Government and Occupational Licensure
Occupational licensing, of whatever kind, often represents a conflict between good politics and good economics. Politicians naturally want to enact laws to "protect the public" from unqualified practitioners of various crafts. At my last count, there were over 40 occupations in Ohio with regulations of this kind, and the list seems to continuously grow.
It is certainly true that craftspeople are in a position to do damage to their customers' persons or property if they do not perform their crafts carefully. A barber could, I suppose, accidentally cut off an ear. A plumbers' pipes could burst. A poor lawyer could get you sent to prison.
The political response to these sorts of fears is usually in the form of a regulatory board which sets entry standards through education and/or testing, regulates entry through licensing, and often enforces these standards with fines or through prosecution. (I should mention that I stand before you as a proud member of a completely unregulated occupation.)
This is good politics on two levels. First, the public appears to like the security blanket offered by such regulation. At the very least, politicians can claim to be doing something. Second, the regulated occupation itself often is the most vigorous supporter of the regulations. I am sure you will hear a lot of opposition to this bill from already licensed dieticians.
But what is good politics often makes bad economics. To the extent that exams, education requirements, license fees, inspections, bonding requirements, etc. add to the cost of entering a particular line of work, we would expect fewer people to enter that line of work. By reducing the number of plumbers, barbers, dieticians, etc., we cause the price of the services rendered by these individuals to rise.
So occupational licensing operates like a tax on the consumers of the regulated services, and as a subsidy to the existing practitioners whose income is enhanced by the reduction of competition and higher prices. Of course, this is why the existing industry is so vocal in support of regulations.
Furthermore, as one investigates the actual regulatory requirements in various occupations, one is stuck by how arbitrary and capricious many of the requirements appear to be. Indeed at its worst, occupational regulations may offer little or no benefit in the form of better or safer services but only higher prices for consumers. In the current example, preventing people with Ph.D.'s in nutrition from dispensing advice borders on the ludicrous.
Ultimately, the economic question is this: Is the protection to the public, in terms of reducing the number of unqualified practitioners, worth the cost of the regulation, in terms of restricted entry and higher prices to consumers?
There is no way for me to answer this question for you. But it seems reasonable that in those areas where the harm from "unqualified" practitioners is minor, that regulation should be light or even nonexistent. Conversely, in those areas where the potential harm is high, regulations should be more stringent.
I am sure that getting a "bad" dietician is a potential problem. It would also seem to me that the potential harm to the public to be caused a “bad” dietician is not anywhere on the scale of getting a "bad" doctor.
The Buckeye Institute advocates for an increase in market-oriented public policies and a reduction in heavy-handed government regulations. So we should note that the marketplace already has in place a number of mechanisms to weed out bad craftspeople.
First, many such practitioners rely on word of mouth and reputations to garner and keep business. If a plumber's pipes routinely burst, then he is unlikely to stay in business long. Institutions like the BBB and Angie's List also contribute to the information available to consumers. Second, in the event that serious harm is caused by a craftsperson, then there remains the remedy of tort law.
What role is there for government then? I suggest that H.B. 188 offers a prototype for how government should approach occupational regulation, if such regulation is needed at all, should be structured. It essentially makes the licensing process optional. Practitioners willing to go through the regulatory hoops can become "licensed" and can advertise themselves as such. The regulatory agency would act as a sort of UL label for the craft. But people would not need to be licensed to operate. They could operate as "unlicensed" dieticians so long as their clients were fully aware of this fact.
This model of optional licensing shifts the role of the state away from heavy-handed entry regulation to light-handed information provider. It is more consistent with a free society in which people are permitted to make their own choices.
Joshua C. Hall is the director of the Buckeye Institute Center for Education Excellence and a lecturer in economics at Capital University.
