The Guild-ed Age
Sen. Mike Lee Takes On Crony Capitalism

Over at Forbes, Utah Senator Mike Lee has an important op-ed on the explosion in the number of working-class fields that have implemented unnecessary licensing requirements over the last several decades, raising prices and squelching competition:

Security guards, florists, barbers, massage therapists, interior decorators, manicurists, hair stylists, personal trainers, tree trimmers and auctioneers work in just some of the many, many professions that state legislatures have seen fit to cartelize [ . . . ]

According to a study by University of Minnesota Professor Morris Kleiner, “Occupational licensing has either no impact or even a negative impact on the quality of services provided to customers by members of the regulated occupation.”

Occupational licensing has grown not because consumers demanded it, but because lobbyists recognized a business opportunity where they could use government power to get rich at the public’s expense.

Lee frames the licensing problem as primarily a blow to consumers, noting that it forces Americans to spend $200 billion more on services each year. In this moment of anti-establishment fervor, however, it might be just as effective to describe the growing licensing cartel as a type of conspiracy against the working class. As Lee notes, dentists (median salary: $149,000) lobbied aggressively to create a licensing requirement for teeth whitening once their business was challenged by less-educated people performing the same service for a lower price. It might be hard to get voters riled up about occupational licensing the way they get riled up about illegal immigration, but this is nonetheless a real example of insiders with access to political power rigging the system against less credentialed workers. The Economist has reported on research that professionals protected by licensing see 18 percent higher wages than they would otherwise. Meanwhile, other workers lose out.

Taking on occupational licensing run amok is tricky, since most of it takes place at the state level. The Obama administration has put some pressure on states to scale back licensing requirements, and Senator Lee’s Committee will hold a hearing this week on “the relationship between the antitrust laws and cartels formed under the auspices of state authority.” Ultimately, however, it seems likely that most of the work in fixing this system will need to be done at the state level. Republicans are currently in a position of unprecedented power in state capitols; opening access to working class professions would be a good way for the GOP to show that it is serious about taking on insiders and sticking up for the little guy.

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