The Guild-ed Age
Occupational Licensing as “Opportunity Hoarding”

One defining characteristic of decaying blue model institutions is that they serve insiders well, while making it harder for striving outsiders trying to climb the ladder. Think of our heavily regulated and subsidized higher education system, which delivers fantastic rewards to top administrators, while creating an exploding class of low-paid, disposable adjuncts. Another example, as Richard Reeves and Edward Rodriguez point out in a Brookings Institution post, is overly restrictive occupational licensing, which can favor skilled professionals at the expense of less-credentialed workers with the same skills:

Licensing can act as a form of “opportunity hoarding,” allowing those with resources and connections to benefit from the higher incomes flowing from these occupations, in part by preventing others from competing with them. As Reihan Salam points out, questionable licensing extends well up the income distribution. Dentists in North Carolina prevent other professionals from providing teeth-whitening—even though the procedure is relatively straightforward. Insurance brokers in Utah play a similar game by attempting to make free equivalents of their service illegal. If nurses were allowed to perform more routine medical procedures, doctors would make slightly less, but nurses could earn more and overall health care costs would likely fall.

Middle and working class Americans in 2016 are expressing unambiguously that they feel that America’s current political and economic system is rigged in favor of elites, and that they aren’t going to take it much longer. Though Donald Trump and Senator Bernie Sanders are answering this sentiment with their own varieties of statism, it is actually the decrepitude of the blue model—the expansion of government power at the behest and to the benefit of various interest groups—that is to blame for much unfairness. Occupational licensing might not get voters as impassioned as invectives against illegal immigration do, but it really does represent a way that elites have used their political connections to stick it to the less-connected, and reasonable reforms increase opportunities for those seeking upward mobility.

It won’t be easy to reform licensing. Just as traditional universities will resist any challenges to their dominant market position, and just as teachers’ unions will resist reforms that would hold them accountable to student performance, professional guilds will fight to keep their racket in place. But it may be that the upsurge in left and right populism alike will impel elites to change their tune and intensify current pressure for reform. The White House has recently moved against licensing, and a bipartisan California commission is making promising suggestions to the Golden State legislature. Here’s hoping that elected officials follow through.

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