PUBLISHER’S NOTE: The Monopoly State

Texas state government under Republicans hasn’t changed a whit from what it was under Democrats. It resembles nothing so much as a giant protection racket.

To cite but the most recent example, the one legislative accomplishment Gov. Rick Perry could brag about last session was allowing Texas residents in dry counties to purchase wine on the Internet.

I hope he and his legislative colleagues didn’t break their arms patting themselves on the back. It took an order from the Fifth Circuit in 2003 to make them enact the reform. Four years before that ruling, the Legislature happily passed a bill—at the bidding of Texas wine wholesalers—making the importation of wine into Texas a felony equal to assault with a deadly weapon. (George W. Bush declined to sign it.)

For years Texas liquor laws have been a crazy quilt of regulations designed to protect distributors and wholesalers, not consumers. Texas law requires that retailers buy from a distributor, who in turn buys from a wholesaler. That’s why the base price (before taxes) of your favorite brand is higher in Texas than in almost any another state. By prohibiting retailers from buying from any distributor outside of their home county, the law assures that there’s no chance that competition might drive those prices down.

Wonder why today’s Texas liquor taxes, in real dollars, are 77 percent below where they were in 1984? State-guaranteed monopolists make powerful puppeteers, and Republican legislators seem to dance as well as Democrats when their strings are pulled.

But liquor isn’t the only industry with its own set of strings. Each of the professions—law, medicine, dentistry, accounting—has a state agency devoted to its protection. They’re joined by polygraph examiners, funeral directors, land surveyors, private security companies, social workers, pest controllers, irrigators, family therapists, dieticians, barbers, audiologists, acupuncturists, hearing-aid dispensers, and court reporters, among others.

Even hairdressers need protection—from other hairdressers. Dallas’ Isis Brantley made her living for 15 years weaving intricate designs into the hair of her African-American customers—until the Texas Cosmetology Commission shut her down. When she fought back, the TCC finally came up with a compromise, requiring anyone wanting to braid hair to take 300 hours of courses. Brantley found herself taking lessons that she should have been paid to teach.

Texas state government is designed to prevent competition, not to encourage it. One way is by restricting information. In 2001, for example, the Sunset Commission chastised the Funeral Services Commission for not posting sample prices for funerals on its web site. Four years later, the information is still not there.

The Sunset Commission, in fact, seems to be the only anti-regulatory regulatory body in Texas. Its victories are often small, but each one is important. In 1997, it succeeded in eliminating the Texas Soybean Producers Board—whose job, of course, was to keep soybean prices high. Later, the commission was able to stop the Texas Animal Health Commission from regulating riding stables (i.e., preventing new riding stables from being built).

The philosophy of Texas government is classic mercantilism, using the coercive power of the state to favor one group over the other—at the expense of the public. F. A. Hayek warned about it 45 years ago in The Constitution of Liberty. It is nothing more than government for sale to the highest bidder—and it should be no surprise that the bidding process has become a Texas legislative art form.

In all, I’m reminded of what Democratic Speaker Gib Lewis once said after the greed got too egregious even for him one day in a House budget session: “I move we recess to go outside and throw up.”