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PaperclipPerfector  4mo ago (text post)   35192 thread views

Culture War Roundup for the week of February 17, 2025

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A little over a week ago, I talked about Alex Tabbarok's review of a new book, "The Licensing Racket", which does a deep dive on occupational licensing, specifically when the boards that control the licensing process are, themselves, controlled by licensed professionals within that industry.

I just listened to the author, Rebecca Haw Allensworth, get interviewed on the Short Circuit Podcast. It's worth a listen, above and beyond the snippets that Alex pulled from her book. She very intuitively conveys exactly how these things function and why. She literally just started going to their meetings (often the only non-industry-insider present), watching what they did, listening to what they talked about, and getting a sense for how they actually functioned in the real world. I want to point out a couple things that I didn't really bring out in my prior comment.

First, just another anecdote. Some handyman installed a Ring camera. He just bought the camera at Sam's Club. They're designed to be super easy to use; meant to be pretty much just plug-and-play by consumers. His great sin was that he put on a business card that he could install Ring cameras. For this, he was dragged in front of a licensing board for installing security systems. "This could be competition." When some people on the staff suggested that they could be lenient, because after all, he only did it once, the response from the board was, "...that we know of." Maximum fine. You have to scare anyone else who could even think about competing with you.

Anyway, everyone is aware that, right in everyone's face, there is a huge conflict of interest with these boards. The author says that industry folks talk about how they can totally manage it. "Hats", they call it. When you sit on the board, "you take your industry professional hat off and put on your board member hat". Of course, it's easy to say that; it's much harder to actually do it. They find themselves constantly coming down extremely hard on anything that smells like competition, but when it comes to one of their own, when their people are actually harming consumers, they suddenly find mercy and leniency. As mentioned before, they play the two-step of, on the one hand, playing up the super scary dangers of unlicensed people (i.e., people who haven't paid their dues to the cartel) doing anything, while on the other hand, saying that it's soooo critical that people have access to their services (like medical care, where there is a 'shortage'), that they just have to keep bad professionals out there harming consumers. "Better to have a butcher for a doctor than no doctor," but god forbid a foreign doctor or anyone who hasn't paid their dues to their particular cartel. Their own will get second, third, and fourth chances. When they actually need to dive in to a complaint, they only meet once every month or two, so they'll spend one day every month or two working on it, and if it's a case that needs five days of work, eh, they'll get around to figuring it out within a year, maybe. Even when they know it's a bad professional causing harm to consumers; even saying things like, "We know he'll be back again." The author says that often times, these folks don't get stopped by the board; only the most egregious cases get stopped - and those often get stopped by criminal proceedings in actual courts of law! In the meantime, they're out there taking patients and prescribing...

In the interview, they draw comparisons to labor unions. Obviously, both have the tangible impact of raising wages for their profession. She cites one of Morris Kleiner's books, saying that union membership has gone from super high in the 1950s all the way down to where it is today... but licensing goes in the exact opposite direction - super low in the 50s, way up to being quite significant today. That said, everyone knows and acknowledges that unions are self-interested; the overt point is to vindicate the interests of its members. They get a seat at the table with management to hash out a relationship. It's expected to be somewhat adversarial, and there are a bunch of rules governing how that interaction is supposed to work. But licensing boards aren't like that. Instead, we basically just declare that the 'union' is actually the government. They're in charge of the whole shebang. They essentially 'make law' in the area. It's an entirely new way of organizing labor in society, and it just sort of happened, quietly, while everyone smiled and trusted that a "Board of experts" was looking out for them.

Which is why there is only one guiding light holding them back via anti-trust action - North Carolina State Board of Dental Examiners v. FTC. The board was sending cease and desist letters to folks offering teeth whitening in malls. You know those things that you can just buy at Costco and do at home? Yeah, they were basically just selling it and maybe helping folks put it on. They were "practicing unlicensed dentistry". The Supreme Court acknowledged that when a state licensing board is primarily composed of active market actors, they are not immune from anti-trust regulation unless they're being actively supervised by the State. Of course, we haven't made most of these boards become actively supervised by the state; the union/cartel still controls most of them. They just make sure they have a cartel union Board lawyer present when they're making decisions, who sometimes tells them that they shouldn't do certain things that could attract too much anti-trust attention (apparently, they do really often want to do stuff that would be egregiously anti-competitive, so these lawyers still have to tell them no reasonably often). Of course, how one thinks about the strength of these constraints depends significantly on how one views the anti-trust mechanisms in government. In my estimation, you have to be pretty overtly egregious, and do so by policy, for them to rouse into action.

