A radical solution to the occupational licensing mess

by on March 5, 2018 at 11:10 am in Current Affairs, Economics, Law, Political Science | Permalink

That is the topic of my latest Bloomberg column, here is one excerpt:

My radical proposal is therefore for the federal government to pre-empt as much occupational licensing as is possible. That’s right, these functions would be taken away from the state and local governments.

Unfortunately, I don’t expect the federal bureaucracy to usher in the reign of Milton Friedman’s Chicago School economics. But the federal regulatory process would likely pay less heed to local special interests, and it would produce a more homogenized and less idiosyncratic body of regulatory law more geared toward the most important cases, such as medicine and child care. The federal government is less likely than many state and local governments to obsess over licensing rules for fortune tellers, florists and athletic trainers.

A federal approach to these regulations would also bring standardization and uniformity across state lines, making it easier to move from one part of the country to another, and helping restore the great American tradition of mobility. As it stands now, imagine yours is a military family and you are transferred every few years or so, and your spouse works in a profession that would require relicensing. What justification could there be for such a hardship and inconvenience?

I consider how legally difficult this would be, and toward the end I argue:

If my idea sounds too ambitious, a smaller first step against anti-competitive licensing would have state governments pre-empt requirements at the city level, as Tennessee did last year. That doesn’t raise major constitutional issues, and at least it limits the possibility that American cities become a crazy patchwork of mobility-limiting interventions.

Keep in mind that the alternative to my suggestion is not the status quo but rather a regime where occupational licensing becomes progressively worse at multiple levels of government.

Do read the whole thing.

1 TheRiver March 5, 2018 at 11:20 am

I have a suggestion that might help this problem and would also help with government over reach in general. Require that all local, state and federal licensing fees cannot exceed actual costs for managing the program. Many of these requirements are being used as cash cows by the states and some of them serve so little purpose that without the profit the states might simply end the requirement.


2 Freddo March 5, 2018 at 12:24 pm

Even better, as this is all “in the interest of the children”, makes all licensing fees and training costs deductible from State taxes, with time investment pro-rated at 15$/hour.


3 Mulp March 5, 2018 at 1:05 pm

Professional and job expenses were deductible until the tax reform eliminated many of these evil tax dodges.

They were replaced by bigger standard deductions, so everyone gets tax credits to pay for needed job skills and certifications whether they need or pay for them, or not.


4 Art Deco March 5, 2018 at 11:23 am

Yet another addition to federal function, this time because Alex Tabarrok is inclined to fret over the market for haircuts rather than discuss problems which might cost him something professionally or socially.


5 Ray Lopez March 5, 2018 at 11:28 am

But it was a Tyler Cowen post.


6 Benny Lava March 5, 2018 at 12:13 pm

So poorly written it was mistaken for an Alex


7 Art Deco March 5, 2018 at 12:32 pm

Aye. And I’m assuming the two are in a dyadic association.


8 roadrunner March 6, 2018 at 7:36 am

Not that there’s anything wrong with that


9 TMC March 5, 2018 at 11:25 am

“My radical proposal is therefore for the federal government to pre-empt as much occupational licensing as is possible. That’s right, these functions would be taken away from the state and local governments.”

Cool, until they roll out the new! and improved! regulations.


10 edgar March 5, 2018 at 2:48 pm

+1 George Stigler observation that “as a rule, regulation is acquired by the industry, and is designed and operated primarily for its benefit” is accurate at both state and local levels as well as at the federal level. Nationalization of regulation merely gives competitive advantage to larger, entrenched rent-seekers over smaller, local interests. And the National Labor Relations Act of 1935? I still can’t get over Tyler offering that as an example. Talk about an agency where Stigler was never more true.

It is not hard to conjure up pre-emption regimes that would hypothically work better than a plethora of state regulations: product liability for example, where businesses active in multiple states are essentially forced to comply with the state that has the worst courts, and yet…Call me a simple minded fool, but slippery slopes and all that..


11 carlospln March 5, 2018 at 10:11 pm

+ 1

‘Regulatory capture’:

A big reason why insurers never got into the disastrous trouble banks did in 2008: insurers are regulated at state level.

Banks convinced the Federal Gov’t that this would be better done at the national level.


12 Transnational Pants Machine March 5, 2018 at 11:30 am

>But the federal regulatory process would likely pay less heed to local special interests

You sweet, simple fool.

Can’t wait for Trump to require “community organizers” (aka, Voter Registration Fraud Specialists) to undergo 40,000 hours of training nationwide. Then Oprah will come in and require handgun-safety trainers to visit the moon first.


13 Burgess March 5, 2018 at 12:19 pm

“You sweet, simple fool.”

Yes, this is a stunningly foolish proposal … unless one is basically a leftist with great faith in powerful centralized government over society. How can more-government cure the epidemic of bad-government in America?
And TC is obviously unconcerned with Constitutional issues, but neither are the wonderful folks running the Federal government.
How did TC ever get a reputation as a quasi-libertarian ??


14 Glenn March 5, 2018 at 2:27 pm

“How did TC ever get a reputation as a quasi-libertarian ??”

