The Rent-Seeking Is Too Damn High
8th February 2016
Imagine you run a barbershop and you learn that someone is planning to open a rival business down the street. What do you do?
One option, of course, would be to compete the old-fashioned way by offering lower prices or better service. But the old-fashioned way is hard! Wouldn’t it be nice if you could keep your competitor from setting up shop in the first place? There’s evidence that a growing number of businesses in the U.S. are trying to do exactly that. And while that may be good for them, it’s bad for entrepreneurs, workers and the economy as a whole.
On Tuesday, a Senate subcommittee held a hearing on “occupational licensing” laws, which require government-issued licenses to perform certain types of work. Such laws have long existed for doctors, lawyers and others in highly skilled professions, but they are increasingly spreading to low- and mid-skill jobs as well. A White House report last summer found that occupational licensing requirements have increased fivefold since the 1950s, covering more than a quarter of all workers in 2008. Cosmetologists, tree trimmers and even interior designers need licenses in some states.
The only way to prevent competition is via government action, and that is the major source of (a) special interest legislation and (b) corruption in government, not just in America but around the world.