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• Monday, February 7, 2011
The Wall Street Journal reports that the State of Michigan will soon make practicing massage without a license a felony.
In the age of Yelp, why the explosion of state licensure? After all, if a masseuse is no good, word will soon get around, and it’s difficult to comprehend, in any event, just how much harm an unlicensed masseur could inflictâ€”outside of harm covered by existing lawâ€”that would justify jail time.
Economists and others have for years been exposing the fallacy of licensing professions. In his dissertationâ€”later published as Income from Independent Professional Practiceâ€”Milton Friedman analyzed the correlation between “purposeful interference” with ease of entry into professions and the rise of incomes within those professions. In our book, American Health Care, Shirley Svorny showed that removing licensure requirements for health-care providers would lessen the medical labor shortage without sacrificing the quality of service. In asking “Does Physician Licensing Serve a Useful Purpose?” she also points out that:
Access to information and incentive to act on it create a strong force in the market, increasing private monitoring efforts.
President Obama, in his current cry to review regulations, would thus do far more for access to health care by eliminating medical licensing than ObamaCare would ever achieve.
So, if the argument for licensing doctors won’t even hold water, why the huge growth in other occupations now being regulated as licensed professions?
In a word: Protectionism.
As Professor Morris Kleiner of the University of Minnesota put it:
Occupations prefer to be licensed because they can restrict competition and obtain higher wages.
With Prof. Kleiner estimating occupational licensing to add at least $116 billion per year to the cost of services we pay for, it’s not a trivial matter. Add in the benefits of health care access and cost that abolishing licensing would affect, and it’s a cause well worth taking up. But don’t expect an easy win: in a classic case of “Baptists and Bootleggers,” states find licensing lucrative, capturing hundreds of millions of dollarsâ€”$21 million for Connecticut alone over the past 2 yearsâ€”from the practice.