I’ve asked myself this question several times since subscribing to this blog several months ago. I continue to subscribe because I like all the reading suggestions, which I probably wouldn’t find on my own, at least so quickly (and I have a job). But the economic analysis is hardly libertarian. I do like to read different points of view, too, so I come here for a Leftist-lite point of view. But I don’t think a Bloomberg contributor could be a real libertarian. It’s good to see someone else has the same impression as I do.


15 Troll Me March 6, 2018 at 12:38 am

An overall reduction in the weight of regulation, by taking charge of regulation at a higher level of government, would nevertheless be an overall reduction in the weight of regulation.

It’s hardly a libertarian position, but in outcomes could move closer to a less regulated (or less insanely regulated) situation, which is consistent with libertarian principles, in the sense of the direction of the shift.

The concerns of “Transnational Pants Machine” seem too legitimate though. There would have to be some way to back out if things got too nuts. For example, for people to be explicitly allowed to operate as an “unlicensed community organizer marketing community organizer services” or as an “unlicensed gun safety trainer marketing gun safety training”. With a safeguard of being explicitly allowed to market services in an area of activity while specifying that one is not licensed, absurd outcomes would be less likely.


16 Ray Lopez March 5, 2018 at 11:30 am

I noticed a typo in the Bloomberg article: “Criticism of the proliferation of occupational licensing is now bipartisan. Occupations such as dog walkers, interior designers, auctioneers and barbers do not need state licenses, and those legal restrictions serve mainly to raise prices for consumers and restrict supply, eventually limiting innovation and job creation, too.” should read: “do need”.


17 Yancey Ward March 5, 2018 at 12:14 pm

In a sense, it can be read either way- such occupations shouldn’t require licenses because they don’t really add anything positive to the market for such services, so they don’t really need them. However, for clarity, I agree with you that it should have been written the other way.


18 Troll Me March 6, 2018 at 12:41 am

Unlicensed dog walking service available at (minimum wage +$1) + ($4 administrative fee) + (share of office costs (so please recommend your friends for the service to reduce your portion of fixed costs in the service)).


19 Per Kurowski March 5, 2018 at 11:32 am

“The federal government is less likely than many state and local governments to obsess over licensing rules for fortune tellers”

Well that might be a problem. The regulators, with their risk weighted capital requirements for banks, are acting unlicensed as vulgar fortune-tellers. If they had to be licensed, as regulators, they would at least have to know that what is perceived as safe, is always much more dangerous to the banking system than what is perceived as risky.



20 Logan March 5, 2018 at 11:36 am

Bravo! As a lawyer specializing (in part) in federal preemption issues, I’ve long maintained that federal preemption is underused as a strategy in promoting liberty. The original Constitutional design was to empower the federal government and state governments with distinct powers and responsibilities, with some but minimal overlap (e.g., Federalist 45). However, since the federal government’s powers have grown in size and scope beyond all Constitutional boundaries (and states are also regulating like hot cakes), the previous case for two distinct regulators over given territories is weakened. We would rather be governed by one bad regulator than two.

Occupational licensing preemption would be one small but reasonable step (dog-walkers, sure, but don’t forget to preempt state regulation of lawyers and doctors too). We can also quite easily expand the preemptive force of federal regulations regarding insurance, product regulation (like labeling and safety), and securities.


21 Urso March 5, 2018 at 3:13 pm

There are Commerce Clause issues here. For instance, in Louisiana – uniquely! – you have to have a license to be a floral arranger. By the craziest of coincidences, this law was crammed through by a longtime state senator whose family happens to own a few florist shops. Do these local floral shops engage in interstate commerce to the extent necessary to merit federal preemption?


22 Art Deco March 5, 2018 at 3:51 pm

Do these local floral shops engage in interstate commerce to the extent necessary to merit federal preemption?


this law was crammed through by a longtime state senator whose family happens to own a few florist shops.

He either had a bloody good argument, a great many IOUs to cash in, or is a wizard at parliamentary procedure. The Louisiana legislature can fix this.


23 Dean March 5, 2018 at 5:01 pm

Commerce Clause isn’t that big of a problem, since individual state requirements discriminate against out of state entrants in the market. Setting a single rule to facilitate interstate movement is a well established practice. The flower shops themselves are irrelevant, since the state licensing regime itself that’s the relevant actor being governed.


24 Logan March 5, 2018 at 10:07 pm

In my ideal world, there would be Commerce Clause issues with TC’s proposal. But not in the world as it is.


25 triclops41 March 6, 2018 at 12:13 am

Yeah, it’s hard for me to believe anyone who thinks the commerce clause isn’t defacto omnipotent.

26 Slocum March 5, 2018 at 11:38 am

“Keep in mind that the alternative to my suggestion is not the status quo but rather a regime where occupational licensing becomes progressively worse at multiple levels of government.”

So the argument is that because increasingly cumbersome occupational licensing is inevitable, better that we should be strangled by uniform regulations rather than idiosyncratic ones? No, I don’t accept the premise — there has been quite a lot of push-back against occupational licensing recently, and a number of successes:


I’m for letting the ‘laboratories of democracy’ to continue to work on this rather than having the feds take over yet another responsibility.


