Licensing vs. Certification

One of government’s favorite tools used to control us is Licensing.  In many states, if you want to sell hot dogs from a cart, build a home, decorate offices, repair cars, shampoo hair, or help someone sell/buy a home, you first need to get a license.  In other words, you are forbidden from performing any of these jobs without the proper licenses under penalty of fines and even jail time.

Many people think licensing is there to protect the consumer.  A license usually means they’ve completed some kind of training or required registration with the proper authorities (whatever that means).  And most people will probably say “what’s the harm in that?  I want to feel safe knowing that my ___ is reliable, safe, and properly trained.”

But does licensing actually protect the consumer?

Most likely, no.

In 2012, The Institute for Justice (IFJ) released a national survey for over 102 low- and moderate-income occupations (meaning, they didn’t look at Doctors and Lawyers).  These are jobs like barbers, massage therapist, landscapers, etc.  One thing they compared were the vastly different licensing requirements between states.  What they found was that there was very little difference between safety and consumer protection if you looked at states that required huge amounts of training / fees / education vs. those that had none or minimal.  A manicurist in Alabama, for example, requires 4 months of Education and Experience and passing 2 exams in order to get a license.  Yet Iowa’s requirement was only 9 days and 1 exam.  Were Alabamian manicurists safer than their Iowegian compatriots?  Nope.

Shampooers (the person that washes your hair at the barber or salon) are licensed in 5 states.  Are the other 45 states seeing increased cases of shampooer malpractice?  Absolutely not.

Interior Designers are licensed in NV, LA, FL and Washington D.C.  They all require SIX YEARS of training / education and passing an exam.  In the other 47 states, there are no licensing requirements at all.  How is it possible that homeowners in these other states can survive without the safety of licensing?

Here’s the kicker.  By comparison, Emergency Medical Technicians (EMTs) are required to perform 1/10th of the training of Interior Designers in order to be licensed (Washington DC actually has no education requirement, but you have to pass 2 exams).

So why does Government require so many licenses in order to work?

The answer is because people in these fields want to keep out competition.  By lobbying their legislators to pass these licensing requirements, existing businesses have created huge hurdles for new entrants into these jobs.  As a result, many people are discouraged from entering in the first place.  Eliminating competition creates job security and little incentive to improve services or lower prices.  If you are the only licensed auto mechanic within 100 miles, you can charge whatever you want and still have a line of customers waiting night and day to do business with you.  Your work could be shoddy, you could take days to complete simple tasks, and still they would keep coming to you.

We see this every day.  Cab drivers that forked over all their savings and even took out loans to secure their precious medallions are fighting tooth and nail to keep out the likes of Uber and Rideshare.  Labor Unions insist cities and public services utilize their members only.  Doctors are the only ones that are able to perform certain medical procedures, even though Nurses, Chiropractors, and Midwives are more than capable.

But without licensing, how can the public consumer have any assurance the businesses are safe or reliable?  What’s to stop some crazy person from performing oral surgery in his garage with a blowtorch or an unlicensed Florist from mixing azaleas with the marigolds or an untrained Auctioneer from yelling “SOLD” too quickly?

One possibility is in third-party certification.  Instead of preventing new entrants into the marketplace, those businesses that truly want to distinguish themselves for investing in the latest training, technology, or safety could hire independent experts to evaluate and certify their businesses.  Consumers can then choose whether to risk going to see an uncertified Shampooer (and maybe paying a little less) or going to see Barb, who has been certified by the Florence Henderson Beauty College.  Libertarians often point to organizations such as UL and Consumer Reports as voluntary, 3rd party reviewers and certifiers that serve the public’s interest of safety and quality much more effectively than licensing.

Competition in the marketplace is a good thing for everyone except for those that want to hold onto their monopoly (and the government bureaucrats whose pockets are lined with lobbyist bribes).  Consumers benefit from lower prices due to increased supply and more variety of choices with respect to quality / certification.  Those looking to start a business benefit because they can more easily enter into the marketplace without costly start-up requirements.  Existing / higher-end businesses also benefit because if they offer superior quality and services, and customers are looking for that, they can easily distinguish themselves through certification.

It’s time to start cutting back on all the Protectionism and bureaucratic red tape imposed on us by the government and their cronies.


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