It's all pretty crazy to hear. Whatever role you thought licensing boards were doing, they're not doing that. They're doing the absolute bare minimum to protect consumers and the absolute maximum to protect their own interests. Why wouldn't they? Incentives do what incentives are. The system is what the system does. It doesn't do what you thought it might do, no matter how much you might hope that it did.

How do occupational licensing boards have any authority? Do I just declare myself and my fellow… rodent groomers… an authority and start handing out paid licenses, and the state will back me if I fine someone $10,000 for combing a hamster without my approval?

In the US their authority is generally established by state governments. Now you can in a lot of cases easily get the license on offer from the board, you’re just unemployable without additional training(barbers licenses are often like this- and if you want an apprentice license for HVAC or Electrical it costs $25 and 10 minutes. This will usually enable you to pull permits for work on your own house but not others).

To some extent, this is necessary- after all, making barbers take a basic test on not spreading lice is probably a good thing- but the problem is the state allowing conflicts of interest in the regulatory body.

Locally, the provincial government passes a regulation, lists your organization in the relevant laws (along with your scope of practice), and gives you have power over those jobs.

Here is one list of licensing boards.

Nah, you have to make friends in the government first. Generally, the way this works is that you and your fellow rodent groomers get together and decide that you want to form a cartel. You can't call it that, and you can't act too overtly anti-competitively at this stage. Instead, you're just a 'trade association' that wants to promote rodent grooming. Alone, it's hard for you to have much of a marketing budget, but if you get together and each kick in a little bit, you can market occasional fade cuts for little Mickey to a much wider audience. Yes, you're not personally capturing all of the benefit of the advertising, but maybe there aren't that many of you, so you can capture enough to make it worth kicking in to the club.

At some point, everyone's kicked in enough money that you start thinking about what the most effective use of that money is. You look at the market trends, the providers involved, etc., and perhaps that money isn't best used for broad industry advertising of services. Instead, you might think that it's best to use that money to hire some professional lobbyists who waltz into the state capital, shake hands, pass around goodies, make buddies, and impress upon them that you have a group of individuals who just might happen to be thinking about where they'd like to allocate their campaign contributions. Conveniently, they also point out that there seems to be some minor problems with some shady, low-cost rodent groomers lurking in the underworld. Since your trade association really cares about the quality of the industry, you'd be more than happy to help root out the problems. All the politicians need to do is let you. It costs them nothing; you're going to do all the work of taking care of the situation. And oh by the way, you'd be very grateful, wink wink, something something, campaign contributions. It definitely doesn't hurt if you can get a couple prominent trade association members elected into office.

Then, they pass a law, promoting how they're going to rid the scourge of seedy rodent groomers, so the public can have full faith and trust that they're getting a good one. The law sets up a Board, and the qualifications for this Board are obviously that they need to be decorated and awarded by your trade association, since you're the experts in determining who is fantastically qualified. They may even directly appoint a bunch of your leadership to the Board right off. Then, you can fly, ye formerly caged bird! You can invent all sorts of barriers to entry suitable training qualifications, most of which require payment to members of your trade association. Then, you can haul randos into your kangaroo court for brushing Mickey's hair this way instead of that way, for that may look too much like a fade and constitute unlicensed rodent grooming. You now have all the power you could have wanted, directly handed to you with the authority of the policy powers of the State. Just try not to look too outlandishly anti-competitive, and make sure to heavily heavily emphasize any possible examples of an unlicensed individual doing anything that could have hurt Mickey in any way.1 You've gotta market fear now. The more scared people are of anything going wrong, the more leeway they'll give you to put in place any silly rule that will drive out any competition you might think could be useful in some way.

1 - As seen in the linked comment, it's not even really necessary that it was actually unlicensed people who caused the harm. The vast vast majority of people who were hurt by the drug that kicked off one of the whole shebangs in the medical industry had taken it under the direction of a government-licensed doctor.

