Collective Action Kills Innovation

by on January 4, 2018 at 7:25 am in Current Affairs, Economics, Law, Medicine | Permalink

Oregon has just passed a law that gives gas stations in rural counties the option of allowing self-pumping (in some rural counties this is allowed only between 6 p.m. and 6 a.m.!) As you have probably heard, this incomplete lifting of an absurd restriction has some Oregonians upset and afraid.

“I don’t even know HOW to pump gas and I am 62, native Oregonian . . . I say NO THANKS! I don’t like to smell like gasoline!” one woman wrote.

“No! Disabled, seniors, people with young children in the car need help. Not to mention getting out of your car with transients around and not feeling safe. This is a very bad idea. Grrr,” another woman wrote.

“I’ve lived in this state all my life and I REFUSE to pump my own gas . . . This [is] a service only qualified people should perform. I will literally park at the pump and wait until someone pumps my gas.”

Most of the rest of the America–where people pump their own gas everyday without a second thought–is having a good laugh at Oregon’s expense. But I am not here to laugh because in every state but one where you can pump your own gas you can’t open a barbershop without a license. A license to cut hair! Ridiculous. I hope people in Alabama are laughing at the rest of America. Or how about a license to be a manicurist? Go ahead Connecticut, laugh at the other states while you get your nails done. Buy contact lens without a prescription? You have the right to smirk British Columbia!

All of the Oregonian complaints about non-professionals pumping gas–“only qualified people should perform this service”, “it’s dangerous” and “what about the jobs”–are familiar from every other state, only applied to different services.

Once we got familiar with self-pumping it didn’t seem like a problem, but it’s surprising we ever got self-pumping as it would have been easy to scare people into voting no. After all, the case for trained gas pumpers is far stronger than for licensed barbers. Perhaps we were less risk averse and complacent in the past. I don’t think we could build the Hoover Dam today either.

It’s easier to scare than to inform and we fear losses more than we desire gains so collective decision-making defaults toward stasis.

We have innovations like Uber and Airbnb and many others only because entrepreneurs didn’t have to ask for permission. Had we put these ideas to the vote they would have been defeated. Allow almost anyone with a car to drive customers around town? Stranger danger! Let any house be turned into a hotel? Not in my neighborhood! Once the innovations were brought into existence, the masses saw the benefits but they would not have seen those benefits if the idea had been put to a vote. Demonstration is more powerful than imagination.

More and more, however, the sphere of individual action shrinks and that of collective action grows. Thus, I do not laugh at the Oregonians and their fear of gas pumping freedom. We are all Oregonians in one form or another.

1 Dick the Butcher January 4, 2018 at 7:37 am

LOL

New Jersey doesn’t trust its serfs with pumping their own gas, either.

Licensing is forced because it adds to the treasuries and supports bureaucrats – coercion and power.

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2 GoneWithTheWind January 4, 2018 at 9:52 am

In Oregon this is simply about jobs or the public impression that the legislature was protecting jobs. It has little to nothing to do with the Oregonians desire or reluctance to pump their own gas. As it relates to rural areas, the law had an odd clause that allowed membership only stations to sell fuel pumped by the individual buyer while mom and pop stores had to have two employees on hand to sell fuel so instead they simply shut down the pumps after 6 pm. So as in most of what government does it was designed to get votes and/or benefit some special interest and had nothing to do with meeting the needs of the everyday citizen.

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3 Dzhaughn January 5, 2018 at 4:19 am

Historically, in Oregon, the self-service ban was viewed as an anti-oligolopoly measure. Even if it is in the state fire code.

The story was that large gasoline retailers were reluctant to own non self-serve stations (which did not fit their cookie-cutter model) and so the measure increased local price competition. Oregonians heard your laughter, but were rather consoled by their relatively low gas prices. (Along with New Jersey’s.) And it was obvious who was lobbying in favor of allowing self-serve.

That was a couple decades ago; it is unclear if the argument remains valid.

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4 RZ0 January 4, 2018 at 7:42 am

A little history: Gas stations went to self serve during the energy crisis of the 1970s because consumers wanted to save a couple of cents per gallon. For a while stations offered both full service and self serve, but in a classic case of adverse selection, the price of self serve rose, and each time the price rose, fewer people wanted full serve. As those people switched to self serve, the fixed cost (the attendant) was borne on fewer people, the price rose and we ended up where we are today – with no full-service pumps.
Outside of New Jersey, where self-serve is banned and we look upon self-serve as cretinous behavior. One might like or dislike the law in principle, but given our weather forecast (-3 degrees on Saturday), full-serve looks mighty fine.

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5 clockwork_prior January 4, 2018 at 9:53 am

Yep, there used to be two different pump areas at all the local Fairfax gas stations in the 70s – except Hess, which was the first stations that went full self-serve, in my memory (though I cannot quite remember if the self-serve gas station next to the Arthur Treacher’s at near Fairfax Circle started out as a Hess station or not).

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6 Triclops January 4, 2018 at 11:48 am

How dare those cretins refuse to subsidize your preferences!!!!

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7 dan1111 January 4, 2018 at 11:54 am

+1 (cent per gallon).

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8 Pete Ozug January 4, 2018 at 3:16 pm

Even back when New Jersey was cheaper, I did everything I could to plan around filling up while driving through. In most states, a long wait at a highway pitstop is however long it takes to fill a tank. In New Jersey, I’d have to sit for probably an extra few minutes per tank in line in front of me, so that the tip-grubbing knuckle head pumping gas could wipe all the windshields, whether they started dirty or clean, like fictional homeless man at a stoplight.

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9 Charlie January 4, 2018 at 7:42 am

Alex, not Tyler.

Luckily there is a literature:

http://www.convenience.org/magazine/pastissues/2011/october2011/pages/feature8.aspx

What is that quote about a group of businessmen and conspiring to defraud the public?

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10 Alex Tabarrok January 4, 2018 at 7:53 am

Thanks. I made a few edits.

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11 Art Thompson January 4, 2018 at 7:58 am

“After all, the case for trained gas pumpers is far stronger than for licensed barbers.”
Anyone with a pair of scissors and a chair should be able to open a barber shop?

