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Real Diversity Needed on Licensing Boards

According to Heidi Hall, of Vanderbilt University, states are facing increased risk of lawsuits following a Supreme Court case, North Carolina State Board of Dental Examiners v. Federal Trade Commission:

Allensworth compiled a list of 1,790 state boards. Eighty-five percent of the boards have rules that result in most of the board members selected to serve being active in the same profession the board regulates.

“The dark side of occupational licensing – its tendency to raise prices to consumers with dubious effects on service quality, its enormous payout to licensees and its ability to shut many willing workers out of the workforce – has begun to receive significant attention,” Allensworth said.

Basically, if licensing boards consist overwhelmingly of members from within the profession, they’ll be subject to lawsuit based on their self-interest in controlling the flow of competition.  In the case of the North Carolina dentists, six of the eight members were required to be dentists, themselves.  Rhode Island’s Board of Barbering and Hairdressing, for another example, requires six of the seven members to be barbers or hairdressers.  That leaves only one vote on the board with no immediate financial interest and, therefore, no incentive to make the rules challenging for potential competition.

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Licensing as Legalized Racketeering

Writing in the American Spectator, Jon Cassidy likens government’s occupational licensing regimes to racketeering:

Racketeering is a multifarious concept, but when the word was coined in 1927 by the Employers Association of Chicago, it referred specifically to tradesmen who had banded together to artificially drive up the cost of their services. The employers group wanted the authorities to crack down on crooked laundry and building trades, among others, but in the long run, the trades won by subverting and perverting the power of the government. It’s easy enough to picture the old noir films with cops on the take, doing the mob’s bidding, but this corruption was of a less glamorous, more insidious sort.

That lead-up reminds me of my response when people attempt to quantify government corruption in order to claim that Rhode Island isn’t that much of an outlier.  The problem is that we’ve essentially made corruption legal, and with deteriorated social norms around inside dealing, the word “corruption” is useless if it must involve something illegal.

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Politically Correct Anti-Tobacco Regs: How Many People Might Die Because They Were Denied a Less Harmful Choice?

Better something that is less harmful than more harmful. But to some, innovative new products that reduce health risks – should be banned. In the tobacco and nicotine industry, the politically-correct anti-tobacco movement is advocating for the suppression of individual rights and elimination of less harmful choices, via restrictions and outright bans on products that could improve public health.

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Corporate Decisions in Two Different Worlds

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Jobs Lost to Regulation

Katie Wendell’s article on occupational licensing in Ohio brings to mind questions about Rhode Island:

Ohio lawmakers are considering changes to some requirements amid concerns that over-regulation is keeping some people — including many from the generation most apt to leave the state — from gaining employment.

“Ohio’s licensing requirements have prevented more than 7,000 people between the ages of 25-45 from pursuing licensed occupations in the state,” says a new study by the Buckeye Institute, a conservative think tank.

I don’t think it’s so much a generation that might leave as a class, which I’ve called the “productive class.”  (Again, that description is meant to distinguish from, say, an “investor class” or “student class,” not a “lazy class” or something.)

I do wonder what the Buckeye Institute’s model would find Rhode Island’s job prevention number would be.  According to the Institute for Justice, Rhode Island has the 10th most burdensome licensing laws for low-to-middle-income occupations, compared with Ohio’s 38th.

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Locking People Out with an Explosion of Regulation

The topic of occupational licensing has been trending, lately, and Nila Bala adds this on The Hill:

Nearly one out of three Americans has a record in the criminal justice system and, as a result, faces a difficult road to becoming employed. Adding to their woes is the fact that many jobs — including interior designer, barber, pest control applicator and fire alarm installer — require some kind of occupational license.

Unfortunately, many states still deny licenses for individuals with criminal convictions, even when those convictions are decades old or relatively minor. The good news? Several states and cities across the country are poised to become leaders in reforming the law.

The number of jobs requiring occupational licenses has ballooned in the last 50 years. Occupational licensing has expanded from covering five percent of the workforce in the 1950s to 30 percent today. In recent years, occupational licenses have come under fire for creating unnecessary barriers to work without any measurable gains in safety or quality of services provided to the public.

Of course, one could argue that the mix of jobs has changed in the last half-century, but somehow people got along without government oversight of a big chunk of the economy in the past.  It isn’t clear that the benefits of all this regulation outweigh the costs, or even have substantial benefits looking only at that side of the ledger.