Whatever role you thought licensing boards were doing, they're not doing that.

Hey now, I'm sure plenty of people here hated occupational licensing before it was cool. The Institute for Justice has been suing some of the more absurd boards around the country for 15 years, but its still common for a cosmetology license to require 1500 hours of training vs 300 for an EMT. Louisiana famously had an onerous flower arrangement license, scaled back since 2010ish. Not until 2020 did Florida scale back its ~1000hour license for interior residential decorating. There was a country-wide movement to pare back licenses for braiding hair. The ring cam anecdote is new to me.

The Gist recently had an interview with a journalist looking into occupational licensing. Might be the same author you referenced. They got into the weeds about how doctors who become drug addicted, drug peddlers, or do some patient related sex crimes maintain there licenses, often going to work in prison jails when nobody else will hire them.

Not until 2020 did Florida scale back its ~1000hour license for interior residential decorating.

Was that the one they put in place after an interior decorator killed sixteen Czechoslovakians?

That was in New Jersey.

One of the things I was pretty interested in when visiting various less developed nations is that there was a surprising lack of visible homelessness. Example: Thailand. There were no homeless on the streets outside of extremely and visibly disabled people (missing arms/legs/eyes, severe mental disabilities, etc). I suppose it's easy to stay off the streets if you can just go buy some coconuts and sell the juice on the street without a gaggle of PMCs following you around issuing fines. The barrier to entry for commerce seemed to be minimal at the actual worst.

Now I look at the US with many of its large cities overrun with homeless encampments, hear about bullshit like some jurisdictions enforcing a "flower arrangement license" and it really makes me disgusted at the evil we have wrought.

In the third world the difference between countries with lots of homelessness and little homelessness is typically how easy it is to squat land around the cities. Even in the poorest places you won't see that many homeless people if anyone can go 20km in the direction of the poorest urban settlement and build a shack right after the last round of shacks. Much wealthier third world countries that restricts such settlement will have lots of visible homelessness.

is typically how easy it is to squat land around the cities

Note also that "squatting land and building a shack" is just a specific form of development in general; when the commons outside the city are enclosed (for reasons that are real- like lack of physical land or lack of accessible water- or fake like environmentalism or democratic capture), prices skyrocket.

Was in Bangkok a week ago and saw many homeless people, and several beggars who might or might not have also been homeless, including children. One man, as you say, was disabled and seemed to have had his hands removed or maybe they never developed, but most seemed relatively whole. This does not necessarily contradict your point, but even Japan, for example, has homeless people, and Osaka used to have fairly visible encampments around the castle until they were bussed out for the World Cup years ago--to who knows where. I've seen homeless people in most larger cities in Europe, in Harare, Bulawayo, Johannesburg, Durban, etc.

I saw a homeless beggar in China once. Two Chinese cops were standing over him and very kindly talking to him. Completely blocking his begging attempts. I didn't observe this for long, but I saw no one cross those two cops to give him money.

So I spent a solid chuck of time in Thailand and was struck by all the severely disabled people. This is approx 2008. I thought about giving them money because you can't fake missing all 10 fingers and open wounds. A bit of googling led me to news posts and forums alleging that these people are essentially slaves to the local mafia. They are bussed in to beg, and kept in a pitiful state to earn more.

a gaggle of PMCs following you around issuing fines

The people issuing fines for unlicensed flower arrangement are not, generally, PMCs. They’re florist shop owners.

American homeless aren't (generally) aspiring florists and coconut peddlers stymied by regulations, they are the people Thailand, at best, just lets die, and quite often executes.

Or pushes into places away from the tourists, Latin America style, to do drugs among themselves.

Thats death on a longer timeline, generally.

Flowers are an insane business, so it's flower wholesalers actually, usually as a way to protect their laundering operations. There are a couple of florists, but most florists are the female version of model train enthusiasts, and their shops act as tax write offs for their husbands.

but most florists are the female version of model train enthusiasts,

Excellent analogy. And fucking scary. I once met an actual "foamer" and my spidey sense went off like an air raid siren.

A what now? Is that like an anorak but more antisocial?

Well sure, my point was that it was decidedly not-PMC business owners.

I know, I just know about that ridiculous industry so I wanted to build on your comment. I tried to write it so it would seem more like an addition than a correction, but I failed.

