TCS Daily

eBay Nation and the Golden Goose

By Glenn Harlan Reynolds - October 19, 2005 12:00 AM

Okay, not long ago I wrote a column noting that eBay was catching up to WalMart as America's largest employer. I guess that was the kiss of death. At least, now I learn that North Dakota may require people who sell on eBay or other online "auction" sites to get an auctioneer's license:  

To sell things over eBay, Mark Nichols may be required to take instruction in rapid-fire speaking, breathing control and reading hand gestures, even though the transactions are done by computer keyboard and mouse.


North Dakota's Public Service Commission is exploring whether people like Nichols, who runs a small consignment store in Crosby, must obtain auctioneer licenses before they can legally use eBay to sell merchandise for others.


Regulators in other states are also eyeing similar restrictions or preconditions, moves prompted by the growing popularity of online auctions.


To get a North Dakota auctioneer's license, applicants must pay a $35 fee, obtain a $5,000 surety bond and undergo training at one of eight approved auction schools, where the curriculum includes talking really fast.


It's easy to make fun of this kind of thing, and people are. One blogger observes: "Soon enough, governments will force these guys to wear a suit and tie in front of their personal computers."


But even though North Dakota's proposal is being targeted for mockery, it's also being targeted for emulation, as quite a few other states are considering similar proposals. This seems like a dreadful idea to me.


The Internet has done very well as a venue for commerce and small business, in no small part because Internet entrepreneurs have been free -- either de jure or de facto -- from a lot of the dumb laws and regulations that afflict small businesses in general. You'd think that people would take the lesson, and reduce the regulations afflicting concerns that do business off the Internet. Instead, I fear, we'll see a lot more proposals like this one, aimed at bringing the Internet under bureaucratic, guild, and trade-union control.


North Dakota's law may be dumb, but it protects existing auctioneers, auction schools, and auction-regulating bureaucrats, or at least they probably hope it will, and that's the usual agenda of state trade-regulation laws. (My own state had a law forbidding anyone but a licensed mortician from selling caskets, until a federal court struck it down in response to an Institute for Justice lawsuit. The law was ostensibly about consumer protection, but it was really about letting morticians charge enormous markups without fear of competition.)


Congress could do a lot to help here, by exempting Internet businesses from intrusive state and local regulation. And judges, both state and federal, should be alert to problems -- under both state and federal constitutions -- with special-interest regulations that limit people's constitutionally protected right to earn a living. Everybody (er, except perhaps its competitors) wants to keep the Internet golden goose alive, but that will require some self-restraint on the part of lawmakers, as well as some external constraint on their behavior.


Ironically, it's places like North Dakota -- remote, and with struggling local economies -- that should be most receptive to Internet commerce. Thanks to the Internet (and FedEx, and UPS), location doesn't matter as much as it used to. That makes the lower cost of living in places like North Dakota more attractive to Internet business. As Nichols says later in the same story: "Online auctions help create a marketplace. You can bring in money from outside the community, and that's important to small towns like Crosby." But only if people let the golden goose live.


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