27 Logan March 5, 2018 at 11:38 am

Commenters above are right to be skeptical of regulation, but they underestimate the fact that preemption adds one federal regulation but gets rid of 50 state regulations. If you’re skeptical of the purported wisdom of regulators, you should want preemption, no question.


28 stasi March 5, 2018 at 11:56 am

yes because we really do need regulation of Dog Walking. Time to dig out this Churchill (?) quote; , “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. “


29 Linvega March 5, 2018 at 2:21 pm

That’s just an absurdly bad faith argument. Nobody here is calling for regulating things that aren’t already regulated. The argument is that we should prefer fed licences over state licences because it’s at the very least uniform and thus allows people to move.

Saying that it is naive to think the feds will make it better is reasonable criticism. Claiming anyone wants to regulate dog walking is not.


30 Li March 5, 2018 at 5:14 pm

“Nobody here is calling for regulating things that aren’t already regulated.” I doubt many high school students would make the logical blunder you have – unless you think that the Feds will preempt only licenses which are currently required in all USA jurisdictions? AND that the licensing requirements are IDENTICAL in all jurisdictions (hint: state constitutions are not identical, nor are the case-law precedents)? AND that enforcement is also uniform?…in which case there is no need for the Feds to step in, is there?


31 Linvega March 6, 2018 at 5:36 am

That’s again a very weird way to interpret what I wrote, and what Tyler wrote.

The point is that if there is *already* a licensing mess in a given profession, we should try to solve it by introducing a consistent licensing *instead* on the federal level instead. To repeat, this does not require licensing profession that aren’t already licensed in a significant number of states and it is asinine to claim so.

One nice thing is that you could easily preempt even silly regulations by simply introducing a fed level license that you get automatically by just asking. So it’s not like this approach is wholly incapable of dealing with the problem of silly regulations.

To be perfectly clear, I’ve not actually have made my mind clear about whether I’m actually in favor of this idea. I just think that these kinds of objections lead nowhere.

32 Bob from Ohio March 5, 2018 at 5:29 pm

“Claiming anyone wants to regulate dog walking is not.”

Once one centralizes regulation, more industries will get regulated since there is one lobbying focus.

Dog walking is no more ridiculous than hair braiders as a target for licensing in any event.


33 Linvega March 6, 2018 at 5:47 am

I’m not sure I agree with you on that. Once you regulate at all, you already have this risk. Decentralized regulation is cheaper to lobby and it’s easier to organize smaller groups of people, so you could easily end up with *more* regulation with decentralized regulation than with centralized regulation.

On the second point, if you want to get rid of silly licensing, I’m absolutely with you on that. But getting rid of silly licenses does not solve the problem of inconsistent licensing for professions that shouldn’t be unlicensed.

34 triclops41 March 6, 2018 at 12:14 am

Are there cases off effective preemption we could look to?


35 Logan March 6, 2018 at 11:14 am

Sure, plenty. In Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341 (2001), a state had approved of a tort called “fraud on the FDA,” which would treat FDA regulations (which are already onerous) as a jumping off point and allow tort suits for allegedly defrauding the FDA, even if the FDA itself said that it wasn’t defrauded. By preempting that suit, the Supreme Court made states weaker in how they regulated medical devices, but did not make the FDA any stronger than it already was.

The Airline Deregulation Act was a delightful piece of regulation that prevented states from regulating airline service. Some states have tried to do so, but courts have struck down those efforts under the ADA. See, e.g., Air Transport Association of America v. Cuomo. The ADA made flights cheaper and drastically reduced compliance costs, because now airlines had only to worry about the FDA instead of the FDA AND state regulators.

In Int’l Paper Co. v. Ouellette, 479 U.S. 481 (1987), the Supreme Court held that the Clean Water Act preempted a civil suit sounding in state nuisance common law regarding the dispersion of effluents into a body of water that allegedly injured the plaintiffs’ property in a neighboring state. Had the Court not done so, people would have had to not only comply with the Clean Water Act, but could be sued and put out of business even if they DID comply with the federal standards.


36 blogsplatter March 5, 2018 at 11:46 am

Someone remind me again, when are in favor of federalism? Recent events have me confused.

I know it is good when ISPs use it to kill metro connectivity, but not when limiting their ability to put different prices on bits used for different purposes.

Also good when it subverts local property law for energy extraction.

Now local control over services is bad. I’m sure this is fine Commerce-clause reasoning; we all know Raisch means this is fine, it is just odd to see so many folks on board with it this time.

Any others?


37 Bob from Ohio March 5, 2018 at 5:30 pm

“when are [we] in favor of federalism?”

When it benefits us or hurts our opponents, duh.


38 Pipsterate March 5, 2018 at 11:47 am

I think the differences in occupational licensing laws between states can be a good natural experiment to see which laws are truly helpful and which aren’t. If the laws were the same nationwide, we’d probably see a stronger status quo bias, causing more people around the country to assume that unnecessary laws are necessary.


