What can a vulgar cartoon about kids with a talking towel and marijuana farmers teach us about public policy? It turns out, quite a bit.
For over two decades, South Park has masterfully combined social commentary with juvenile humor. For those who don’t know, the show follows four young boys and their misadventures in the small and quirky town of South Park, Colorado.
South Park’s season 23 premier came out swinging, combining a satirical take on Immigration and Customs Enforcement (ICE) with themes from the much talked about Joker movie starring Joaquin Phoenix. But being a nerdy policy wonk, I was immediately struck by the character of Randy Marsh and the B plot. The storyline provides an excellent explanation of how the regulatory process works, better than James Buchanan directing an episode of School House Rock.
Randy and his partner Towelie own and operate Tegridy Farms, which grows and sells weed in the legalized and expanding Colorado marijuana market. By the end of season 22, Tegridy Farms was expanding rapidly because of their ability to offer convenience that their competitors could not match.
However, advantages in business don’t last forever, and before long Randy finds that marijuana sales are slumping because the townspeople begin growing their own weed. Homegrown weed cuts into Tegridy’s profits, concerning Randy. But rather than trying to once again innovate and offer a superior product, reduce costs, or become more convenient, he turns to a different tactic: crony capitalism.
Tegridy Farms appears before the city council, seeking to ban homegrown weed. Through his son Stan, Randy cites the supposed dangers stemming from people growing weed in their own backyards. Stan reads his father’s warning, “People could grow it wrong and poison themselves,” and “unscrupulous growers can use cheap irrigation and drown babies,” a line which elicits confusion from Stan and laughter from the audience. We laugh because of how blatantly hollow, self-serving, and ridiculous the argument sounds.
That is, it seems ridiculous. Unfortunately, South Park creators Trey Parker and Matt Stone perfectly capture the regulatory process in action.
Randy’s attempt to use the government to stifle new competitors is an example of rent-seeking. Rent-seeking is the process by which firms seek to obtain additional profit (rents) through the political process. These special privileges often take the form of subsidies, protective tariffs, or regulations. Because inefficient existing firms are helped at the expense of innovators and entrepreneurs, and because the money spent lobbying is not used for productive purposes, the process of government picking winners and losers is economically wasteful.
While real life examples of rent-seeking in the regulatory process don’t involve a government-designed sentient towel with substance abuse problems, it can be strikingly similar to South Park’s characterization.
Occupational licensing is a great example of rent-seeking. It is the professional associations that benefit from licensing, not consumers, who typically lobby state legislatures to enact licensing laws which make it harder for new businesses to compete with them. Like Randy and Towelie, those already in the profession benefit from the new barriers to entry, while those seeking to the join the occupation face new additional costs. The benefits of licensing for existing businesses can be substantial; researchers have estimated that licensing laws increase average wages by 15 percent compared to unlicensed occupations.
When professional associations lobby for occupational licensing, they typically cite consumer safety as a concern. While arguments for protecting consumers from low quality services in occupations like healthcare may make sense, many are almost as laughable as South Park’s example. Here are some examples:Florida requires that interior designers be licensed in order to practice. When the governor considered delicensing the profession, licensed designers fired back, claiming they protect the safety and welfare of Floridians in public spaces
Licensed hair braiders maintain that licensing laws protect clients from braiders dropping combs on the floor and using them without cleaning.
In 2009, Philadelphia began requiring tour guides become licensed in response to “telling tall tales” about the Founders. Ben Franklin would have been rolling in his grave had it not been weighed down from all of the pennies.
In Louisiana, the only state to license florists, the professional association successfully argued that diseases in the dirt and flowers posed such a threat to consumers that licensing was required to protect them. Parker and Stone have created some masterfully outrageous storylines over the years, but even this might be too far for them.
Tegridy Farms lobbying to erect barriers to entry provides a humorous, yet realistic example of incumbents using regulation to insulate themselves from competition. Rent-seeking is pervasive because using the government to restrict competition is an easy way to profit. The negative effect for consumers of one additional occupation licensed or one fewer falafel shop is relatively small. But combined, the effect on consumers is quite large. This negatively impacts almost everyone, both those prevented from entering professions and competing, and those who miss out on the option to purchase their services.
(Photo Credit: Comedy Central)