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Fellows with Friedman

The Many Restrictions Placed on Free Markets

David Henderson

The whole history of occupational licensing belies the view that its main purpose was to rein in low-quality practitioners and assure quality for consumers. Consider three facts. First, when licensing is introduced, it typically grandfathers in the current practitioners. If shysters and low quality for consumers were the problem leading to licensing, one would expect that licensing would be used to exclude them from the occupation.

Second, if quality assurance were an important factor in licensing, there would be a fairly tight connection between what one studies to get the license and what one uses in practicing the actual occupation. But the connection is quite loose. Sometimes there is virtually no connection. . . .

The third reason for doubting the consumer protection rationale is that if that were the driving force, one would expect, at least occasionally, that consumers were the ones who pushed for licensing. Yet, even though over 800 occupations are currently licensed in at least one state in the union, I know of no example where consumers were the driving force.

To learn more, read “Occupational Licensing Is a Bad Idea,” available here.

Michael Boskin

According to Hoover Institution senior fellow Michael Boskin, many regulations impose costs and stifle competition. Although there are often economic, health, safety, environmental, and other benefits that justify regulation, many of them create a drag on the economy. Once they are implemented, we need to track their impact and periodically reevaluate them. An ongoing goal should be to achieve the original goals at a lower cost.

Watch this short video on reforming regulation for a quick summary.

You can also read Boskin’s chapter in Blueprint for America, in which he argues:

Government regulation, at the federal, state, and local levels, is pervasive. Last year alone, almost eighty thousand pages of rules, proposed rules, and notices were published in the federal register. Most regulations impose costs, and studies indicate they cause a cumulative large drag on the economy. Those costs are colloquially said to be “on business,” but in reality, businesses shift them to consumers with higher prices, workers with lower wages, or investors with lower returns.

You can find the rest of Blueprint for America here.