39 roadrunner March 6, 2018 at 7:40 am

This. We need need other states’ examples for NJ to start spending less.


40 rayward March 5, 2018 at 12:03 pm

Cowen favors local control, except when he doesn’t. Local licensing protects local residents from unlicensed outsiders who may not have the same concerns and interests about protecting local public health as do the licensed local business/professional people. If unlicensed outsiders can come in and engage in practices that enrich the outsiders but endanger local health, what do the outsiders care; they just move on to the next community to exploit for their gain. What Cowen seems to want are (1) large corporations to dominate what have been occupations provided by local business/professional people with community ties and (2) a roving band of migrants moving from place to place in search of low paid jobs offered to them by those same large corporations. Cowen may express concern about local residents being denied an occupation or job by local licensing requirements, but the reality is far different. Cowen’s argument for shifting control from local communities to the state or national government works in theory but not in practice.


41 Art Deco March 5, 2018 at 12:35 pm

Cowen favors neither local control nor democratic institutions. He hasn’t attempted to conceal that.


42 Li March 5, 2018 at 5:22 pm

I’m sorry – your comment has been deemed to be a trigger and hence we are revoking your license to comment. Should you wish to appeal this decision, please obtain a license to appeal (waiting time has improved, it is down to 36 months (if you can afford a lawyer licensed in D.C.)) and then file an appeal (we are now scheduling court appearances for the year 2137, so you might have a bit of a wait).


43 Urso March 5, 2018 at 3:15 pm

Prof. Cowen prefers technocratic “experts” in DC to make pretty much all decisions. I’m not as enamored with the technocrats as he is, but I’m also not so naïve to think that local decisions regarding regulation are made by thoughtful, caring locals who just have the best interests of the community in mind.


44 Li March 5, 2018 at 5:30 pm

Eugenics laws and the Final Solution were brought to us by “thoughtful, caring” people with the “best interests of the community in mind”. (not counting it’s victims as part of “the community”, of course).


45 Jimbino March 5, 2018 at 12:12 pm

it would produce a more homogenized and less idiosyncratic body of regulatory law

No, in English one uses “homogeneous [with an ‘eous”]. Homogenized refers to a process for mixing cream into the milk.


46 Yancey Ward March 5, 2018 at 12:16 pm

This would be a proper use of the commerce clause and a I would support it. Standardization would be a good thing in this case.


47 Art Deco March 5, 2018 at 12:30 pm

It’s conceivable people might contract across state lines for legal advice, you actually have to be in the room to get your hair cut.


48 Yancey Ward March 5, 2018 at 1:23 pm

The point is that standardization means you can take your license with you when you move to another state.


49 Slocum March 5, 2018 at 1:51 pm

But that same ‘standardization’ argument could apply to almost anything a state does — drivers licenses, school curricula and calendars, criminal codes, building codes, zoning, tax policies and rates, etc, etc. Federally enforced standardization of everything would make it easier to work, move and do business across state lines. Would you be in favor of the federal government taking charge of all those things? If not, why not? Or if so, what would there be left for states to do?


50 Slocum March 5, 2018 at 12:30 pm

Really!? Your argument is that occupational licensing within a state is interstate commerce because it affects who can move into the state and work? Well, I suppose that interpretation is less extreme than Wickard v Filburn — if growing wheat on your own farm for your own use is interstate commerce then African hair braiding could be too (perhaps even if it’s your own hair on your own head — since it was Filburn’s own wheat on his own land). Still, I seem to remember when libertarians were against this kind of (apparently unconstitutional) federal overreach.


51 Bob from Ohio March 5, 2018 at 5:31 pm

“proper use of the commerce clause ”

It would be a gross violation of state police powers and federalism I think you mean.


52 bryan willman March 5, 2018 at 12:19 pm

this suffers the same problem as relaxing building regulations

people will just find some other way to achieve the same effect. no longer need an absurd license to be a barber? great. except now it turns out that people join haircut cults that only patronize certain exalted barbers, and when all is said and done, the barrier to entry and barrier to mobility are as great as they ever were.

as much as I personally love bland fair universal homogeneity, that’s clearly not what humanity as a whole wants or will tolerate.


53 Borjigid March 5, 2018 at 12:41 pm

You’re right- we can’t accomplish anything ever.


54 rayward March 5, 2018 at 12:33 pm

Homogenize means to combine or unite. In this context, it means to facilitate monopoly or near monopoly of occupations that have historically been the heart and soul of a vibrant local community. Amazon and similar large companies have decimated locally owned retailers. Now, Cowen wants homogenization in service occupations that have historically been the heart and soul of a vibrant local community to achieve the same ends as homogenization has in retail.


55 Meets March 5, 2018 at 12:40 pm

A Bernie Sanders administration would pass stricter federal guidelines


56 Borjigid March 5, 2018 at 12:42 pm

. . . right after they give everyone a pet unicorn.


57 Engineer March 5, 2018 at 12:46 pm

Well, we could require states to recognized occupational licenses granted by other states. As with commercial drivers licenses, so with barbers and hair braiding. Next up, concealed carry.


