Protectionism and the Licensing of Occupations

Protectionism and the Licensing of Occupations

On Thursday, I testified on two bills before the Government, Military and Veterans Affairs Committee of the Nebraska Legislature. The first one I testified on was Senator Andrew La Grone's (LD49) LB1187, which would provide for "universal recognition" of occupational licenses of people who move to Nebraska from other states. A nice write up of that hearing can be found here.

The second bill I testified on was LB1068–a bill which would create a voluntary registry for Interior Designers so that they can obtain a state-issued stamp to place on their portion of building projects which need to be reviewed by building inspectors for code conformity. Currently, Interior Designers can make the plans for interior renovations (which don't include structural elements), but they have to go to architects or engineers to place the stamp on their plans. This bill, introduced by Senator Megan Hunt (LD8) would allow those Interior Designers who have taken the added step of passing a national certification exam (to qualify to take the exam, you are required to demonstrate completion of educational requirements, as well as supervised work experience), and once certified, they could sign up with the state as a Registered Interior Designer and would be granted the ability to stamp plans. We liked this bill–not because it created a new regulation, but because it was optional, doesn't REQUIRE an Interior Designer to become certified or registered, and took an approach short of a practice act. 

Both of these bills seemed to me to attract a level of both unwarranted pretense, and protectionist inclinations. Some opponents suggested that accepting credentials from other states would result in a "watering down" of standards–an argument that I would argue is totally without merit in most cases. If you've lived in more than one state in your life, you know that there are practitioners in licensed occupations in all of them–and that it's virtually impossible to tell the difference from state to state. I've had my hair cut (and–back in the 90s, permed) in three different states. I'd find a location or a stylist I liked, and I kept going there. I have no idea what kind of pre-licensing experience any of them had. I think it's fundamentally false to argue that on the whole practitioners in one state are measurably better or worse than those in another state based on the hoops they had to jump through to get authorized by the state.

The other thing I noted was the protectionist inclinations of some professions–especially in the second bill. Understandably, everyone wants to believe that their particular training is superior to the training of someone in a related field, and ought to be the only ones allowed to do certain things. I'd seen it when I was in the Legislature–when nurse practitioners sought to break free from practice agreements with physicians, and physicians squawked that "they aren't trained like we are"; likewise, there was a difference of opinion about who should be able to assist dentists with different types of anesthesia–dental hygienists or dental assistants. It's an understandable conflict of visions, but it probably makes very little difference to the consumer of the service.  image from

The term "protectionism" is typically used to refer to government policies that restrict international trade in order to help domestic industries. It depends on government sanction of one sort or another–whether through tariffs or other sanctions that place limits on what the country can import from other places. Protectionist policies tend to protect domestic producers of goods and services, but not necessarily consumers. Because consumers are left with fewer options for purchasing goods and services, that means that the costs will often be higher than they would be if more producers were competing to provide the service.

Protectionist policy is the antithesis of a free market. A free-market economic system is based on the concepts of supply and demand balancing each other out, to provide for the goods and services. It assumes that those providing the good or service are offering it to the consumer, and that the consumer chooses to accept the service. In the occupational licensing arena, though, government decides who can provide the service, and who consumers may lawfully receive the service from.  The protectionism comes not from any demonstrable harms that have been done by unlicensed persons, but rather from existing professionals claiming that there might be harms done to the public if some other occupation crosses into their "turf." 

Members of professional and trade associations, as well as occupational licensing board members, tend to seek to use the power of government to protect their own turf and keep competition out, to maximize their own status (and presumably, earning capacity). That is protectionist. I think the free market works better, providing competition and supply for consumers who can choose using their own preferences (like quality, location, price), and letting those who are seeking to work the opportunity to do so without undue limitations from either government or potential competitors. 

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