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End Licensing to Revive the Freedom to Work
By Doug Bandow of Cato.
"Americans are worried about jobs, yet the government makes it
harder to work. More than 1100 professions are licensed by at least one
state.
In addition to lawyers and doctors are locksmiths, interior
decorators, funeral attendants, librarians, hair stylists, food
caterers, florists, barbers, and music therapists. As well as operators
of conveyor belts and sellers of frozen desserts.
In 1950 just five percent of Americans needed official permission to
work. Today nearly a quarter require some form of government approval.
Licensing is an extraordinary scam. The Wall Street Journal
noted Texas’ requirement that “shampoo specialists” in hair salons take
150 hours of classes, including on the “theory and practice” of
shampooing. There’s also a practical exam—which tests applying
conditioner.
Licensing obviously punishes consumers. The Obama administration found
that licensing increase prices, on average, as much as 16 percent. The
rise is bigger in some occupations and some states.
In response, people may go without or do the job themselves,
sometimes with disastrous results. Surveys have found up to 95 percent
of people in child support, consumer debt, and eviction cases act “pro
se.”
Licensing denies many people work in their preferred career.
Regulation also discourages new forms of practice online and across
state lines. Immigrants and military spouses suffer particularly.
Government restrictions on employment are particularly
counterproductive at a time of high unemployment. By one estimate
licensure destroys nearly three million jobs. Overall, licensing has
been estimated to cost $100 billion to $200 billion a year.
The only serious argument for regulation is to protect consumers or
bystanders. But fewer than 60 occupations are licensed in all 50 states.
Public Choice economics predicts that concentrated interests will
out-organize the public, manipulate the law, and capture regulatory
agencies for fun and profit. Thus, professional regulation is not
designed to weed out the incapable.
Virtually every system grandfathers in existing (incompetent)
operators. The rules for the same work vary dramatically by state.
Standards often are irrelevant to practice. Moreover, regulators focus
on punishing competition, not incompetence.
Yet, reported the administration: “most research does not find that licensing improves quality or public health and safety.”
The administration suggested limiting requirements to health and
safety, reducing regulatory burdens, adding public members to licensing
boards, allowing licensees to provide all services in their competency,
limiting restrictions to consumer protection, conducting rigorous
cost-benefit assessments, harmonizing requirements across state
boundaries, and creating interstate practice compacts.
Better would be to end most regulation, instead relying on market
mechanisms for consumer protection. Mercatus noted how the rise of the
sharing economy “has overcome market imperfections without recourse to
traditional forms of regulation.” In particular, the internet and
information technology have dramatically expanded information sharing,
reputational feedback mechanisms, competitive alternatives, and
innovative experimentation.
The only exception to full deregulation might be limited rules
covering professions with the greatest impact on health and safety. Even
then the market can do a better job than government.
California State University economist Shirley Svorny noted how state
licensing fails to assure physician quality. In contrast, “Consumers are
protected by an interdependent system of private oversight motivated by
concerns over reputation and liability.”
At most, government might enhance private consumer protection by
creating systems of registration of practitioners, certification of
professionals, and requirements for bond or insurance. But voluntary
licensure and certification can do the same.
Like so much pernicious regulation, licensing is virtually impossible
to eliminate once imposed. Incumbent practitioners typically become
strong advocates for protecting their privileged positions.
Rather than rely on political action alone, Nick Sibilla of the
Institute for Justice urged more litigation. He noted that the Institute
had won cases rolling back licensing of two dozen occupations, most
recently for “tax preparers, casket-making monks in Louisiana and
African hair braiders in Texas.”
As I point out in the Freeman:
“Americans are concerned about too few jobs and slow economic growth.
In the ‘land of the free’ people shouldn’t have to get anyone else’s
permission to work.”
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