58 Andrew M March 5, 2018 at 4:44 pm

Cross-state license recognition would cause a race-to-the-bottom. That’s great if you want to eliminate regulations: everyone can buy their $5 flower-arranging or dog-walking license from the cheapest jurisdiction. But it also means we can’t have good regulations. Voters might well want the government to regulate the qualifications of doctors and dentists. A bad haircut is annoying for a few weeks; a bad medical decision can be life-changing.


59 Bob from Ohio March 5, 2018 at 5:41 pm

“Voters might well want the government to regulate the qualifications of doctors and dentists.”

You could exempt professions that are universally regulated.

Let’s say all 50 states regulate 75 occupations. Then those 75 occupations are exempted from preemption. That should take care of occupations where quality has significant benefits, all states regulate doctors and dentists and lawyers.


60 Engineer March 5, 2018 at 9:28 pm

Any evidence its a problem with commercial drivers licenses?

For dog walkers, a race to the bottom would be a good thing. I suspect some state would establish $10 dollar fee, internet based, Comedy Dog Walkers school to take care of it.


61 Axa March 6, 2018 at 9:48 am

Andrew, which state won the race to the bottom for commercial driver’s licenses? It’s been 31 years since CDLs are accepted nationwide.


62 rayward March 5, 2018 at 12:53 pm

Consider the regulation of physicians and telemedicine. Or more accurately the slow pace of the expansion of telemedicine. Telemedicine is considered the practice of medicine and, hence, the physician offering it must be licensed in the state where the patient is located. If physicians were licensed nationally rather than by the states, telemedine would expand rapidly, and patients would have the benefit of being treated by physicians located hundreds or thousands of miles away. Call it virtual medicine. Of course, this would accelerate the trend of physicians becoming employees of very large health care companies.


63 rayward March 5, 2018 at 1:08 pm

Of course, Cowen is a well-known defender of monopoly as well as deregulation of occupations. The latter facilitates the former. Cowen and his friend Peter Thiel must believe people who own small businesses are dolts. With one large exception: restaurants. What would happen if the restaurants that are small businesses disappeared? I suspect at least one thing would happen: we wouldn’t be as large.


64 Bob March 5, 2018 at 11:23 pm

There are monopolies that are terrible, and monopolies that are ‘earned’, at least of a while, and help create small businesses. For example, monopolies in fiber connections, when clamped down to non-ridiculous profits, open opportunities for companies that use said fiber connections. Companies that ease varied bureaucracies will make money off the top too, but if they make it easier for small businesses to start, they are a good thing overall: A very dominant Shopify, for instance, creates businesses, instead of strangling opportunity. Yelp, OpenTable and the like are very well entrenched, but look at what they’ve done for good restaurants, which are easier to find than ever.

The scary monopolies are the ones that print money, then expand in other directions: Google and Amazon will be terrifying, and probably start to be worse than not having them, in a couple of decades. The scary part of software as a service is that most of their workers are building capital every day, and all that capital is deployed everywhere, instead of being limited geographically. Thus, ultimately fighting incumbents requires so much capital that one has to go get funding from said tech giants themselves to compete.


65 Sure March 5, 2018 at 8:32 pm

Actually no, the Interstate Licensure Medical Compact has already gone live to make cross state credentially vastly easier. Further even in states with sufficient population and spread to make markets works for telemedicine (e.g. CA, IL, FL, NY); we have not seen rapid uptake. Further in some specialties, e.g. radiology, we have huge numbers of telemedicine practitioners already. The real problems are figuring out how to manage the wonky bits (e.g. uploading hi-res photos) and then getting appropriate billing going; both of these in turn are hit hard hit by regulation. Another fun shot is that the most prolific patients tend to be senior citizens with limited technology grasp and people with a variety of medical conditions (e.g. Alzheimer’s) that makes telemedicine more difficult.

The number of available cross-licensed physicians is exceedingly far down the list of problems with more general uptake of telemedicine.


66 Troll Me March 6, 2018 at 1:01 am

Considering monitoring capacity of phone and internet, it’s not clear that anything promoting medical consultations by telephone would necessarily be a good idea.


67 edgar March 5, 2018 at 12:55 pm

“But that does not seem to be in the cards”

Ah yes, anyn excuse for brute top down force. When you have a federal government, everything looks like a nail. As John Milton observed: None can love freedom but good men; the rest love not freedom, but license, which never hath more scope than under tyrants.

But the states actually are already moving in this direction. https://www.forbes.com/sites/adammillsap/2017/02/15/some-progress-on-occupational-licensing-but-much-more-needed/2/#17a6a70e42bd What better way to kill that movement than threatening federal action? And how are we to pay for this proposed National Occupational Licensure Board? Remember the $20 trillion national debt?

