Apr 24, 2020

New Research on Occupational Licensing Reform, Reputation Risk, and Small Business Relief during COVID-19

New Mercatus research from April 20-24
Shannon Dailey Staff Writer

Occupational Licensing Reform and the Right to Earn a Living: A Blueprint for Action

Adam Thierer and Trace Mitchell | Policy Brief

Entrepreneurialism and innovation create major gains for individuals and society in the form of greater choice, improved mobility, increased wealth, better health, and longer lifespans. Promoting a social and political culture that protects entrepreneurialism, the freedom to innovate, and the right to earn a living, is imperative to the well-being of current and future generations. This is why it is essential that public policy seek to reward entrepreneurial activity, experimentation, and risk-taking. Unfortunately, many barriers limit our collective ability to expand opportunities for innovation.

In this policy brief, Adam Thierer and Trace Mitchell summarize several potential reforms that policymakers can undertake to create a culture of innovation that protects the right to earn a living and rewards entrepreneurial efforts. They place specific focus on policies regarding licensing and entry barriers, as these are the most costly and susceptible to undue influence by special interests.

Why Government Shouldn’t Regulate Reputation Risk at Banks

Julie Hill | Policy Brief

Often times when a business, organization, or person presents an controversial or risky persona, regulators pressure financial institutions to make changes on account of their “risky reputation.” But broad regulation of reputation risk does not reduce overall bank risk and unnecessarily politicizes bank regulators. 

In this policy brief, Julie Hill suggests that Congress should prevent regulators from requiring banks to make changes when there is no other safety and soundness concern. She defines reputation risk and discusses the ins and outs of reputation risk regulations.

A Government-Backed Line of Credit Would Help Small Businesses More Than Current Relief Efforts

Veronique de Rugy and Arnold Kling | Policy Brief

The devastation of the small-business sector in the wake of COVID-19 could be disastrous for American families. Government grants and loans provided through the Coronavirus Aid, Relief, and Economic Security (CARES) Act are meant to keep businesses solvent and to encourage them to retain their employees, but while such programs will be needed when the economy begins to reopen, they should not be the focus for now. 

The bottom line is that the government’s current approach for relieving small businesses is problematic not only in theory but also in practice. In this policy brief, Senior Research Fellow Veronique de Rugy and Senior Affiliated Scholar Arnold Kling suggest an alternative that is more likely to prove helpful: a government-backed line of credit—one neither extravagant nor insignificant—for every American.

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