Government Isn't Opportunity, It's a Barrier To It

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President Obama called for expanded opportunities in his State of the Union address this week. If you listened carefully though, by opportunities President Obama really means more government spending on programs which he believes increase the equality of opportunities. However, we already have an overabundance of government spending and opportunities aplenty. The problems are the government is penalizing people who take an opportunity and succeed and the country has too many people who are not interested in seizing the opportunities already in front of them.

In today's economy, education is often the key to economic success. President Obama is right to argue for ensuring that all American children are offered the chance to attend excellent schools and to be provided with adequate resources to help them learn. Yet, we already spend $10,000 per student per year on average. Where would the money for more spending come from? Not from the children's parents; after all, how many of them can afford to pay the $10,000 being spent now? So is primary education to become an (even bigger) income redistribution scheme?

Education already receives enough funding. The problem is the money is spent on the wrong things. Too much money is wasted on bureaucracy; not nearly enough of the money reaches the classroom to pay teachers and buy supplies. Beyond that, our public schools are not teaching the tools needed for success.

We need lessons on time management, study skills, impulse control, personal finance, and other life skills so that students can make the most of what they are being taught and the financial resources that they do have. Then schools should add a course or lesson series on entrepreneurship so that kids understand how to turn an idea into a business and what it takes to stay in business.

If students realized that for a business to succeed it needs to earn a profit, they might not think of profit as something evil. Without corporate profits, we would have no iPhones, no Coca-Cola, and no life-saving drugs.

Yes, schools need to teach the core subjects they have always taught: math, reading, history, science, and foreign languages. Those are still important basic building blocks for life. But we cannot stop there. If children are taught how to seize the opportunities presented to them, they will be more successful and we will all be better off.

Once we are giving children the tools to succeed when an opportunity presents itself, we need to make sure that they are allowed to seize their opportunities. Today that is no sure thing.

Silly government regulations block people, especially kids from finding and pursuing opportunities. Stories abound of local governments shutting down children's lemonade stands because of health regulations or business license requirements. And it is not just children. Selling home-baked products is very difficult in most places unless you pay tens or even hundreds of thousands of dollars to install a commercial kitchen in your house.

Beyond these minor abuses of power, there is the larger pattern of government-sanctioned restrictions on a wide range of professions. For example, in my state, real estate agents, hair stylists, stock brokers, chiropractors, cosmetologists, hearing aid dispensers, funeral directors, podiatrists, counselors, architects, and librarians are just some of the professions that people need a license in order to practice. Other states have similarly long lists of professions which a person cannot enter without permission from the state and often a long list of requirements such as tests and classes to pass.

These restrictions are often supported by the professions themselves because by restricting entry they help to increase the earnings of those who manage to qualify for a license. While this restriction of free trade may help the incumbents in the industry, they block others from pursuing opportunities.

Such restrictions go beyond licensing for individuals. Hospitals are required to have a state license, generally called a certificate of need, to operate and need approval for specialties that they wish to offer. Passenger airlines need a certificate of operation from the FAA before they can do business in the U.S. Restaurants and bars cannot sell alcohol without a license from the local government. Banks cannot operate without government approval (either state or federal). All these restrictions mean that people who see an opportunity in many industries are not allowed to pursue it unless a government gives them permission.

If President Obama really wants to increase opportunity not just government spending, he should work on reducing all these restrictions that stop people from entering an industry or profession where they see an opportunity to succeed. The good news is that most of these restrictions are at the state or local level, so President Obama has no direct power to change the rules. Given his difficulties with Congress, it is probably best for him to focus on something that does not involve national legislation. Instead, he can use his bully pulpit and the speeches that are his favorite tool for governing to encourage local and state governments to streamline or eliminate their red tape.

Government programs can never prepare underprivileged children to have an equal chance of success in their future opportunities because government does not know where the opportunities will be. Who knew forty years ago that computer programming and electrical engineering were about to be good skills to have? Who knew ten or fifteen years ago that social media was about to be the next growth sector?

If President Obama wants to push opportunity, all he needs to do is reduce the government restrictions that are squelching people from following their dreams and starting businesses when they see an opening. The market can decide if they will succeed or fail; nobody needs the government to decide if their idea is a good one or not.

Government does not need to create opportunities because it cannot do so. Instead, if government simply does less to block opportunities it will be rewarded by an explosion of economic growth generated by people with endless creativity. Americans see plenty of opportunity; government just needs to let them seize it.

Jeffrey Dorfman is a professor of economics at the University of Georgia, and the author of the e-book, Ending the Era of the Free Lunch

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