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12 Art Thompson January 4, 2018 at 8:10 am

BTW, using that one YouTube video for making a point is humorous but clearly disingenuous. Consider how many times a day People pump their own gas in this country. If this was the norm, rather than the exception, we would be seeing it in the news almost daily – like gun deaths.

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13 OldCurmudgeon January 4, 2018 at 1:09 pm

Presumably, the real harm they’re trying to avoid the environmental damage from spilled gasoline (i.e., a toxic material). Oregon is known for it’s environmental ethos. NJ…less so.

Semi-related: the EPA will fine companies for surprisingly small spills.

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14 NL7 January 4, 2018 at 1:32 pm

Most regulations should be presumed to have a protectionist angle. And most of those regulations that weren’t designed from the outset to protect influential incumbents will eventually be turned to that purpose.

In New Jersey, a single gas station owner opened a self-serve-only station and undercut the price cartel of the full-serve stations. The other owners eventually got his business model prohibited by law, protecting their profits. The legislature swore it was a safety measure, but the newspapers at the time all correctly identified it as corrupt protectionism. Full-serve-only in NJ was protectionism from its genesis.

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15 OldCurmudgeon January 5, 2018 at 12:00 pm

If I were following the law, I’d be pretty annoyed if my competitor wasn’t. Particularly when that shirking provided him with a marked advantage.

If you want a proper protectionist law, Wisconsin had (has?) a one that established a minimum markup on gasoline. That is, businesses there can’t offer cheap gasoline as a loss-leader.

16 derek January 4, 2018 at 8:10 am

Why not?

Think this through. If you have a barbershop with two chairs, would you hire and leave someone you don’t know whose only ‘qualification’ is some accredited course? No. Never in your life. You would watch them do the job, and if they are qualified by practice you would.

There is a vast difference between certification and qualification. I personally am certified to do work that I’m not qualified by experience or even training to do. I am also qualified by experience and training to do things that I’m not certified to do by the local jurisdictions.

If you are in a town visiting and you need a hair cut, you look around and find one that is busy. The one that is empty, no matter the level of certification, you best stay away from.

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17 Triclops January 4, 2018 at 11:50 am

But the piece of paper says “certified” on it!!! I’m safe from harm then.

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18 Alan M January 4, 2018 at 4:35 pm

If you owned a barbershop and had an opening for a new barber, how do you vet potential hires if not for accreditation? If someone walks in and asks for a job you can’t just point them at the nearest customer and say “show me your skills”. Do you keep a bunch of those haircut dummies in the back? Maybe this just shows my lack of understanding of the barber industry, and there’s already some industry standard interview procedure I don’t know of.

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19 Peter Ozug January 4, 2018 at 8:13 pm

How in any field? Either get references that you trust, or teach them yourself. Or offer clients some sort of deal like free haircuts. Let them cut under your instruction. Basically, however you get certified, but under the employer, rather than at school. Heck, you could still have the beauty schools, and then the person comes to you and shows their certificate, though without legal mandate. How did people do this before licensing?

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20 derek January 4, 2018 at 11:07 pm

You wouldn’t with either. Even accredited doesn’t mean qualified. You would ask for references, talk to previous employers, etc.

If a market has accreditation, anyone serious would have it. But there are markets without that function just fine.

My worst mistake in business was hiring someone with credentials and expecting that they had even the most basic skills. The paper means nothing. Experience and ability are what matter.

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21 rayward January 4, 2018 at 8:13 am

“More and more, however, the sphere of individual action shrinks and that of collective action grows.” What? Tabarrok lists his ideas of innovation, from self-service gas stations to Uber to Airbnb, and then warns of growing collective action. “It’s easier to scare than to inform . . . .” That’s for sure.

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22 Mulp January 4, 2018 at 3:04 pm

What is innovative about charging customers to do part of the work in the gasoline value chain?

Granted, there has been a lot of innovation that has eliminated the local garage the keeps cars running with lots of skilled labor, pumping gas as just one part of the service.

But heavy use of pesticides and farming monoculture has killed off the bugs that kept good service station workers busy, able to remove the bugs from windows and lights before the tank filled. Never drove anywhere without the need to scrub the windshield every fill up in the 60s and 70s. Hated the self serve stations with crappy scrubbers.

Innovation is an electric vehicle with almost no maintenance required and contactless charging when you pull into your garage.

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23 Peter Ozug January 4, 2018 at 8:16 pm

Maybe at a busy gas station, or in a world with no wage minimums where a kid could do his homework for 50 minutes an hour and pump for the ten that has someone there, but in the world we have, it’s nice to be able to accept only credit or debit at night and let the customer do the labor that is only needed to be done when the customer is present.

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24 john January 4, 2018 at 8:15 am

Wonder what their take (and their laws) regarding electric vehicles is? I would think it might be (devil will be in the plug design though) the electric fill-up might be much more dangerous than that of pumping gas.

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25 Dzhaughn January 5, 2018 at 4:25 am

Cue Hollywood’s remake of The Birds for the age of Tesla.

https://www.youtube.com/watch?v=5-HYj5cLfEI (1:40)

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26 Sam the Sham January 4, 2018 at 8:17 am

The question should be “Who will stop me?” not, “Who will let me?”

I think it’s outrageous to need a license to cut hair as well, but I’m just a libertarian nutjob.

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27 tjamesjones January 4, 2018 at 6:17 pm

let me wheel this one out, apparently Churchill, said, “In England, everything is permitted except what is forbidden. In Germany, everything is forbidden except what is permitted. In France, everything is allowed, even what is prohibited. In the USSR, everything is prohibited, even what is permitted. “

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28 Daniel Weber January 5, 2018 at 11:46 am

Everything not forbidden is mandatory.

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29 Joe In Morgantown January 4, 2018 at 8:24 am

Once I was in NJ, which is also a state where pumping gas is left to the qualified professionals.

Only, the professional had never done it before. He’d received the training you’d expect— none at all. And, because you tend to stay in the car in those states, he’d apparently never watched anybody do it.

I gave him a few tips and he did fine.

