Monday, August 11, 2014

A libertarian primer: Occupational licensing

What is the purpose of occupational licensing?  Well, usually proponents of various licensing schemes claim that it is for the safety or protection of the consumer.  If a doctor has been licensed by the state, consumers can then be assured that the doctor in question is reputable and presumably safer than some other "unlicensed" doctor.

In reality, however, licensing is often used as a pretext for limiting the number of people working in that field, maximizing the business and income of those already in.  Licensing boards are usually comprised of those already in the field, so they have a vested interest in limiting access.  Recent examples include the licensing of "teeth whitening" practitioners in North Carolina, an area with no public safety ramifications at all since teeth whitening generally consists of putting strips on teeth and letting them sit for a few minutes, a process that many people do at home.

As a libertarian I generally oppose any sort of state licensing for any reason at all.  My argument would be that the way to find out if someone is qualified or competent would be to check references.  I didn't find my doctor by checking with the licensing board, I found him by asking around to find out if anyone I knew had a good doctor.  I've been with him for fifteen years now.  Ditto my eye doctor.  I went to his office which was conveniently located near my home and was impressed both by talking to him and by my first pair of glasses.  I've been going there ever since. 

So how could a non-word-of-mouth system operate in the absence of state licensing?  How about private organizations?  Motorcycle helmets, for example, are required to meet Department of Transportation (DOT) standards.  Manufacturers either do their own testing or hire out to a private lab.  If the helmet meets the standards the manufacturer puts a sticker on the back of the helmet to indicate compliance to the consumer and law enforcement.  It is a self certification system which is only randomly spot checked by the DOT.  However, companies can pay the extra money to a private testing firm to obtain their certification.  Snell is a well known and respected certification firm and many motorcycle riders will not buy any helmet that does not also have Snell certification.  Anyone could set up a similar system for any field and build a reputation for fair and honest dealings.  Practitioners who chose to have that extra layer of referral could pay the fee and advertise their affiliation.

Licensing does nothing, in my opinion, other than increase the cost of services as the licensing boards keep the number of practitioners artificially low.  Consumers should take responsibility for choosing and researching their own options and reap the benefits of increased choice without government control and artificial limitations.

So why did I decide to write this article?  Well the Texas Attorney General is exploring the possibility of eliminating occupational licensing for any occupation that does not have direct consumer health or safety implications.  This would include things like interior designers, dog trainers, barbers, etc.  You have to seriously wonder why any of these occupations required licensing to begin with.  Really?  You can't get paid to suggest that blue curtains and an orange carpet aren't a great idea unless you have a state certification?  This is a good first step and should be emulated across the country. 

Expect resistance from the people running the licensing boards.

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