The crime? Entrepreneurship without a license

Three years ago, Mary Jo Pletz of Walnutport, Pennsylvania — about 70 miles north of Philadelphia — learned her 6-month-old daughter had been diagnosed with a brain tumor. To care for her child, Mrs. Pletz, 33, had to give up her job as a dental hygienist and look for some kind of home-based employment that would help her husband pay the bills.

She started selling stuff over eBay. When she ran out of her own stuff, she offered to sell other people’s items, for a commission. She ran the operation out of her garage.

Then, right after Christmas, 2006, the state regulators came calling. In what many view as a test case designed to put the fear of God — of the state, at least — into other such entrepreneurs, the state agents contended Mrs. Pletz was running an auction house without proper licensing. They proceeded to shut down her business, forcing her to spend thousands of dollars in lawyers’ fees as she fights their efforts to fine her, well … thousands of dollars.

Who’s behind the crackdown? Greedy politicians hoping for a new stream of tax revenue aren’t too far in the wings. Eight states have considered new regulations for Online sellers, though The AP reports all have backed down in the face of opposition, mainly from eBay.

But other online sellers think the pressure to crack down on such electronic sellers comes from the established auction houses, whose proprietors may believe they’re losing market share

“We feel it’s important that they be regulated, so consumers have peace of mind,” says Chris Longley, a spokesman for the National Auctioneers Association, based in Overland Park, Kansas. “Public trust is being lost because of the fraud involved in Internet auctions.”

Oh, please. Pennsylvania auction licensing rules require anyone entering the auction-house business to either work as an apprentice for two years or to take 20 credit hours’ worth of auctioneering courses at the college level. Think that’ll help an online seller determine whether a piece of carnival glass they’re handling really dates from 1912 (if it’s light blue, it’s probably new), or whether that Hardy Boys mystery was really printed in 1933? (Copies printed 20 years later still retain their original copyright dates — look for a glossy frontispiece.)

Has state regulation ended fraudulent practices in “brick-and-mortar” auction houses? Of course not. National headlines periodically reveal bid rigging, fixed appraisals, collusion, and other manipulations even in the largest auction firms. Regular attendees at small local auctions know the many operators who want to “play it straight” do so despite the absence of any visible state regulatory presence, while auctioneers who want to accept “shill” bids, or to drive up bidding by accepting phantom bids “off the wall,” still do so with impunity. They can also go out of business without notice just like anyone else, leaving owners of consigned merchandise struggling to regain their property regardless of any state “license” hanging on the wall of that locked office.

Most such regulatory schemes have a lot more to do with limiting competition and producing registration and licensing fees for state bureaucrats than with any effective effort to “eliminate fraud.”

Are Internet auctions subject to chicanery? Of course. Sellers can ask their friends to place phantom bids in order to drive up a price. They can also send merchandise not as described, or simply fail to deliver — for a short time.

But ironically — given these claims — independent firms like eBay have set up electronic buyer complaint and rating services light years ahead of the horse-and-buggy complaint offices of state regulators.

Many believe the nation is entering hard economic times. They certainly know THEY are entering harder economic times.

The porkmasters in Washington have been warned they can’t support both expansive foreign wars and booming domestic “entitlement” programs, forever. They merely respond “Print more money!”

With the money supply growing at an annualized rate of about 15 percent — and even more inflation now promised in the name of an “economic stimulus” to bail out those who made bad real estate loans — there’s little doubt the carefully massaged “official” 6 percent rate of inflation considerably understates the rate at which a typical paycheck’s buying power is being eroded.

But Americans are a hardy and resourceful lot. Yes, some go whining down to the government “relief” office for a hand-out, claiming to have some newfangled “disability.” But most simply tighten their belts and look for a second source of income to help keep food on the table.

In this electronic age, selling things over the Internet is a peaceful entrepreneurial activity that beats setting up a lemonade stand on the sidewalk, or hawking newspapers downtown. (I note in passing another story in Monday’s newspaper, reporting police in Seattle are threatening $1,000 fines and 90 days in jail under their “panhandling” ordinance for homeless men selling copies of the weekly activist newspaper “Real Change” for 65 cents a copy.)

And what is the politicians’ answer as these tax-strapped citizens struggle to find a second source of income to keep their families fed? Do they praise that “can do” attitude?

No. Tipped off by already ineffectively regulated businessmen jealous of the new competition, they crack down on Mary Jo Pletz, in an attempt to frighten us out of trying to make a few bucks selling our old Flintstones lunch box over the Internet.

I hope they’re proud.

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