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30 Tom Cooper January 4, 2018 at 8:39 am

Great post, thanks. The Institute for Justice is on the case: http://www.ij.org

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31 Christoph Maurer January 4, 2018 at 8:50 am

Just found this via twitter: http://www.oregonlive.com/trending/2018/01/actually_oregons_ban_on_self-p.html

Interestingly, the author makes the claim that stations will continue their allegedly valuable service despite the new law
“Whatever the reason for the internet-wide scoff in our direction, in reality, many rural stations are continuing on as they did before the law changed and there will likely be a helpful attendant to greet you, pump your gas and send you on your merry way next time you pull up to a station.”, but nevertheless concludes “Actually, Oregon’s ban on self-service gas is good”

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32 Benny Lava January 4, 2018 at 8:53 am

I don’t believe the Oeegonians quoted were serious. I think it is a joke and the serious people are being had.

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33 Transnational Pants Machine January 4, 2018 at 9:31 am

It’s true, liberal views are often indistinguishable from satire.

For example, “Colleges are teeming hotbeds of rape and racism that everyone should be able to attend free of charge.”

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34 Handle January 4, 2018 at 10:41 am

I had the same impression. Jokes and fakes.

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35 Tanturn January 4, 2018 at 10:59 am

Sounded like real retards to me.

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36 Sam the Sham January 4, 2018 at 11:55 am

Poe’s Law – fundamentalist beliefs are indistinguishable from satire.

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37 asdf January 4, 2018 at 12:36 pm

I wish, but my NJ based mother freaks out over self serve in just such a manner.

People really really like doing what they are used to.

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38 Dzhaughn January 5, 2018 at 4:27 am

This is the truth. It is easy to find people with the quoted opinions in Oregon, but that doesn’t tell you what is really going on.

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39 mkt42 January 5, 2018 at 7:46 pm

I’d guess that a good portion, probably most, of the quotes from Oregonians were real.

But that doesn’t mean that most people in Oregon are idiots — only the ones who supplied those quotes.

Over half of the people now in Oregon were born in another state. They (we) are well aware of the absurdity of Oregon’s current full-serve requirements. I think even most native Oregonians are too.

But changing that regulation is about as easy as telling Oregon to start charging a sales tax — which is something else that, like self-service gas, Oregon lacks. But before you all move to Oregon, note that its income tax and property taxes are relatively high. A saner system would have a better balance between its various tax revenue streams, but like self-serve gas there’s a lot of inertia against it.

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40 chuck martel January 4, 2018 at 8:59 am

In Oregon and NJ how are gasoline transactions structured? Does the attendant handle the credit card or the buyer?

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41 Steve Brecher January 4, 2018 at 9:44 am

In NJ the attendant handles payment.

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42 clockwork_prior January 4, 2018 at 9:49 am

And in the past, they preferred cash, and would often fill the tank in such a way as to make ‘tipping’ easy – especially when spending a minute to find 22 cents. Those coin belt changers were amazingly rare among attendants, in my memory. Though in all honesty, I also remember the attendants that would wipe the windshield, and fill the tank exactly as instructed. It would be interesting to hear of more recent experiences.

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43 Peter Ozug January 4, 2018 at 8:21 pm

Same for Oregon. I was in a hurry to fill up my rental before heading to the airport. It happened to be cold so the attendants were all inside and took way too long to come out and way too long to do any part of their job that involved taking their hands out of their pockets. I would have been gone before they caught me had I pumped my own gas.

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44 Dzhaughn January 5, 2018 at 4:31 am

Cash users generally have to pay inside the store; card payers use a terminal at the pump, generally without assistance. No one trusts attendents with cash.

At leat that’s the situation along the I-5 corridor; I would not deign to speak for Malheur county.

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45 Art Deco January 4, 2018 at 9:01 am

I’m pleased to have licensing requirements for people who wield straight razors.

It’s a reasonable wager that what’s motivating these people is a dislike of change borne of a sense of insecurity. That’s a perfectly normal sentiment. N.B., if where I’ve lived is any guide, when you institute self-service, full service gas stations disappear. There was a time in the 1970s in New York where you typically had options. I haven’t seen a full-service station since about 1995.

It’s amusing to see the soi-disant libertarian professoriate invest their verbiage in these diversions so they don’t have to take stances that would be status lowering in the faculty rathskellar (or take stances which would reveal their libertarianism to be largely bogus).

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46 Erick January 4, 2018 at 10:45 am

Nobody uses straight razors. Even “straight razor” shaves are not made using real straight razors.

Anyway, how much training is needed to let someone know that slicing someone’s arteries is a bad idea? You think it’s a class that would prevent someone from doing that? Do you have any examples of unlicensed or home barbers killing people because they didn’t know that razors were sharp and you need blood to live?

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47 Art Deco January 4, 2018 at 11:09 am

Nobody uses straight razors. Even “straight razor” shaves are not made using real straight razors.

My barber’s straight razor won’t disappear if I stop believing in it.

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48 Jay January 4, 2018 at 1:41 pm

I usually enjoy the quality of your posts Art but think this one through a bit. My barber uses straight razors too and I never once cared if there was a piece of paper on the wall. Imagine if they didn’t need one, you think a business owner would open themselves up to a mile-deep pool of liability if they hire some razor-wielding artery cutter to shave you for even a single customer? The owner/employees have much more incentive to ensure they’re qualified than some licensing board does when handing out pieces of paper.

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49 Art Deco January 4, 2018 at 2:26 pm

I see your point.

What the licensing requirement does is compel aspirant barbers to follow a particular training regimen. In New York, the training course takes about 4 months and costs about $4,600. It’s open enrollment. This particular school does not specify whether an equivalency is good enough.

http://abi.edu/courses/500-hours-barber-operator-program

Then you’re good to work as a staff barber in a shop. After two years, you can take a state examination and open your own shop. You can make an argument that that’s not reasonable using the reasoning familiar to students in economics courses. Maybe you’re right. I’m thinking Chesterton’s fence.

And, of course, I think it’s amusing that someone providing quite padded services (all those distribution credits) consequent to the arms race between families to acquire labor market signals is making hay over a 4 month training course which has a sticker price that’s about 4% of the in-state sticker price of a B.A. degree at George Mason. And, of course, he has tenure to boot.

