Tuesday, June 24, 2008

Licensure Epidemic

“When you see that trading is done, not by consent, but by compulsion- when you see that in order to produce, you need to obtain permission from men who produce nothing- when you see that money is flowing to those who deal, not in goods, but in favors- when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you- when you see corruption being rewarded and honesty becoming a self-sacrifice- you may know that your society is doomed.” Ayn Rand (Atlas Shrugged, page 413)

Those words of warning were uttered half a century ago. We’re not there yet, but today there are growing signs all around us that it is time to heed them. One such sign…in a Forbes magazine article entitled The New Unions, Suzanne Hoppough documents the out-of-control government occupational licensure epidemic sweeping the country.

What started out as a state power limited to certain occupations dealing in “public safety” such as doctors, lawyers, airline pilots, plumbers, and electricians, government licensing has exploded into an epidemic covering occupations such as hairdressers, florists, interior decorators, secretaries, and librarians. According to Ms. Hoppough, the accelerating licensure trend is being led not by power-hungry government bureaucrats and politicians, but by private citizens looking to protect their occupational turf through governmental coercion.

“Such occupations are the new unions. These modern-day guilds have replaced organized labor as the main vehicle for workers seeking to shield themselves from competition. As the economy has switched from manufacturing to services, some 28% of U.S. workers--or 43 million people--now belong to a licensed profession, according to a Princeton University/Gallup survey last year. That's up from 4.5% 50 years ago.” (emphasis added)

There is a lesson to be learned here. Government power, once granted, begets more government power. Once we granted to the state the power to require a license to earn a living in a single occupation…to require men to seek permission to produce from men who produce nothing (government bureaucrats)…there was no way to contain it. And the costs, in lost economic output and in lost freedom, are mounting;

“University of Minnesota economist Morris Kleiner recently estimated what occupational licenses cost the U.S. through higher fees and the lost output of people excluded from the roped-off professions: $100 billion a year. Some guilds are especially adept at keeping out new members even as demand balloons. The population has grown 22% since 1990, but the number of dentists and hairdressers hasn't budged. The shortage of dentists has pushed up their average real hourly pay 45% over that period.” (emphasis added)

In other words, political pull and favoritism…rather than ability or ambition or goal-oriented personal achievement…are increasingly becoming the passkey to “success”, thanks to government’s licensing powers.

In addition, it is the people who need a free market the most that are hurt the most;

“Licensing laws hit the poor particularly hard. They're often shut out of jobs that would hoist them onto the first rungs of the economic ladder--shampoo assistant, pipe layer's helper, home health aide--because they lack the time and money to take the classes and serve the apprenticeships to pass the exam.”

Senator John Edwards, oh great champion of the poor, where are you?

While “There are occasional victories for competitive markets”, the trend is disturbingly clear;

“Today there are 1,100 occupations--from secretaries and librarians in Georgia to wallpaper hangers in California--that require a license in at least one state, according to the Council of State Governments. That's up from roughly 80 in 1981. ‘These are monopolies created by the government,’ says William Mellor, president of the Institute for Justice, a nonprofit in Arlington, Va. that litigates on behalf of property rights and other civil liberties.” (emphasis added)

Government licensing powers are a threat to our liberty, and should be repealed. The function of certifying occupational qualifications can be easily handled by private agencies without the rights-violating coercive powers of government. Private producers seeking to build public trust can apply for the “label” of one of the competing certification agencies relating to one’s particular field, if one wants. But no one should be forcibly prevented from selling his goods or services to willing consumers for failure to obtain permission from the state. (For a detailed discussion on a related topic, the FDA, check out Stella’s piece over at ReasonPharm. Many of the points expressed there are relevant to the licensing issue here.)

One final note. The government’s proper role is to protect individual rights…and that includes laws against fraud and deception. Compulsory government occupational licensing is not needed to prosecute, and indeed does not prevent, unscrupulous and unqualified charlatans from operating. All it does is trample the rights of many honest people seeking to earn a living, while awarding established players the power to coercively block competition…a bulwark of a free market.

Related Reading:

Sometimes The Best Medical Care Is Provided By Those Who Aren't M.D.s, by Amesh Adalja, M.D.

Post Reference 31

No comments: