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Segs in the City: Unnecessary Regulations Are Stifling Growth

This spring, the DC government stopped an unknown terror from stalking city streets. Segs in the City will no longer be free to ferry unwitting tourists on its two-wheeled scooters. Absent the vigilance of local authorities, visitors to the federal city would have risked encountering one of a dozen guides employed by the firm without license. We are truly free now.

This steaming pile of regulatory rot is the subject of a lawsuit appealed on May 5th to the federal court in DC. At question is the constitutionality of what Segs in the City believes is a restriction on their right to free speech. Or, in this case, the tour company’s freedom to tell you what the neighborhood east of the White House used to be called (really, check it out).

[pq]Only 1 in 20 workers needed a permit to operate a small business in 1950. Today, that figure is more like 1 in 3.[/pq]

Instead, DC has declared its right to require tour guides to pay $200 in fees and take an official test in order to roam the streets. By not following this regulation, Segs’ guides risk up to 90 days in jail. The city claims this is an important consumer safeguard. Segs begs to differ. The courts will decide the winner.

There’s much more at stake here than just the right to look silly on two wheels. This fight is about the regulatory underbrush that has needlessly grown up around small businesses today. As The Economist found, only one in 20 workers in the 1950s needed a permit from the government to operate a small business. Today, that figure is more like one in three.

These licenses and permits choke the growth of small businesses by raising entry costs and deterring startup growth. They do so often with little discernible benefit to consumers, which of course is their ostensible reason for existence. More sinister is their use to cosset incumbent firms from competition. If you don’t believe me, just ask Uber. Or Lyft. Or AirBnB. Or any food truck worth their salt.

Business dynamism in America is the lowest it’s been in three decades. If you’re looking for a reason for this, start with America’s licensing raj. It’s a needless burden on entrepreneurs and small businesses. We don’t need a Segway tour guide to tell us that.