Sunday, July 30, 2006


State Licensing

What types of services, if any, should require state licensing?

This has come up in several of my "kitchen table" debates, as well as in a public policy class I took with Chris. It seems almost everyone is in favor of licensing for doctors, dentists, emergency medical personnel, etc. But most of the people I've talked to agree that it is ridiculous for the State of North Carolina to have a Board of Cosmetic Art Examiners. Apparently, NC isn't the only state to do this, either. How do I know about this? My mom is a cosmetologist and she was complaining about the "continuing ed" classes she is forced to take in order to keep her license. She's been doing her job for over 30 years, but NC says she has to go to classes to learn how to do it better, stronger, faster, whatever.

Now back to the question. What should be licensed and what shouldn't? I personally have so much (perhaps blind) faith in the market that I don't think licensing anywhere is worthwhile. It imposes invisible costs and may remove some risk, which is why most people like it: it seems like all gain and no pain to the uninitiated. To the initiated, it seems like a costly barrier to entry, a new revenue stream for state governments, and a way for politicians to sound morally righteous by saying things like "In a State as great as ours, we should have a decent standard of care in Industry X." Almost makes me forget how absurd the premise is, when it has that "politician ring" to it.

What do you think?

You seem to be giving the impression that politician's motivations for implementing these licenses is less than noble.

An economic argument could be made for asymetric information. However, it comes at a cost that is spread nice and thin over the entire population. The difficult thing is that it could be worth it, if there were some unanimous consent. Without it, however you can never know.

Like the folks in the public policy class, many people can not comprehend of a private or non-profit licensing mechanism.

I think licensing is a waste and it only serves as an artificial safety net full of holes.

Yes doctors and dentists should have degrees and credentials -- there is just no "need" for the government to legislate, enforce, and regulate this important market mechanism (price and quality differentiation).
Isn't brand-naming a kind of free-market licencing? How about posting the grades that certain professionals earned when learning? Dr. Joe Smith graduated 5th in his class of 123 at blah, blah blah University...
Board and Bar exams are great, except when they use the force of law to achieve their ends.
Am I the only one who cares about licensing? I guess I have to push this into some gray area before we get conflicting answers.

What about emergency medical care? This is an interesting example because consumers have very little choice in paramedics.

Could this be a legitimate government intervention or not?

Should EMT be privatized?
Travis, it's not that we don't care; it's just that, like you "I don't think licensing anywhere is worthwhile." You already said it - why should I repeat?

In answer to your more specific question: Yes, EMT should be prizatized. At the same time, we shouldn't have government licensing for anything in the health profession. Doctors, nurses, etc can all be evaluated efficiently by private institutions - I'm sure we'd all be better off if that were the case.
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