50 Jay January 4, 2018 at 4:18 pm

I agree with your final point Art. I see the point of the courses and I have no problem with existing, I just disagree that its the mandate and the course that compels aspirant barbers alone. If the barber market sees these certificates as valuable and wanted, then barbers will get them willfully. I have a problem with NY saying to the 62 year old barber who’s been cutting hair in Kansas for 40 years…”you can’t open a shop here until you pay this tax and take this completely unnecessary course for a piece of paper”.

51 Boonton January 6, 2018 at 6:01 am

I wonder how much of a barrier this really is? I can see how the 62 yr old Kansas barber who moves to NY is not going to want to do a 500 of training to learn what he already knows. But how many barbers would move from Kansas to NY or vice versa in a world without any requirements or where states were required to cross-recognize each others’ barbers licenses?

For someone entering the market it is a ‘tax’ of a sort but nothing like the requirements to be a CPA, doctor or lawyer. $4200 tuition spread out over a 30 year plus career is actually not bad at all.

52 Heedless January 5, 2018 at 1:07 pm

Ahem.

What do we really know about it barbers?

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53 Heedless January 5, 2018 at 1:07 pm

Our, rather.

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54 Transnational Pants Machine January 4, 2018 at 9:28 am

Alex is 100% correct on all counts.

And I expect him to crank out this very same column more-or-less annually… while he continues to vote Democrat.

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55 dan1111 January 4, 2018 at 11:25 am

In fairness, Republicans haven’t exactly been leading the charge against things like occupational licensing.

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56 Triclops January 4, 2018 at 11:54 am

Yep, they’ll mention it here or there to get an “Amen”, then go back to the Mexicans and Muslims.

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57 dan1111 January 4, 2018 at 11:59 am

Well…that’s not exactly my view, either.

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58 Boonton January 6, 2018 at 6:04 am

Two of the biggest supporters of Republicans: Car dealership owners and Real Estate brokers. Two professions that are almost entirely manufactured by protective regulation.

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59 clockwork_prior January 4, 2018 at 9:44 am

‘As you have probably heard’

Actually, there was a Post headline, but the subject seemed so trivial that it was simple to scroll past, like most clickbait .

‘because in every state but one where you can pump your own gas you can’t open a barbershop without a license’

Luckily, this web site is able to make even the most trivial subject amusing, with the proper framing. Call it the MR clickbait effect.

‘I hope people in Alabama are laughing at the rest of America.’

Considering that Alabama almost elected a man who used to cruise malls trying to pick up teenage girls, it might be worth considering that for people born and raised in most of the U.S., using Alabama is not really considered a way to bolster any argument.

‘You have the right to smirk British Columbia’

BC is not in the U.S., and generally, using a Canadian province is not really considered by Americans a way to bolster any argument.

‘is that gas stations started offering this option before anyone thought that there should be a law one way or the other’

So much for mentioning NJ as a way to bolster this argument.

‘because entrepreneurs didn’t have to ask for permission’

And in the case of Uber, repeatedly broke the law in a number of jurisdictions globally.

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60 Pshrnk January 4, 2018 at 10:05 am

“BC is not in the U.S., and generally, using a Canadian province is not really considered by Americans a way to bolster any argument.”

Why not?

https://en.wikipedia.org/wiki/Human_Development_Index

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61 clockwork_prior January 4, 2018 at 10:42 am

One reason being that most Americans think of Canada as part of the U.S., just one they were previously unfamiliar with. According to a Nova Scotian B&B owner, the consistency of her American guests mentioning how they never knew that America had such lovely areas as Antigonish was astonishing – and very irritating, though in typical Canadian fashion, she remained polite when correcting them over and over and over again.

The other reason being, as so many Americans seemingly know, Canada is a socialist hellhole almost as bad as Germany. Especially somewhere like BC, which a Canadian paratrooper in Halifax said would turn communist if Canada ever split up. Admittedly, he also observed that Alberta would become part of Texas, so take his decades old observations as you will.

Basically, I was tweaking a born Canadian’s nose at using a provincial Canadian example in an American oriented web site, in similar fashion to how virtually no American outside of Alabama is likely to use Alabama as a positive example in a debate. I know someone who recently moved to Alabama, and not a single American (family or friends or friends of friends) outside of Alabama could quite hide their reaction at what that meant (and yes, their reaction was more than a bit uninformed, as essentially none of them have ever been in Alabama ). Admittedly this was before a man on a horse named Sassy rode up to the polls to do God’s will, losing by a massive 20,000 votes weeks after Alabama voters learned about his younger days hanging out at the mall.

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62 Pumped Up January 4, 2018 at 9:52 am

It’s only been a few months since Lawrence v. Texas legalized anal sex. If we can barely prove anal sex is safe, it’ll still be years before we can prove pumping your own gas (metaphor) is safe.

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63 The Anti-Gnostic January 4, 2018 at 9:54 am

Inapt headline. Bringing just about anything to market is the result of collective action. Maybe, “Credentialism kills innovation.”

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64 Borjigid January 4, 2018 at 11:22 am

+1

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65 Matt January 4, 2018 at 10:14 am

“A license to cut hair! Ridiculous.”

Maybe, but the idea isn’t as trivial as you make it seem. Hair coloring involves some chemicals that can be fairly toxic and require special handling, and a great deal of becoming a barber involves learning to use a straight razor without hurting your client. Which is easier to do than you might think.

Beauty licensing is a mess and needs some serious overhauling. But it isn’t just “A license to cut hair”. It’s more proof than you can do so safely.

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66 Careless January 4, 2018 at 11:00 am

“A license to do A! Ridiculous!”

“Maybe, but the idea isn’t as trivial as you make it seem. B involves some stuff that could be dangerous”

Oh. That seems relevant

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67 Borjigid January 4, 2018 at 11:22 am

+1

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68 Matt January 4, 2018 at 11:27 am

I suppose if your purpose is deliberate reductio ad absurdum, then sure. Details aren’t really the sort of thing you want to muck about with. In fact, you probably shouldn’t.