It's an entirely new way of organizing labor in society

I don't think that's the case.

Good call! I hadn't made this connection, myself, though now I see that there are quite a few works making that comparison as well. I was curious about why we would have the transition from guilds->unions->boards, and it seems that the leading hypothesis for the two arrows are the Industrial Revolution and the transition to a service economy. That is, in the guild days, there was mostly a patchwork of small, independent producers, who banded together to rent-seek. As mass production took off, the economics were in favor of larger firms (now you could build cars and sell a bunch of them across the nation or internationally) where workers were mostly trained in one specific task on an assembly line, so guilds started to fall, while unions began to rise. Then, as we've transitioned toward services, they're again more of a patchwork of small, independent providers, who, unsurprisingly, band together to rent-seek.

Medicine is an especially egregious case, as we've seen significant consolidation in that sector. It's less about small independent providers, as the doctors here are apt to point out that larger conglomerates are taking over and many doctors are now employees of a hospital system rather than just running their own little business. So I'm not surprised that a brief search indicates that doctors' unions are significantly on the rise. Of course, they don't have the same sort of mass production scale, as they are still fundamentally a service product rather than a good, so I think it's less likely that the guild power of licensing is going to disappear to any meaningful degree, especially not in comparison to the historical decline in guild power in the good production arena. Instead, we're going to get the worst of both worlds - obscenely licensed and unionized. The academic papers I've found say that they have empirical evidence that these schemes do intersect and provide the most rent-seeking. It's like the anti-Reece's peanut butter cup - two awful tastes that taste awful together. I had sort of thought that the medical industry was reaching a breaking point and that changes would have to occur... but now, I'm sort of getting the feeling that it's going to get a whole lot worse before there's any hope that it'll get any better.

I'm sort of getting the feeling that it's going to get a whole lot worse before there's any hope that it'll get any better

My prediction for failure mode of us healthcare;

  • Good doctors (most, not all) become too frustrated with the insurance regime and become cash only concierge providers for the wealthy.

  • The surging demand paired with vanishing supply for those who cannot afford out of pocket healthcare creates healthcare gridlock (look at the British NHS for an example of this). No one can get seen in a timely manner, the care that is provided is perfunctory, follow up visits are non-existent.

  • Amateur and grey market pharmacology takes off and we see a spike in accidental overdose deaths. These stats, however, are probably laundered by calling some of them suicides, some of them related to pre-existing conditions, or even more blatant cooking of the books.

  • Eventually, Federal laws do change for "low level" or "routine" medical care; You can do visit local clinics to get band-aids and aspirin and not have to get it from a doctor, but some sort of glorified EMT. This expands to cover most types of prescription drugs as well.

  • Medical insurers become financially insolvent gradually as the healthy and wealthy drop out of the system. Eventually, some tech company figures out how to create non-insurance-insurance wherein they can deny you based on risk factors (like insurance used to work). The work around is that they aren't technically insurance, but function as some sort of mutual liquidity market (you're, very technically speaking, exchange mutual contracts with other individuals to help defer costs of medical care at an undetermined date in the future, the tech company in the middle just provides a digital marketplace ... something along those lines).

  • All of the Americans who want health insurance have it (Obamacare: Hooray!) but all of the Americans who have health insurance cannot actually see a decent doctor in any timeperiod less than 1 - 2 years. Most simply rely on long term prescription drugs for pain management and placebo effect.

  • Americans without healthcare (and without independent wealth) create this wholly new side industry of non-insurance-insurance and, in so doing, create new demand for medical care provided by doctors, perhaps, not from this country originally - or ever (i.e. medical tourism partially or fully covered by the not-insurance-insurance).

  • People (not yet doctors) see that they can pursue medical careers without going to the traditional medical schools or passing boards. A whole new shadow-doctor industry staffs up. After 5 - 10 years of this group demonstrating not only equal, but superior health outcomes, the traditional Medical School cartel is finally broken up.

I think this takes about 20 years, starting roughly the time the Social Security Trust becomes insolvent.

Occupational licensing boards are one of many reasons Richard Hanania cites as to why he believes the US is a gerontocracy.

I agree that these boards are rent-seeking institutions which at best provide no tangible benefit to consumers and may be (probably are) net-negative in the long run.

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