Many licensing rules exist only to block competition and raise prices

Long-overdue attention is finally being paid to work rules and occupational licensing schemes that serve little purpose beyond being a barrier. Here is a great example of those hard-to-justify rules from Lens:

“Jerry Schmidt files horse teeth at his farm near Port Angeles, Washington for a fraction of a veterinarian’s cost. After a formal complaint from a local veterinarian in 2012, the Department of Health issued a cease and desist order to prevent Schmidt from receiving money for the practice without a veterinarian license, even though it is legal when done for free.”

The essential Institute for Justice deserves a lot of the credit for bringing this important issue to the fore. IJ has been highlighting onerous requirements for years, and litigating when necessary to help individuals who can’t take on the system on their own.

Stopping competition the aim
In so many cases, occupational licenses serve little purpose beyond preventing more people from breaking into a certain market. Licensing is mostly about economic protection for politically favored groups. That’s the purpose taxi medallions served for many years. They kept competition out of the market and drove prices higher, but now the Uber model is disrupting that market.

Not all licenses are merely about economic barriers. Some are genuinely necessary for the purposes of health and safety. Still others don’t seem to serve any purpose, legitimate or otherwise. Is there any particular reason you need to have a license to announce a boxing match in this state?

“Health and safety” sometimes an excuse
While some occupational licenses are justified by health and safety, those are often the basis for occupational rules that quickly become onerous and stretch far beyond a legitimate restriction.

Hair care is the most common example. There may be proper concerns about hair professionals using proper hygiene techniques or cleaning equipment. Certainly you want the person dyeing your hair to know something about chemical reactions.

But should someone who simply wants to braid hair need 1,600 hours of schooling before they’re allowed to take a state exam? It’s absurd, but that was the rule before the Institute for Justice successfully sued on a braider’s behalf.

System favors the status quo
Like so many government mandates, work rules like this exist because the people who would benefit the most can’t take on the system, while customers, who would benefit a little by increased competition, aren’t going to care enough to organize themselves to seek repeal of the rules.

Meanwhile the people who prefer the status quo care a lot, and they’re willing to pay to maintain it. They can afford lobbyists and put on fundraisers. In the hair care example, it’s not so much current barbers and stylists working to keep others out of the market but the training schools. The schools greatly favor requiring 1,600 hours of training.

Rules like these are also the natural consequence of who speaks with their legislators. If lawmakers never hear from constituents stymied by occupational licensing but hear often from district residents who are part of organized efforts to keep current rules in place, those legislators will also naturally prefer the status quo.

Thankfully, leaders like state Rep. Matt Manweller (R-Ellensburg) are willing to help push the boulder uphill. He wants to take a fresh look at licensing rules and only retain those that are justified. Those that are mostly about blocking competition need to be tossed on the regulatory scrapheap.
-Rob McKenna

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Rob McKenna
Rob served two terms as Washington’s Attorney General, from 2005 to 2013. He successfully argued three cases before the U.S. Supreme Court and negotiated three of the largest consumer financial protection settlements in national history, all involving mortgage lending and servicing. He is a recognized leader in the development of consumer protections on the internet, in data protection and privacy regulation.