Niche

Here comes the government, like some red-white-and-blue monster, crushing people’s livelihoods and aspirations almost without noticing: a typical political horror story.

That’s what the Las Vegas Review-Journal article about the amendment to the transportation bill that snuffed out the industry of selling people tobacco and paper, then letting them use roll-your-own-cigarette machines, sounds like at first. But if you notice three facts mentioned in the article, you might second-guess that judgment.

First, what the law actually does -- according to the Review-Journal -- is expand the definition of cigarette manufacturers to include the roll-your-own operations. This may stretch the word “manufacturer,” but while the consumer participates in the production process at a roll-your-own shop, the businesses buy the parts of cigarettes, and customers come to them in order to leave their premises with whole cigarettes. So these operations have a lot in common with manufacturers and compete with them.

Second, one of the grounds on which customers prefer the roll-your-own outfits to the major cigarette manufacturers is that the former offer a cheaper way to obtain cigarettes.

And third, the way the legal change is putting the roll-your-own businesses out of business is by raising their regulatory costs.

Add up those three facts and you get what seems to be a less horrifying picture: Certain small businesses had been exempted from regulatory burdens borne by their larger competitors, and had been able to put cigarettes into consumers’ hands more cheaply as a result. Now they’ve lost their special exemption, and the market will not sustain the prices they would now have to charge. Too bad for them--but that doesn’t mean their exemption was fair. OK, perhaps the big cigarette companies lobbied to get rid of the exception, but maybe this was a case of getting rid of unfair privileges their competitors had.

So how are we to make moral sense of this?

For one thing, we can point out that economies of scale and other factors often make it feasible for large, established businesses to bear regulatory burdens their smaller, newer competitors cannot. Unscrupulous large businesses sometimes take advantage of this fact to drive their competitors out of the market by supporting the imposition of such burdens on all producers in their industries. Merely because the weapon being used is a burden they bear too but more easily, does not mean these businesses aren’t substituting government force for productive efficiency in their effort to obtain wealth.

But the key moral point is that fairness isn’t the issue -- rights are the issue. People have the right to produce, trade, and consume the products of their choice, without being burdened with laws that interfere with their choices (except to protect others’ rights). The big tobacco companies are having their rights violated, and that ought to stop; the violations should not be extended to smaller competitors.

One thing more: When the prevailing view of the economy divides it into numerous special categories, many with their own special privileges and restrictions, everyone is at risk of being moved into a less advantageous category or having the benefits and burdens of his category readjusted. That’s what happened here: the roll-your-own outfits had a legal niche where they could function, and they were shifted into a category where they couldn’t. And that’s part of the horror of the story: that American businesses face the risk of being crushed at any time by a change in the law.

If you want to be secure in your freedom to carry out your work -- and that’s a kind of security that can contribute a lot to human life -- don’t look to special legal privileges or niches. Only a restored commitment to individual rights, including the freedom of production, trade, and consumption, can provide that security.

spiderID=2746

‍