Yes, by all means promote the Tennessee example, but adding more federal bureaucracy? No. And its not as if having a busy-body higher power has made much difference in the EU whose workforce is burdened with similar levels of occupational licensing: file:///C:/Users/DJJINVA/Downloads/FINAL%20report%20prevalence%20of%20occupational%20regulation_publ%20dec%202016%20(1).pdf

Tennessee, thank you for your fine example. And many thanks too, to the Federal Trade Commission which is doing an excellent job of cheer-leading similar state efforts: https://www.ftc.gov/policy/advocacy/economic-liberty/state-based-initiatives


68 edgar March 5, 2018 at 1:00 pm
69 Troll Me March 6, 2018 at 1:03 am

Wouldn’t a threat of federal action on it make state action arrive faster, out of their own preference for jurisdiction?

Also, 50 boards would almost certainly be more expensive than 1 federal one (not that the savings would necessarily be worth it).


70 husdemir March 5, 2018 at 12:57 pm

It is hard to trust the nonfunctional congress to get this right. Here is an alternative. Sates can require licensing only in groups. Let’s say you need 1/3rd of the states, or states representing 1/3rd of the population or the licencees to come together and develop licensing rules. In practice this leaves room for two separate types of licenses which might be required due to philosophical or geographical reasons. A state can require none, one or either of these licenses, but not both. In a lot of cases we will end up with only one license. This would help a lot with fields like medicine and engineering where we need to unify the licensing requirements. I am not sure what its effect would be on unnecessary licensing like fortunetellers. At the start congress can also repeal all current licenses that are not required by at least half of the states (need to change the denominator for snow shovelers etc..) and give the rest a couple of years to get together and come up with uniform rules.


71 Daniel Klein March 5, 2018 at 1:28 pm

Another idea: State-level demonopolization of permission.

Texas, say, could pass a reform saying that permission from any of the 50 works as permission in Texas.

Here I expound on the idea for permitting new drugs and device, at the transnational level:


72 Logan March 5, 2018 at 2:47 pm

Your idea for state-level de-regulation/demonopolization is fantastic policy, but is unlikely to be passed because of public choice. Local sellers have a huge incentive to engage in rent-seeking and regulatory capture. National preemption policies, however, are frequently enacted because local sellers have less power at the federal level.


73 RPLong March 5, 2018 at 1:46 pm

More homogenization = less competition.


74 Logan March 5, 2018 at 2:42 pm

More homogenization = less competition among state laws, but more competition in regulated fields because of the lower burdens for entering competitors.


75 RPLong March 5, 2018 at 2:53 pm

That assumes an ideal outcome.


76 Logan March 5, 2018 at 10:18 pm

A likely outcome. Unreasonable barriers to entry are established by local regimes in order to protect local donors. There is comparatively less incentive to advocate for draconian barriers to entry at the federal level. Also, take it from me as a lawyer specializing in federal preemption that preemption virtually always reduces the total amount of regulation. Read SCOUTS cases Geier (car regs) , Buckman (product liability torts), Arizona (immigration regs), and many others.


77 RPLong March 6, 2018 at 9:37 am

” Also, take it from me as a lawyer…”

Oh, yeah. If there’s one category of person who can be trusted on their word, it’s lawyers.

More seriously, I don’t think lawyers are the best equipped to analyze policy outcomes or public choice incentives.

78 Logan March 6, 2018 at 11:22 am

Hahaha, fair enough. But lawyers have to advise their clients on how to reduce legal compliance costs, so we do get to work intimately with businesses. In doing so, we get to understand how complying with overlapping federal and state regulations becomes so burdensome (and in some cases, is impossible).

If you’d prefer to hear this analysis from a better lawyer/economist than me, read Richard Epstein, The Case for Field Preemption of State Laws in Drug Cases, 103 Nw U L Rev Colloquy 54 (2008) or any one of his many wonderful books on preemption as well.

79 RPLong March 6, 2018 at 1:47 pm

I don’t need to read about it, though. I lived through a bit of CADTH’s slow takeover of the provincial drug approval systems in Canada. This is a good example of the counterpoint to your point because when you nationalize drug approvals, you end up with less variation, i.e. fewer available medicines. When patients have access to fewer medicines, more of them die, even though “on average” the system looks more efficient. (Suppose you had to kill twelve people to give a 30-million population an average of 0.25 QALYs each. Good deal or bad?)

In this case, national-level hair-braiding licenses are likely to be less onerous than local level ones, but hair-braiding licenses are not currently a national problem. Make occupational licensing the purview of the federal government, and they will be. So what is a marginal benefit for a couple of states becomes a big new cost for all the others. That’s the problem.

80 Ron Jeremias March 5, 2018 at 1:55 pm

How about a constitutional amendment that says that licensing is permitted only to the extent that it helps protect consumers, not the licensees. The courts could then decide whether 1000 hours of training is really necessary to be a licensed barber. I think that one could argue successfully that, for this occupation, no training and no license is necessary. The worst that can happen is that you get a bad haircut.


81 Borjigid March 5, 2018 at 2:17 pm

Constitutional amendments are hard. Federal preemption is (relatively) easy, and more proportionate to the scale of the problem.


82 chuck martel March 5, 2018 at 9:51 pm

Constitutional amendments are hard.

That’s why the feds didn’t even try a repeat of prohibition of alcohol with marijuana. They just made its use and possession a federal crime. Much easier that way.