On the other hand, if you’re the sort that considers it important to accurately define what your discussing, then details like “This isn’t as trivial as you make it seem” are fairly important.

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69 Careless January 4, 2018 at 1:17 pm

accurately framing your post is not a deductio. Sorry. You made a pointless post. Hair cutting is not hair coloring.

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70 Niroscience January 4, 2018 at 2:28 pm

This isn’t so much A and B, as much as A.1 and A.2. Many hairstyles and barbers, especially the former for women, do both and much of the work goes into hair products as much as actual cutting of hair.

That being said, occupational licensing (and ironically the revival of the aristanal barber culture that invokes guilds) is most always blatant barriers to entry by incumbenets. Regulators play along usually because its politically less costly to have licensing than one accident.

71 Peter Ozug January 4, 2018 at 8:29 pm

But even if you want to be specific about hair dye…

You can purchase chemicals to dye your hair that can injure your eyes. You just can’t apply it to someone else for money. If they are so dangerous to require a license to apply, why not a license to buy?

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72 Boonton January 6, 2018 at 6:09 am

Perhaps strict liability with an insurance requirement would be better. You can cut/dye hair but you must have either an insurance policy that can cover up to $200K per incident or set aside $200K for X number of years in an escrow account.

If classes and certifications reduced the odds of someone getting hurt, insurance companies would drastically discount premiums for shops that only hired people who completed them. On the other hand if a shop offered to reduce risk in some other way like not offering a straight razor cut or hair coloring, they could likewise save on the insurance premiums and compete against full service salons.

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73 Glenn Mercer January 4, 2018 at 10:24 am

I am glad AT removed this sentence: “Indeed, I suspect that the only reason we have self-pumping gas stations is that gas stations started offering this option before anyone thought that there should be a law one way or the other.” Because it is more complicated than that: early on safety and payment were big issues and we did need attendants: the states regulated on the former and the companies acted on the latter.

Another commenter has linked to a nice history of the situation (thanks Charlie!). I actually used to work (in the 1980s) at an oil major which had a few thousand gas stations, and my recollection of the history was:

1. Early on everything was “full-serve” because a) often the refueling methods were messy (e.g. pouring gasoline from barrels, pumps with lots of splashed gasoline) and b) indeed dangerous (lots of Americans smoked… all the time) and c) cars were so high-maintenance that you really DID need to check the tires and oil every time you refueld. AND you needed someone to run the calculation, as it was very easy to get some gas and drive off without paying. And fire was a real risk. Check out YouTube Russian dashcam videos of people checking their gastanks with cigarette lighters….

2. Later on modern “full serve” caught on as a marketing tool (“You can trust your car to the man who wears the [ Texaco ] star”) as people started to realize gasoline was becoming a commodity, and so service was the differentiatior. Also, state regulations DID emerge requiring someone to be on hand in the case of fire (which was a real problem, especially as we went to multiple pumps per station)… but that person did not have to pump gas, only be ready to respond to fires.

3. Then as commenters mentioned, with the oil shocks companies were desperate to reduce the price of fuel and that meant getting rid of full-serve (with all its labor costs), and at the same time electronic pumps were getting good enough to actually handle both measurement and payment.

I recall field-testing an early electronic pump, whose processor had fried, such that every 5 or 10 seconds it would post a randomly different price… 85 cents a gallon, 2.35, 15 cents… I watched one poor driver stare at the thing (before we fixed it), thinking it was some sort of test of skill, that if he pushed the start button at just the right instant he would “catch” the low price…

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74 Anonymous January 4, 2018 at 2:44 pm

Thanks for the history and the detail.

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75 Thor January 4, 2018 at 7:38 pm

Thsnks for the info.

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76 tim January 4, 2018 at 10:24 am

I always assumed you were exaggerating in these things and figured there was no significant cost to getting a barber’s license, but it looks like a license near me requires barber school and 1000 hours of training — near me the schools seem to be $12,000+.

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77 Bill Walker January 4, 2018 at 10:29 am

In New Hampshire the statehouse just passed statewide school choice. I think that’s a pretty clear expansion of individual action:

http://www.unionleader.com/state-government/House-passes-school-choice-funding-bill-on-roll-call-vote-01042018

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78 A Definite Beta Guy January 4, 2018 at 12:23 pm

Free State Project FTW

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79 Mulp January 4, 2018 at 3:26 pm

Few people have any choice. Saying you can chose any school you want when the number of options is one is pretty pointless. Some towns have enough student density to support religious schools, and also have public charters.

But charters are mostly bringing back the schools of the 60s and before: small community grade schools and then dual track academic and trade in later grades.

BTW, NH public schools have been mostly very supportive of home school, letting kids take regular classes a la carte, like band, chemistry and other lab classes and subjects the parents don’t know, plus physed to easily meet State requirements.

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80 andy January 4, 2018 at 10:32 am

I hate the pumps with attendants. I never quite know if I’m supposed to tip or not or whatever…

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81 albigensian January 4, 2018 at 10:40 am

Self-service gasoline ruined the market for innovation in automating the task.

If most gas station owners were still paying attendants to slop gas down the side of customers’ cars, they’d be far more willing to pay for a robot that could do at least as well. And thus far more incentive to develop such robots.

And in the older vernacular, as “gas station” was a “service station,” because most offered at least some automotive maintenance services. Self-serve gas also ruined the opportunity for commissioned attendants to pop the hood and declare that you needed coolant, oil, windshield cleaner, etc.

And, wither bank tellers? Bank customers still (occasionally) go to bank branches to transact business, yet tellers are a cost to the bank. Will they be replaced by video screens (remote tellers in a cube farm somewhere), or human-teller-for-a-fee, or will management justify their cost by incenting them to sell financial products to customers who mostly just want to get their business done and leave?

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82 JK Brown January 4, 2018 at 11:01 am

“Self-serve gas also ruined the opportunity for commissioned attendants to pop the hood and declare that you needed coolant, oil, windshield cleaner, etc.”

There is far more profit in getting the driver out of the car where they are more likely to decide a soda or a candy bar, both far more profitable than oil or coolant.

