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A while back, I talked about some secondary press on "The Licensing Racket". In that book, the author talked about just showing up to board meetings for various licensing boards and just watching what they do. Her takeaway was that when it came to disciplining bad behavior of their members, it was supreme leniency, but when it came to any sniff of an unlicensed person doing anything, it was knives out. High crimes. Treason.
At that point, I was mostly just taking her account as an account. It certainly seemed plausible, but of course, she may have been motivated to exaggerate things for an agenda or just to sell more books or something.
But someone on the HVAC subreddit just linked to this. It's from North Carolina's board for plumbing, heating, and fire sprinklers. Looks like they publish one of these newsletters every couple months. Front page is the most important bit - PAY YOUR MONEY TO RENEW YOUR LICENSE! Then some information about the board and forms. Finally, the bulk of the newsletter is reporting their disciplinary stuff.
It's all right there. In black and white. From their own pen. You can just read through it and see. The majority of items (~60%) were them going after unlicensed folks. Near as I can tell, in almost all of the examples of discipline against their own, licensed folks, the result was "probation" and maybe taking a class (almost certainly paying the board to take said class). I think the only examples of anything more significant than that were cases where a licensee did something, how shall I phrase it, 'against the integrity of the licensing scheme'? Like, they let someone else use their license number, for example. That's a real crime that will get your license revoked.
Whereas they seem to have quite the scheme for going after unlicensed folks. They may get someone to sign a "consent agreement", promising not to do any unlicensed work. Or they might take it to a court, potentially getting real, big boy penalties. Did you know that they can get you put in jail for 30 days and slap you with a $5,000 fine? I learned that.
They publish this! You don't have to go to their meetings to find out! You don't have to believe what some random author said about them! They just tell you!
Is there a legislative mode of attack to get rid of these "license board" professional "rent extraction" orgs?
I wish I knew. Crony capitalism is a genuinely hard problem any time the government is allowed to exert such strong power over market actors. Funniest idea I've had that just might work is threatening to abolish the Air Force. This route would be playing the very long game, and is more likely to not work than work anyway, but I'm not sure there is an idea that has a >50% chance of working.
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What would you change?
The government outsources quality control by letting each guild collect its rent. There’s deadweight loss, but that’s the price you pay for hedging out some of the worst outcomes.
Maybe we have the capacity to do a more laissez-faire model based on reputation? It’s more plausible now than in the Yellow Pages era.
I don't think it is, even within the field with expert level knowledge it's hard for me to know if a doctor I'm seeing is good before I go, and depending on my knowledge of the speciality it's also hard afterwards.
Patient surveying and other mechanisms of assessing doctor quality tend to zero in on customer service which is important but is often the opposite of what you need for an actual quality doctor.
In smaller tighter knit communities you were more likely to get to "he was gruff but I think he caught things others wouldn't."
I have a friend in primary care who picked up most of the local population of a specific ethnic group. He's a good doctor but they don't know that, he was just nice to them and understood their culture so they all came.
They don't know that he's not making mistakes other PCPs would make.
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I think this is the thing that is being challenged. That they're basically not even doing quality control. It's license control, not quality control.
I'd note from my previous comments regarding the book, they had examples from other industries, too. One that stood out was doctor malpractice that the boards would just kick the can on. "Better to have a bad doctor than no doctor." (But definitely not a foreign doctor!) IIRC, they talked about a case where the board just kept kicking the can and stringing it along, and nothing happened to "control this guy's quality" until he was arrested on criminal charges by the county prosecutor for the utterly obscene stuff he was doing (completely separately from the board's proceedings).
Different industries probably need different changes, because sure, there should be some sort of standards/quality control, and what that looks like can vary. But as it is, it seems to be pretty clear that they're not really doing that.
Unironically yes, which is precisely why occupational licensing is evil.
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The Texas HVAC board revokes a contractors license occasionally- generally for egregious lies to a residential customer about mechanical matters. I don't pay attention to any other disciplinary proceedings.
Requiring an HVAC contractors license is facially reasonable. I won't defend any specific requirements- it would cost me about $1500 and six weeks of my time to get it. Common legend has it that the EPA license literally never gets revoked/disciplined because licensees refuse to inform on each other. I won't stake my criminal record on it, but it seems true enough to be believable.
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Such incentives made accounting stagnate and be all about compliance with precious little insightful metrology. If you really think about operations and valuations, you can easily beat the market (but "non-GAAP" is mostly bs). To practice accounting at work, you must be licensed; if you are the end user, you can do plenty of "illegal" and useful things.
Could you share some examples?
When practicing accountants cook the books, they're embezzling or misrepresenting the company's operations. The professionalized field emerged to protect investors from false data. Presuming this works and public data is real, we may wonder if this data is also useful. A few basic valuation practices which violate regulations:
Some of this might seem tame, but accepted metrics like COGS leave a lot of alpha on the table because of various violations, which e.g. make illegal some methods to compare companies at different parts of the same industry (e.g. midstream and upstream companies) which help you gauge the cycle.
Similarly, in my system of national accounts, "government spending" is not included in the net material product, a term inspired by the Soviet style which excludes most services and nets out capital depreciation. I use this to forecast growth and market expansion. It's also really import to even out imputed values. From 3% in 1985, now 10% of US GDP is arbitrary imputed rent while e.g. China takes construction cost and depreciates it at 2% per year. This means China's imputed rents on are 1/10 of Germany's for comparable housing, after purchasing power adjustments, when habitable area/person is only 42m^2 vs. 48m^2. In Japan, imputed rent went to 14%.
Now, I don't count "government spending", because monetized transfers like social security directly increase GDP, which is bad. But many governments pay for healthcare and tertiary education - those should be imputed for their real value. This is why I don't count services. After all, greater US healthcare output does not give Americans healthier lives than Italians or Singaporeans, higher European education attainment does not result in greater incomes than Americans; there are obvious confounders for all of this.
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I am fairly sure regulation and license boards and code and inspectors is why I rarely bother to discuss anything related to food or electricity safety with a subset of US people. Especially the "licensed, up to code" ones. The part of their brain with which they can grasp that electrical safety comes from the laws of physics and not regulation seems to be atrophied. Ditto with the "danger zone" food experts.
Compare Australian Prime Minister Malcolm Turnbull, on being told that his demands for a backdoor in encrypted communications were mathematically impossible: “The laws of mathematics are very commendable, but the only law that applies in Australia is the law of Australia.”
(Where's King Canute when you need him?)
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What is a good example where those are at odds, and how have the licensed practitioners a blind spot?
Let's start with the fabled danger zone for food. That you can only hold food at room temperature for 4 hours. Observation shows that even 24+ hours is totally safe. If you have been in a frat house - probably have figured out that even week old is ok-ish The other is about extension cords - especially in the context of using 240V appliance when the only outlet of 240V is not in the kitchen.
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Great Patio11 tweet:
A lot of regulatory schemes are more complex than, "create a government entity that finds violations and punishes them." I have no idea whether or not the North Carolina State Board of Examiners of Plumbing, Heating and Fire Sprinkler Contractors is a wretched hive of regulatory capture and villainy, but punishing unliscensed practitioners is a key aspect of any regulatory regime involving licensing.
Of course, this is the opposite of the tweet you quoted. He's talking about the cost of the license functioning as a mechanism to keep the licensed in line. You, and the North Carolina board, are talking about the licensing guild functioning as a mechanism to keep the unlicensed in line.
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