83 Bill March 5, 2018 at 2:16 pm

State and local regulations will vary, so pre-emption of the licensing field would be a problem if you rely on the licensed person to know and enforce local rules, unless you want to set up, for example, a national building permit system.

A better option is a dual system. Here’s an example. The Antitrust Division in the past suggested dual regulation for insurance: states could regulate and license local insurers and oversee solvency, complaints etc. Or, you could purchase insurance under a national system, with a federal regulator, which would thereby create a national insurance market.

Another option is for a national standard, which, if your met, you could permit states to grant reciprocity and waive in under that’s states licensing system, with a requirement that state standards above that national level be tested for. So, for lawyers, a national test and waive in to other states, with the requirement that you take a test for the state specific standard knowledge of state law.


84 Troll Me March 6, 2018 at 1:13 am

The possibility of implicit federal control over many areas of activity which are mainly of local relevance could be a problem.

For example, building codes differ across many areas, sometimes for good reasons. But if occupational licensing in building were federal, then this could end up reducing the ability of local governments to represent their constituencies via local regulations.

Licensing related to advanced machinery used in some building processes might sensibly be federal, but not in other types of machinery, perhaps because geography and climate (or simply more localized preference or tradition) dictates that different training requirements would make sense.


85 Bill March 6, 2018 at 9:03 am

Agree, but some aspects of licensure…such as whether you know how to compute a load on a beam…is universal for mechanical or structural engineers.


86 Thiago Ribeiro March 5, 2018 at 2:48 pm

Under Dr. Júlio de Castilho’s July Constitution, which was called the most perfect Constitution of of all West Hemisphere, there was no occupational licensing whatsoever.


87 IVV March 5, 2018 at 3:02 pm

Do you want war between Washington and New York? Because that’s how you get war between Washington and New York.


88 Becky Hargrove March 5, 2018 at 4:36 pm

Not sure that state and local governments would want to give up the lobbying money they receive for these locally legislated privileges, especially if the lobbying money simply shifted to Washington. Perhaps better to create special economic zones where there exists a reprieve from a wide array of knowledge and skill use limits.


89 Li March 5, 2018 at 5:51 pm

As already pointed out by others, why not include criminal law too? As a matter of fact, why don’t we just abolish states, counties, and local jurisdictions? There’s been a lot of comments about barbers here. Seems the consensus is that they don’t need to be licensed because hair grows back. Thank goodness that there is virtually NO risk that communicable diseases (or lice) could be spread by some clueless gal out for a quick buck. How about barbers who shave their customers? Does a razor change the equation? How about waxing? That’s hair removal, right? Yeah, no chance of anything going wrong there, and of course you can drink all of the chemicals hair dressers use – by the gallon. Anyway, I think there are some really DUMB comments here. Homes built in Florida are required to pass certain “high wind” requirements, you should not build a home in Arizona the same as you should in Maine. The idea that there is one size that fits all is, fundamentally, delusional. And yet, here we are discussing it as if it had merit.


90 jack March 5, 2018 at 5:53 pm

The author really thinks that the US Congress would set national standards for dog walking, yoga instructing, hair braiding, interior decorating? That the lawyers will permit national licensing for lawyers? That the teachers will permit national licensing for teachers? Wow.


91 Logan March 5, 2018 at 10:19 pm

National licensing for lawyers and teachers would be fantastic.


92 Axa March 6, 2018 at 9:50 am

They did it for truck drivers……..on 1986.


93 ʕ •ᴥ•ʔ March 5, 2018 at 6:45 pm

I see variations of the answer above. What you want is for the federal government to preclude trivial occupational licenses, while allowing dtates to create broad standards.

So basically, some states reach concord on what a emergency medical technician should know, but nobody licenses dog walkers.


94 ʕ •ᴥ•ʔ March 5, 2018 at 6:46 pm



95 Bill McCullam March 5, 2018 at 7:06 pm

In 1960 I asked Paul Aschenbach how did I become a sculptor (he was a sculptor, and a damned good one). At the time, I may have meant, how does one get all these attractive young women to cosset you? However, his answer was noble. “One morning you wake up and say to the world, I am a Sculptor.”

That is occupational licensing. So, I became an architect where things are a bit more complicated.
One has to pass an exam, consisting, when I took it, of 7 parts administered over four days. One of these is 14 hours long. My brother-in-law, with a Masters in Architecture from Yale, had failed one part 6 times and therefore was no longer able to take the test in New York. He took it in New Jersey, the same year I did in Ohio. We both passed this ugly part.

Today, I may be wrong, but I think one needs a degree in Architecture, as I never had, to sit for the exam. Unlike the former bar exam, when FDR took it, without a law degree, and passed to become President.

Do I think occupational licensing in architecture and engineering is good; that is, supports the goals of safety and health for the public.

Well there are a lot of people who were successful without any credentials; witness Nicholas Hawksmore, Frank Lloyd Wright, and Le Corbusier. It is true that Wright’s roofs leaked; when asked he replied, “That’s what you get for leaving a work of art out in the rain.”