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83 Boonton January 6, 2018 at 6:18 am

Most cars nowadays only have oil or coolant checked and refilled during service calls. You don’t ‘top off’ those fluids anymore unless you’re driving a real clunker. Some cars now even will throw the check engine light if you use the wrong brand name oil.

That being said NJ has been the other state that banned self-service for years while NY and PA around it have it yet no one has been able to detect any real price difference due to it (NJ is always cheaper than PA or NY…granted we have a refinery inside the state plus lower gas taxes but still…either the pumpers cost so little they aren’t noticed or the market has adjusted in some other way to neutralize their cost (perhaps a larger labor force participation rate, more gas stations that only sell gas rather than snack items competing). I’m not convinced removing the ban in NJ would result in lower prices at the pump and pumping gas is a source of employment for low skilled workers that is not marred by occupational licensing or criminal background check discrimination.

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84 spencer January 4, 2018 at 12:30 pm

Actually, the number of bank employees has been growing steadily despite the wide spread use of ATMs.

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85 carlospln January 4, 2018 at 4:35 pm

No it hasn’t.

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86 Boonton January 6, 2018 at 6:21 am

I recall some banks going full force on replacing tellers with ATMs…even trying to put a small fee on using a teller. But after a while it felt like the trend reversed itself…possibly because of all the fees being tacked on for using the wrong atm.

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87 ʕ•ᴥ•ʔ January 4, 2018 at 10:53 am

Here’s the thing, we see licensing of barbers as superfluous *now* because similar licensing make a very safe environment (from the standpoint of communicable diseases and public health) back *then*.

If is a mini-drama, on the same order as “why do we need an EPA, my air and water are fine!”

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88 Art Deco January 4, 2018 at 11:16 am

David Michaelis’ biography of Charles Schulz has a section on the evolution of barbering as a trade. (Schulz father was a barber). The licensing regime was part of an effort to make that trade clean and respectable, which it hadn’t been ‘ere that.

What’s amusing about this is that someone who couldn’t be more insulated from the vicissitudes of economic life is whinging about what’s almost certainly a mild wage premium which benefits an occupation group that numbers about 16,000 and for which the mean annual cash compensation is about $30,000.

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89 Anon7 January 4, 2018 at 2:07 pm

The cumulative effect of these sorts of regulations on lower income consumers is not trivial. But at least the intention is good as we drive down the road to hell.

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90 ʕ•ᴥ•ʔ January 4, 2018 at 5:08 pm

I prefer a few percent overcharge to typhus, ymmv.

a link into a Virginia Health Bulletin

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91 Hiding under my bed from Russians!! January 4, 2018 at 7:05 pm

Typhus has nothing to do with barbers in the link you posted. Typhus is discussed in the context of dead bodies (burials and funerals) not hair cutting services.

But, if being scared of getting typhus from your barber gives you another reason to be a cum-sock for government employees with no useful purpose, who cares if it fucks over a few more poor people? Certainly not moderates like you.

92 ʕ•ᴥ•ʔ January 4, 2018 at 7:21 pm

I know, it was not a super tight link, but those early 1900s standards and practices were all about making the boring and safe world we enjoy.

And there is another link:

https://econpapers.repec.org/article/eeeirlaec/v_3a50_3ay_3a2017_3ai_3ac_3ap_3a50-59.htm

93 ʕ•ᴥ•ʔ January 4, 2018 at 7:23 pm

Not to diminish barber sanitary practices either! That was a good list, including the hand washing.

94 Anon7 January 4, 2018 at 7:27 pm

Post hoc ergo propter hoc. It doesn’t take a costly course in the 21st century to teach barbers to wash their hands and equipment regularly to prevent the spread of disease. Unlike at the start of the 20th century, all people today are constantly reminded to do so.

95 ʕ•ᴥ•ʔ January 5, 2018 at 8:07 am

Even that demonstrates my point. We are safer because of all the hand washing regulations etc, even as people claim we don’t need the same regulations.

You are free riders in that sense, so safe you are free to pretend whatever you want about another unregulated world.

96 Jay January 4, 2018 at 4:22 pm

I bet a lot of trades weren’t clean and respectable in Schulz’s day, do we really think barbering would still be the slums today in the absence of licensing?

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97 dearieme January 4, 2018 at 10:57 am

Filling-stations in Britain have been self-serve for many decades. But one near us now employs a man to hang around on the forecourt offering help. I have no idea why. Because the population is ageing? Seems unlikely. I’m baffled. Suggestions welcome.

Long shot: because if he deals with the fuelling while the driver goes off to pay they can get more cars through per hour? Or because the driver will then have time to buy more stuff in the shop?

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98 dearieme January 4, 2018 at 11:00 am

Afterthought. At some filling stations you have the option to pay at the pump for your fuel: at others you are required to walk into the shop to the cash desk. The one with the new employee is one of the latter.

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99 Alistair January 4, 2018 at 11:45 am

Dearieme,

>>But one near us now employs a man to hang around on the forecourt offering help. I have no idea why.

Oh, I haven’t seen that yet. They are presumably moving entirely to the Supermarket and Banking model of service; a dozen fully automated stations with a single attendant for when Things Go Wrong or you get an old-timer unwilling to transition to the new-fangled technology.

Yeah, we’ve been self-serve for decades over here in the UK. If memory serves, attendants at pump were common but had disappeared by about 1980. I recall seeing a handful in my distant youth…

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100 KevinH January 4, 2018 at 11:00 am

I think it is a fair point, but there is a ton of selection bias here. Individual action produces bad results more frequently than it produces innovation, especially true in a world of the great stagnation, and one where we have so much more wealth to lose than 100 years ago.

The hard question is what is a process that promotes individual actions with positive externalities and contains individual actions with negative externalities. If your answer is “the market” then you are dodging the question. What type of market, with which incentives and protections? Marginal thinking finds local maxima.

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101 Alistair January 4, 2018 at 11:52 am

>>Individual action produces bad results more frequently than it produces innovation,

Uh-huh. But the point of an unregulated market is that business failure costs are borne by the private agents associated with them. Everyone bears the opportunity costs of excessive regulation.