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The Benefits of Letting People Figure Out How to Live

What strikes me most about Jonathan Tobin’s thoughts on the benefits of the recent change in federal economic policy is how easily Rhode Island could take the same approach:

What’s even more astonishing is that as the story’s headline concedes, this impending boom is being directly caused by “The Trump Effect.” American businesses aren’t, as The Times points out, merely happily anticipating the cut in corporate tax rates provided by the reform bill passed last month by Congress. What’s really fueling the upturn, according to The Times, is “the Trump administration’s regulatory pullback.”

Despite the widespread consensus in the mainstream media that the administration has been a disaster on all fronts, Republicans have often singled out regulatory reform as a highlight of Trump’s first months in office. Liberal economists have dismissed this assertion as nothing more than a talking point to reassure Republicans that Trump was, despite his populist tone, trying to govern like a conservative. But, as The Times report points out, the impact of his orders to cut back on regulations that hamstring businesses is real.

Since business leaders are reassured that not only will many Obama-era regulations be cut back, but also that no new arcane rules will be implemented in the next few years, they’re able to plan with confidence. That means more investment, more jobs, and ultimately higher wages for workers in a trifecta that appeals to both big business and also to the needs of the working class voters who were responsible for electing Trump last year.

Government promises security and (somebody’s vision of) fairness as it takes control of the economy.  But when it comes to regulations, its incentive is always to do more than is necessary for a stated policy goal, and the restrictions and uncertainty it places on people who operate businesses do real harm.

In life, we do things like eat healthy, exercise, and visit doctors regularly in order to allow us to live.  When it comes to government regulation, we tend too much to allowing officials to tell us how to live for our own good — or rather, how to live for the good of whomever the government prioritizes.

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Licensing Puts Us at the Mercy of Legislators and Bureaucrats

Eric Dexheimer, staff writer for the Austin American-Statesman, relates the story of Shayne Gatlin, who made the dumb decision as a teenager to agree to drive the getaway car for his friends after they broke into a house.  Some years later, he took up the trade of locksmith, and over 30 years, he has built up a solid reputation and stellar Better Business Bureau rating.

In 2004, however, his home state of Texas began licensing locksmiths, which presented him no problem, beyond the embarrassment of disclosing his record, until he recently had to supply a digital fingerprint under a new rule:

That appears to have set into motion a mandatory new review of his background, said Steve Thornton, Gatlin’s attorney. But rather than acknowledging Gatlin’s long and clean track record, court records show, the Private Security Program instead treated him as a new locksmith applicant. That meant applying an inflexible rule it had adopted in 2014 stating that any applicant with a house burglary conviction, no matter how long ago it occurred, was to be rejected.

The public can disagree about the appropriate rigidity of the law for professionals working in home security, but Gatlin’s story illustrates an important point:  When you need the government’s permission to work, you’re constantly at their mercy.  The rules can change arbitrarily and a single decision — made by legislators or bureaucrats who are too confident in their ability to foresee every consequence — can wipe out your entire life’s work.

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Returning to the Rule of Law and Consent of the Governed

A recent Wall Street Journal editorial applauded the work of the Trump administration in its “great rules rollback”:

The results have been impressive. Ms. [Neomi] Rao [of the White House Office of Information and Regulatory Affairs] reported this month that through Sept. 30 the Trump Administration had taken 67 deregulatory actions but only three new significant regulatory actions. That’s a 22 to 1 ratio. She also reported that since fall 2016 more than 1,500 planned regulatory actions have been withdrawn or delayed. For fiscal 2018, the current agenda includes 448 deregulatory actions and 131 regulatory actions, a better than 3 to 1 ratio.

One reason for success is forcing agencies to abide by the Administrative Procedure Act, which outlines a public comment period for proper rule-making and which the Obama Administration routinely ignored.

Imagine government following its own rules!  After eight years of Obama, that feels new and refreshing — as if we have the rule of law and the consent of the governed (or are moving back toward it).

In recent weeks, I’ve been noticing a number of Trump skeptics come around (which is to say, people more skeptical than I was, which was pretty skeptical).  The reevaluation is justified, and minds ought to be changing across the political spectrum, not the least for reasons like this:

… the far larger impact is lifting the pall of government hassle and arbitrary enforcement from business. In the Obama era, CEOs never knew when or how a federal agency might strike for political reasons, no matter the law. Simply lifting that constant fear has had a liberating effect on risk-taking and investment.

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