Whom Does Licensing Protect?
Our Ethics and Economics Challenge program is using a new economics text this year, Common Sense Economics. We learned recently about the reasons why two particular kinds of government regulation — price controls and entry restrictions — are especially likely to cause harm. Price controls cause shortages or surpluses, while entry restrictions reduce competition. One kind of entry restriction is occupational licensing.
In a new Learn Liberty post, I explore further the reasons why we know occupational licensing more often protects producers than consumers. Excerpt:
Who proposes new licenses? It’s almost always a practitioner group that lobbies the state legislature. Very rarely do you see a new licensing proposal emerge because of consumer outcry for it. When state legislators hear testimony on a licensing bill, only practitioners show up to testify, and they are almost always unanimously in favor of licensing.
Consumers don’t show up, and neither do people who might want to enter the profession someday. So it would be really surprising if state legislatures didn’t overregulate occupational entry when the information and pressure they are getting are so skewed.