Occupy Occupational Licensure!

[Cukes on Eyes]

A recent commentary in my local paper, Fosters Daily Democrat, warned that New Hampshire was threatened by imminent "chaos". Also: the spread of scars, blindness, "diseases like HPV and AIDS" and "crippling effects". In addition, "con artists and fly-by-night businesses" would shortly blanket our fair state.

What could possibly bring about all these dire effects? Why, it's all because of a small bill, HB 446, "AN ACT repealing the authority for regulation of certain professional occupations" now wending its way through the legislative process of the New Hampshire General Court. Specifically, the bill:

… repeals the regulatory boards and authority for licensure or certification for barbering, cosmetology, and esthetics, including tanning facilities; landscape architecture; court reporting; athletic training; recreational therapy; family mediation; hunting and fishing guides; athlete agents; massage therapists; reflexologists, structural integrators, and Asian bodywork therapists; and hawkers, peddlers, and itinerant vendors.

Also see the amendment.

My knee-jerk position on this legislation: Whoa. Cool!

But let's look a little deeper.

While it's not been on the front burner of the hot-issue stove, there's a long and proud history of opposition to occupational licensure. Way back in 1962, Milton Friedman devoted an entire chapter of his classic Capitalism and Freedom to the issue. Here is a John Stossel column on the topic from a few months back. A good, state-by-state review by Adam Summers was published in 2007 by the Reason Foundation. Economist Adam Ozimek offered a pair of blog posts last year describing why both conservatives and liberals should care more about the issue.

You can check out those sources for more detailed arguments. But here's a brief summary:

  • Such laws restrict economic liberty, with no rational justification based on a compelling government interest.

  • Innovation and flexibility in providing licensed services is stifled.

  • The laws give rise to a privileged class, who, in an inherently corrupt setup, set the rules for entry into their profession; these rules are invariably used to decrease competition, and raise incomes for the class.

  • There's also a lucrative side venture involved for people involved in training, and supplying credentials for prospective entrants. They also become, unsurprisingly, strident advocates for licensing.

  • Such laws hurt low-income people disproportionately: first, by raising prices for consumers, and also by raising the financial barriers to their possible entry into the licensed profession. (The Institute for Justice has done some good-guy work in litigating some cases of the latter.)

  • The whole enterprise smacks of government paternalism, an odious state-knows-best attitude where consumers and producers are deemed incapable of arriving at mutually beneficial agreements on their own.

  • It's an inherent slippery-slope game: once a state licenses professions A, B, and C, it makes it much easier to do the same for D, E, F: "You did it for them, so don't we deserve the same?" Unsurprisingly, by most measures, occupational licensure is on the rise in the US.

Wouldn't you think the Live Free or Die state might be at least relatively free of occupational licensure? Unfortunately, according to Summers' study, New Hampshire ranked fourth-highest in the nation in the number of occupations for which you need the state's permission to practice. (Number one, of course, is California, followed by Connecticut and Maine. And New Hampshire was just slightly behind Maine.)

As with much government regulation, the beneficiaries of occupational licensure are a relatively small and easily identified special interest group, the victims are mostly invisible, and the costs are diffused to the general population. So it's no surprise that the people making the most noise are the ones who would be seeing increased competition from folks who hadn't jumped through licensing hoops. (See, for example, the websites for NH Beauty Professionals; the American Massage Therapy Association, NH Chapter; the New Hampshire Athletic Trainers' Association; no doubt others.)

Equally unsurprising, their arguments are short on facts, but filled with lurid scenarios of Fear, Uncertainty, and Doubt. Why, in the post-HB446 world, all the shysters and con artists in the country will flock to New Hampshire, and the normal citizens will wander the streets, blind, crippled, scarred, diseased, and also have very bad haircuts! I have a sneaky suspicion that they aren't so much afraid that HB446 would fail; they're afraid that it would work.

All those anti-HB446 websites and commentaries urge you to contact your legislators. If you are a Granite Stater, Pun Salad encourages you to do the same, after getting the arguments on both sides. I think it would be neat for New Hampshire to serve as a little laboratory of democracy on this issue.

Last Modified 2012-09-24 3:54 PM EST