Dick Carpenter, director of strategic research at the Institute for Justice, discusses the history of America’s problem with bottleneckers and solutions for dealing with them.
Licensing is a perennial headache for the liberty-minded. It is an insidious problem which sneaks up on a society and is difficult to root out. But why?
The book “Bottleneckers” by Dick Carpenter and William “Chip” Mellor, both of the Institute for Justice, answers that question, and was the topic of a recent Issues and Ideas forum.
Carpenter explained that “a bottlenecker is someone who uses the power of the government to limit competition in the market and artificially boost their own profits.” In other words, bottleneckers are groups and special interests that attempt to limit the supply of people who can legally perform a certain job.
Some licenses make more sense than others. Even the most ardent adherents to limited government wouldn’t argue for removing licensing requirements for doctors right away. But among commonly licensed professions you will find not just health care professionals. Athletic trainers, cosmetologists and barbers are all licensed in Michigan.
Superfluous licenses cause many problems, as Carpenter demonstrated. When it takes hundreds of hours of education to make a legal living styling hair or painting nails, prospective cosmetologists have three options. They can sacrifice income-producing time to pursue the educational requirements. They can skip the license and work illegally, which could lead to other problems, including tax fraud. Or they can look for a different occupation.
Whatever our prospective cosmetologists chose to do, the market for that occupation is artificially restricted. Licensed cosmetologists charge more than market value for their services, but those services are not inherently better simply because they received the government’s stamp of approval.
Indeed, licenses arise not from accidents or safety concerns brought up by average people, but from the licensed parties themselves, who argue that the lack of a license jeopardizes the health and safety of the public. This argument has been made for a variety of professions, from dentists to interior designers. Rarely can this assertion be backed up with facts, but it allows protected groups to push out competition in adjacent markets. Dentists go after teeth whitener kiosks in malls. Registered dietitians go after paleo diet bloggers. The list goes on.
Michigan should take a serious look at many of its occupational licenses. Doing so would be a boon for economic liberty and people looking for work.