Of Death And Rent Seeking

What is called the national pastime operates 30 teams in 28 cities from April through October. Another national pastime is much more ubiquitous and constant--it goes on everywhere, year-round. The technical name for it is "rent seeking," and a manifestation of it in Tennessee proves that you cannot avoid it even by dying.

Rent seeking is what economists call the bending of public power for private economic advantage. Sometimes it is the use of government by interest groups to confer advantages on themselves (e.g., tariffs and import quotas to protect the textile industry and sugar growers). Sometimes it is the use of government to impose disadvantages on competitors. The government's antitrust action against Microsoft is, in part, successful rent seeking by a Microsoft competitor, Netscape.

Often rent seeking is done under the guise of licensing requirements for professions, from hairstyling to taxi services. Many of these requirements have less to do with protecting public health and safety than with protecting people in a particular profession--protecting them from competition by imposing impediments to entry into the profession. Entry into more than 500 professions, involving one in 10 American jobs, requires government permission in the form of a license. In Tennessee, morticians are a rent-seeking interest group.

The trouble--the crime, actually--began in Chattanooga when the Rev. Nathaniel Craigmiles, a Baptist, and Tommy Wilson, a school janitor, created Craigmiles Wilson Casket Supply, a retail store which promptly drew the disapproving attention of the Tennessee Board of Funeral Directors and Embalmers. Funeral costs (not including burial plot and grave marker) average $4,700--with cemetery costs, $8,000. For many families, according to the Institute for Justice, which is defending Craigmiles and Wilson, this is their largest investment after house and car.

The Federal Trade Commission says caskets are "frequently the single most expensive item"--one third to one half the cost--of a traditional funeral. Most caskets are metal and range in average price from $800 to $6,000. Wooden caskets range from $1,500 to more than $3,000. Casket purchasers do not want to seem coldly calculating about their dealings concerning a deceased loved one. Funeral customers are, as the Federal Trade Commission says, "unusually susceptible" to bad decisions and unpleasant business practices "because of the unique combination of emotional stress, lack of experience and information, and tight time constraints."

In Tennessee, and nationally, independent retailers substantially discount caskets, as Craigmiles discovered on a visit to Manhattan, where he saw a store selling for $800 a casket identical to the one that had cost him $3,200 when he buried his mother-in-law. Back home, he applied for a business license to sell caskets that would be delivered to the funeral home of the customer's choice. His business would neither handle cadavers nor perform funeral or burial services.

Shortly after they opened their store they were ordered to close until they got a funeral establishment license and a licensed funeral director as manager, which would require them to spend two years and thousands of dollars. To open the store Craigmiles invested much of his life savings and borrowed. Today the store bears a sign that says it has been closed by state law.

To become a funeral director one must take a yearlong course (50 semester hours of classes in three semesters, including instruction on the preparation of dead human remains) and then have a year of full-time employment under a licensed director, or two years of such apprenticeship, including assistance with at least 25 funerals.

The Institute for Justice, a public-interest law firm with a libertarian bent, says that requiring sellers of caskets to be morticians is patently preposterous, there being no relationship between the good sold and the training required of sellers. It is akin to requiring "shoe salesmen to obtain podiatry licenses, or mattress salesmen to obtain chiropractic licenses." Such laws in a dozen states help explain why in the past five years funeral costs have risen three times faster than inflation.

The IJ is representing Craigmiles and Wilson, and owners of a casket store in Knoxville, in a suit arguing that the pertinent Tennessee law establishes an anticompetitive cartel, is not rationally related to public health, safety or welfare concerns, and deprives the plaintiffs of economic liberty in violation of the Fourteenth Amendment's due process and equal protection guarantees. In short, this is a civil-rights matter.

The strength of the IJ case can be gauged by the weakness of the arguments for laws like Tennessee's, such as: Unless only funeral directors sell caskets, death statistics will be inaccurate. And this from the South Carolina Funeral Directors Association: "If they start selling caskets on every street corner, it's possible that more people would start trying to do their own funerals," which "could become a public health problem."

Time was, most American funerals occurred at home. In many homes, parlor doors were built large enough to accommodate coffins. Funeral parlors developed, in part, to service urban people living in apartments too small to hold caskets. In 1881 casket makers formed the National Burial Case Association--a trade association. In 1882 funeral directors followed suit with the National Funeral Directors Association, which in 1883 voted for high prices: "Resolved that we... condemn the manufacture of covered caskets at a price less than fifteen dollars for an adult size."

Then the 20th century saw the birth of the regulatory state, which means promiscuous intervention in the economy by government bent on a large role in allocating wealth and opportunity. Which is why rent seeking has become a national pastime.