On one hand, all celebrated architects are independently wealthy. On the other, do poor architects inflict so much damage on the public. In the former case you will pay $1,4In the former case you will pay $1,400/ square foot for DESIGN, and the latter, $300/ square foot for design.

Modern architecture has a lot to answer for; Pruitt-Igoe in St. Louis had to be dynamited; The World Trade Center collapsed, The Kansas City Hyatt collapsed. More recently, Grenfell Tower and others form a roll of bungling. Several examples are humbling. Eliel Saarinen’s dome for M.I.T.’s auditorium spread, creating a leak that required major modification. I.M. Pei’s Earth Sciences Lab at M.IT. had windows that exploded outwards. His reward, some years later was to design the John Hancock tower in Boston, whose windows also exploded outward. After 14 years this project was completed by an office lackey, whose reward was to become head of the Dept of Architecture at Harvard


96 Thiago Ribeiro March 5, 2018 at 8:21 pm

“He confronted his interrogators with a fiery idealism. . When he was asked who enrolled him in the ranks of the poets, Brodsky shot back: ”No one. Who enrolled me in the ranks of the human race?””


97 magilson March 5, 2018 at 7:12 pm

I don’t even kind of buy it. Can you give an example of an instance where Federal regulation took the place of State regulation and reduced complexity or lowered consumer cost?

– A single Federal agency makes lobbying so much more effective.
– I’ve lived in a state with puppy mill issues that decided to deal with it via specific regulation. I now live in a state without such a problem. Why impose the cost of regulation on all when it’s only needed for some?
– In what ways will future legislation be lined with sweet nothings to those legislators who have particularly vocal constituents in these licensed trades? This is not a small cost to be overlooked.
– In what ways will currently unlicensed occupations be affected by an agency looking to increase it’s power as all agencies are wont to do; and now there’s no escape.

I’m hoping youve thought mote deeply about this than seems indicated by the format you chose to communicate it. Because it’s genuinely awful with the details that fit in that word count. Or at the very least it lacks the evidence a federalist needs for convincing.


98 FE March 5, 2018 at 9:09 pm

I kind of buy it. Federal regulation of banking and securities is less cumbersome — for better or worse — than what the states would do. The OCC’s main mission (unstated, of course) is to prevent the states from regulating national banks. Same with the SEC.

But overall I agree with you, federal licensing would probably be worse on balance. Imagine all the mischief the feds could cause with teacher licensing, attorney licensing, commercial vehicle driver’s licenses, etc. Let’s take our chances with the states and hope for the best.


99 Logan March 5, 2018 at 10:23 pm

Agreed re banking and securities. I’d add aviation, consumer products, immigration, and environmental. Again, the question is not whether the federal regulations are good, but whether you would rather have one bad regulator or dozens.


100 Matthew Young March 5, 2018 at 7:22 pm

The federales mostly do bailouts, something like this is at the bottom of their list.

Laugh at this, and I know Tyler has it as an inside joke:
“For instance, the National Labor Relations Act of 1935 preempts the ability of the states to regulate labor unions”
In California, unions rule local governments, by state law.

I figure the licensing laws are a sham, but they are fifth or sixth in the list of government catastrophes.


101 chuck martel March 5, 2018 at 9:59 pm

Dog walkers and hair braiders need licenses but politicians, their staff members and bureaucrats, who can do immeasurable damage, need no special education or training, aren’t tested or licensed. They need to know nothing and prove it on a daily basis. Technicians that handle refrigerants need a federal EPA license. The people that administer the program for the EPA do not.


102 apoptosis March 5, 2018 at 10:49 pm

Russ Roberts has a podcast with Dick Carpenter on this topic a few months ago. I enjoyed the listen:


103 Ryan Reynolds March 5, 2018 at 11:39 pm

There’s an aspect to this argument which is borrowed from Tullock (I think?): larger organisations naturally have broader stakeholders and will generally tilt towards policies which benefit a wider stakeholder group. Ie; my local neighbourhood can have an enforced ‘buy local’ policy, but a national body couldn’t have a ‘buy in that neighbourhood but not these other ones’ policy. They would have a ‘buy American’ one instead. This isn’t great, but maybe it’s marginally better.

That might prevent the highly localised aspects of regulatory capture, but it broadens the scope of potential gains from regulatory capture. At a state level putting in all that work into lobbying a handful of politicians might yield a benefit for a small number of licensed practitioners (which is not worth working hard to try to capture), but at a national level a lot of practitioners can fund an extensive and well targeted lobbying effort. And a national body has resources which a state does not as well.

More generally, this feels like the latest in a long line of a game of economic ‘whack a mole’ between rent seekers and the rest of society. You go about working for a hundred years to explain why free trade is good, and then everyone sort of understands that, then you spend the next hundred years fighting against the next harebrained policy which aims to achieve a similar outcome by another name. A regulator or a protector of economic rights charged with striking down laws which are impediments to free trade might be a better place to start (including new laws not yet conceived).


104 john March 6, 2018 at 10:06 am

Maybe wrap it in a Commerce Clause wrapper and follow some of the UCC approach.


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