Government Regulation and Competition

Gay Lynn HillEconomics(ML), Mini Lessons

From Common Sense Economics: What Everyone Should Know about Wealth and Prosperity:

As recently as 1970, fewer than 15 percent of Americans worked in jobs that required a license. Today, the figure is nearly 30 percent, and it is continuing to grow. In the mid-1980s, 800 occupations were licensed in at least one state; now, according to the Council on Licensure, Enforcement and Regulation, more than 1,100 occupations are licensed.

The supporters of licensing argue that it is necessary to protect consumers from shoddy and potentially unsafe products. But, licenses are required in numerous occupations that have little to do with public safety or protection of the consumer. For example, one or more states require a person to be licensed in order to work in the following occupations: interior designer, makeup artist, florist, hair braider, shampoo specialist, dietician, private detective, athletic trainer, tour guide, hearing-aid fitter, funeral attendant, casket seller, and even a ferret breeder and a palm reader. The pressure for licensing seldom originates from consumer groups. Instead, it nearly always arises from those already in the occupation. This is not surprising to economists because the current suppliers are the primary beneficiaries of licensing.


Questions

  1. Which of the above-listed professions do you think should require licenses? Now, think about how you would make decisions about choosing a professional in one of those occupations, if there were no licensing requirement?

This reading is an excerpt from Certell’s Common Sense Economics eBook.  Certell offers curriculum materials and eBooks free of charge for students and teachers.  Click Here to download the Common Sense Economics Materials.