You seem to be confounding “bad results” (do you mean consumer or business surplus) with externalities. How many businesses really create significant externalities requiring specific licensing and regulation beyond what tort and consumer protection laws provide?

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102 JFA January 4, 2018 at 11:09 am

Yes, licensing restrictions are (mostly) stupid, but it seems Alex will always find a place to say, “I don’t think we could build the Hoover Dam today either.” He never mentions why he thinks that it should have been built in the first place. It seems that it has been a huge subsidy to people who want to play in the sand out west. It seems a bit off to conflate “we don’t need licensed professionals to pump our gas” with “we should be able to build a Hoover Dam anytime and anywhere we want”.

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103 Smoochie January 4, 2018 at 9:57 pm

96 people died building the Hoover Dam. I’ll bet their families wished there was more of a licensing and regulatory framework in place.

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104 psmith January 4, 2018 at 11:13 am

First, the King has no compunction whatsoever in creating economic distortions that produce employment for low-skilled humans. A good example of such a distortion in the modern world are laws prohibiting self-service gas stations, as in New Jersey or Oregon. These distortions have gotten a bad name among today’s thinkers, because makework is typically the symptom of some corrupt political combination. As the King’s will, it will have a different flavor.

As both a good Carlylean and a good Misesian, the King condemns economism – the theory that any economic indicator can measure human happiness. His goal is a fulfilled and dignified society, not maximum production of widgets. Is it better that teenagers get work experience during the summer, or that gas costs five cents a gallon less? The question is not a function of any mathematical formula. It is a question of judgment and taste. All that free-market economics will tell you is that, if you prohibit self service, there will be more jobs for gas-station attendants, and gas will cost more. It cannot tell you whether this is a good thing or a bad thing.

There may be no jobs for men with an IQ of 80 in Royal California – at least, not in a Royal California whose roads are paved by asphalt rollers. But suppose its roads are paved in brick? A man with an IQ of 80 can lay brick, do it well, and obtain dignity from the task. Nothing whatsoever prevents the King from distorting markets to create demand for the supply he has.

The anthropoid remains a liability. The full-service gas tax is a tax. The man with the 130 IQ will not obtain his neighbor’s liver, and will still have to support him. But, the dependency being sufficiently indirect, he supports a free and dignified man – a yeoman, in fact, if a dull one. Work is not so ennobling that it can convert a low-browed cretin into the Marquis de Lafayette, but it can convert him into a man decent enough to walk the King’s streets.

(source gets spam filtered, but you can google it easily enough)

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105 Borjigid January 4, 2018 at 11:32 am

-1

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106 Alistair January 4, 2018 at 11:58 am

If the King must concern himself with such things as the “dignity” of his subjects, better he tax the productive men and enserf the unemployable to his retinue with the proceeds, or give them some other make-work. Better a direct transfer than distort a thousand markets.

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107 wd40 January 4, 2018 at 6:52 pm

Sorry your argument does not work except as a second best solution. If the teenager gets either dignity or work experience, then the teenager should be willing to work for less (if there is no minimum wage). And if others either sufficiently enjoy the self service or enjoy seeing the teenager achieving dignity, then they will be willing to pay for the service. But evidently, this does not seem to be the case as I no longer see gas stations offering full service.

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108 Massimo Heitor January 4, 2018 at 11:39 am

This a fan service “best hits” deregulation post.

Another important point: people could easily reinstate the previous regulations and they overwhelmingly don’t want to do that.

I would summarize: letting people vote with their wallets is often superior to letting people vote with a ballot. Give people exit over voice.

I challenge the label “collective action”. Decentralized markets are a form of “collective”. This also has nothing to do with https://en.wikipedia.org/wiki/Collective_action

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109 Ray Lopez January 4, 2018 at 11:47 am

Cutting hair badly is a big deal, historically. I once read the Babylonians or Assyrians imposed a capital offense of death on the barber who gave a bad haircut. On Youtube, at the ASP channel involving self-defense, there’s a video of a poor Russian barber who was stabbed to death by a crazy irate customer who received in their mind a bad haircut. Here in the Philippines the licensing of barbers is non-existent, but word of mouth tells people who the bad barbers are; however, for word of mouth to work correctly somebody must have received a bad haircut, imposing a cost. So societies throughout time have deemed it very important to give a bad haircut.

Bonus trivia: we used to cut our own hair at home, and there was a learning curve that got me a few laughs at school, but eventually we did it right. Also I received such a bad haircut at a “street vendor” site in Thailand for about $5 a cut, that my friends laughed for days, and in fact I suspect perhaps the cut was done badly on purpose, to maybe ‘get back at the foreign tourist’.

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110 Ray Lopez January 4, 2018 at 12:00 pm

Correction: “So societies throughout time have deemed it very important to NOT give a bad haircut”.

Bonus trivia: economist Scott Sumner on his blog once claimed that haircuts given in China are superior to ones given in the USA. I disagreed. I have found that “Purchasing Power Parity” is a joke. There is NOT an equivalent to the US standard outside the USA, whether in haircuts or pizzas or whatever. The USA service or good is ALWAYS superior. Always. Defects in hardware are shipped to developing countries like the Philippines and sold for slightly less, I have found no exceptions to this rule. The other day we bought a $200 speaker and sure enough it had a defect (luckily we found a workaround). Cars sold as new here in PH always have defects, they are lemons from the factories that ship the good cars to the USA. Often not serious defects but stuff like your manual transmission slipping out of gear, plastics that crack easy, and the like. Haircuts here are suspect. Pedicures, manicures, massages and the like are “rough” and they make your body, feet or hands hurt. Pizzas even from Shakees or other international chains are not up to USA standards. Even McDonalds here does not have true “USA style” fries. Write it down: PPP is a joke to make developing countries feel like they belong. That said, developing countries can sometimes match the USA in stuff that they do natively, like for example Thai food in Thailand (though the best Thai restaurant in DC is run by a Greek chef, last I heard, and I bet his food is better than what I ate in Thailand)

Bonus bonus trivia: Alwyn Young (1995) got it right, Asian growth is simply capital deepening, not Total Factor Productivity creativity. It’s aping the West (USA and maybe UK, Germany and Japan, though I have my doubts about even those three countries), not really catching up and surpassing the West. Same actually in Greece and probably to a large degree the EU. For this reason all countries outside the USA will remain behind the USA, as long as the USA does not lose its spark and become like the rest of the world, which sadly I see happening however.

