Knowledge And Decisions

Occupational licensing laws are another very different form of economic regulations which nevertheless share many of the political characteristics common in commissions regulating public utilities or common carriers. First there is an enormous bias towards incumbents. Escalating qualification standards in the licensed occupation almost invariably exempt existing practitioners, who thereby reap increased earnings from the contrived scarcity, without having to pay the costs they impose on new entrants in the form of longer schooling, tougher qualifying examinations, or more extended apprenticeship.⁴⁴ Second, the prices of the services are artificially raised and the undercutting of price either forbidden (taxi rides) or rendered uneconomic by forbidding price advertising (lawyers, doctors, optometrists). Although “the public interest” is a prominent rhetorical feature of occupational licensing laws and pronouncements, historically the impetus for such licensing comes almost invariably from practitioners rather than the public, and it almost invariably reduces the quantity of new practitioners through various restrictive devices, and the net result is higher prices.

Some idea of the magnitude of the effect of occupational licensing may be obtained from the prices of such licenses as are transferrable through market sales. A taxi license in many American cities costs thousands of dollars — up $50,000 in New York City.⁴⁵ Where licenses are nontransferrable, as in medicine, the effect of the restrictive practices can be indicated by the income of doctors — which were below those of lawyers in the 1930s but are now more than double the income of lawyers as a result of restrictive practices by the American Medical Association, possessing far more control over medical school admissions and hospital staffing than the American Bar Association possesses over corresponding legal institutions.

Another area in which the government restricts competition is in the application of laws on land use — including municipal land use or recreational land policy for wilderness areas. Restrictions on the use of land forcibly prevents bidding for it by certain users — notably middlemen (“developers”) selling or renting to working-class people. The political impracticality of openly admitting that government force is being summoned to keep out the poor leads to much vague and lofty discussion in which people fade from the picture entirely and such impersonal entities as “valuable open space”⁴⁶ and “fragile areas”⁴⁷ dominate discussion about the need to “protect the environment”⁴⁸ under “rational and comprehensive”⁴⁹ allocation of the land through political processes. But the strong class bias is evident in such things as (1) the heavily upper income occupations (executives, doctors, engineers, academics) of members of the Sierra Club, which spearheads much “environmental” political activity,⁵⁰ (2) strong working-class voter opposition to zoning and strong upper-class support for it,⁵¹ (3) expensive home building “requirements” having nothing to do with the “environment” or “ecology” but having much to do with pricing the poor out of the market,⁵² and (4) the limiting of cheap and fast access to wilderness recreation areas and favoring time-consuming access usable only by those with substantial leisure.⁵³ A student of the so-called “environmental controversy” finds “an ugly strain of narrow class interests involved in the wilderness issue,” an “attempt by the prosperous to bar the rabble” and efforts by those who “already have vacation colonies on secluded lakes” to keep out “developments that cater to the masses.”⁵⁴