Now, various occupational licensing rules–for doctors, nurses, pharmacists, lawyers, car dealers, et al.–are typically justified on two grounds: safety andquality. A licensing rule ensures, we're told, that the performers of the occupation will do it more safely and with higher quality than in a laissez-faire system.
But see, here's the thing. In a modern democracy, there's no group with more political clout than "parents who can afford to hire nannies."
And most parents, we must be sure, care very deeply about the safety and quality of the childcare their children receive.
So if anyone actually believed that occupational licensing ensures safety and raises quality, we would have occupational licensing rules for nannies.
Instead, we see the opposite, in every country I'm aware of….
The example of the nanny really drove home for me the extent to which occupational licensing is a sham. Here is an occupation where the concerns of safety and quality are paramount to the consumers, and where these consumers have political clout such that if they demanded occupational licensing rules, they would be immediately enacted. But because it is the consumers who have the political clout, not the producers, occupational licensing rules were not enacted. And nobody–quite rightly!–views this as a problem.
I know people will counter with the idea that most licensed occupations require specialized training and skills that somehow markets could never sort out. I don't think that's usually true, though that is a more complicated argument. But I liked this simple, vivid way into thinking about the whys and needs of occupational licensing.
Some eye-opening facts on how occupational licensing really functions in these here United States, reporting on an Institute for Justice report on the topic. IJ fights for justice, which often means fighting against occupational licensing.