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111 Alistair January 4, 2018 at 12:01 pm

> I once read the Babylonians or Assyrians imposed a capital offense of death on the barber who gave a bad haircut.

Yo, but did you see the ringlets and locks on those fellahs? Serious braids, dude, serious braids.

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112 babar January 4, 2018 at 11:55 am

waht about the never pumpers?

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113 Bill January 4, 2018 at 12:16 pm

Fake gnus.

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114 Chris January 4, 2018 at 12:48 pm

I’m an Oregonian & am perfectly happy not pumping my own gas. Imagine requiring a “service station” to perform, er, SERVICE. Honestly, I think most people would prefer not having their hands smell like gasoline if they didn’t have to.

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115 Borjigid January 4, 2018 at 3:10 pm

Should all of your preferences be encoded in law, or just this one?

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116 Brad January 4, 2018 at 4:58 pm

Californians can pump gas without their hands smelling of gasoline. So either (a) you haven’t really done it enough to be decent at it, or (b) your southern neighbors are more adroit than you.

As a good Oregonian you think the opposite of b is true, which means a.

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117 Massimo Heitor January 4, 2018 at 5:48 pm

service attendantsIf customers, in aggregate, are willing to pay a small premium for service attendants then gas stations will provide them. If customers, in aggregate, aren’t willing to pay for gas station attendants, then stations shouldn’t provide them.

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118 anon January 4, 2018 at 9:40 pm

Just grab a paper towel from the dispenser next to the pump and cover your hand with that while holding the pump?

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119 Alistair January 5, 2018 at 7:07 am

Hands smell of gasoline? Geez, how much do your pumps leak?

Seriously, do any Oregonians ever travel abroad and realise how anomalous they are?

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120 Sigivald January 4, 2018 at 1:04 pm

Nearly everyone (except old people and maybe Chris?) in Oregon knows how to pump gas … and even knows that gas pumps don’t magically leak gas all over your hands.

Likewise nearly everyone is willing to trade “waiting for a damned understaffed attendant pool to pump your gas” for “getting it going immediately”, even if it causes high-school-age unemployment. And lower gas prices, because lower labor overhead.

(Want a laugh? Look at the legislature’s pathetic Policy Statement as to why we can’t be allowed to operate a gas pump.)

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121 peri January 4, 2018 at 1:32 pm

Why, you even get this stuff down here in Texas, where I’m told it smells like freedom!:

http://www.mystatesman.com/news/after-years-business-locksmith-loses-his-license-for-1980-crime/DuJ6O3WxF7CkjTMMySTaxK/

He hid nothing, the humans passed him year after year, then a computer system was set up and flagged him, and that was that. The not-all-that-self-aware humans took their orders from the computer.

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122 Brad_sk January 4, 2018 at 1:44 pm

Superb piece.

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123 FRANCISCO ARAUJO DA COSTA January 4, 2018 at 2:20 pm

I’m disappointed that YouTube link wasn’t to that scene from Zoolander (https://www.youtube.com/watch?v=ZnZ2XdqGZWU).

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124 msgkings January 4, 2018 at 3:49 pm

+1 Derelicte outfit

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125 Viking January 4, 2018 at 3:11 pm

I’m currently an Oregonian.

Once at a filling station in Troutdale (sketchy Portland suburb), the gas station attendant was high (on khat or something) and lost track of where we were, and inserted the filling nozzle into our car again after first removing it as we were filled up, and we ended up ripping the hose off the pump as we were driving off.

Trained professionals!

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126 Brad_sk January 4, 2018 at 6:06 pm

The worst of this is car dealerships…We need regulated licensed sales people to sell us car…God forbid if we buy our own on the internet.

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127 Matthew Young January 4, 2018 at 6:47 pm

How does one tell the difference between trained and untrained gas filler-uppers? Is there a license?

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128 Ronan January 4, 2018 at 8:30 pm

I know how to pump gas, obviously, but if I lived somewhere where I had to allow someone else do it, and pay a little extra for the benefit? Sure, why not? Give the man a job. Don’t see any point in ridding the pump attendant of his livelihood to fulfill some weird libertarian fantasy of gas pump self sufficiency.

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129 Brad_sk January 5, 2018 at 2:20 pm

Nobody is forcing the pump attendant to be out of livelihood. They are still allowed in states where self-pumping is ALSO allowed. The issue here is that Oregon did not allow self-pumping at all.

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130 Heedless January 5, 2018 at 2:32 pm

And pay a little extra to ensure construction can be done only by Union Labor.

And pay a little extra so liquor is only sold in state stores.

And pay a little extra to save us from the scourge of unlicensed interior decorators.

And pay a little extra to make sure corn farmers can always sell their crop to make ethanol for gasoline.

And pay a little extra for sugar protectionism.

And pay a little extra…

Eventually it stops being just a little extra.

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131 anon January 4, 2018 at 9:38 pm

Sitting is very unhealthy to do for extended periods of time without standing up periodically. Getting up periodically to do things like pump gas will increase lifespan and quality of life. I dislike the mentality of people wanting to just stay seated all the time… it’s dumb, lazy, and very unhealthy. And I say this as someone who has a handicap that makes standing and walking difficult at times.

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132 Jay January 5, 2018 at 12:08 am

My changes in all caps…

“I’ve lived in this state all my life and I refuse to pump my own PENIS . . . This [is] a service only qualified people should perform. I will literally park at the pump and wait until someone pumps my PENIS.”

All fixed.

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133 David January 5, 2018 at 2:28 am

Here in South Africa petrol pump attendants are mandatory at all gas stations. It’s legislated. A couple of years back the attendants went on strike for higher wages. I’m surprised they risked exposing their redundancy! Turkeys voting for Christmas…

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134 roadrunner January 5, 2018 at 10:35 am

Whatever, we supported the 19th Amendment, we get stuff like this.

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