Washington should consider innovation in occupational licensing

Pole sbloom@theolympian.com

The ACLU is one of the most admired and effective organizations in the United States. It has advanced individual rights and protections over the decades starting with the Scopes trial in 1925 and continuing with cases like Korematsu v US, Brown v Board of Education, Miranda v AZ, Roe v Wade, the Skokie case and, of course, “Obergefell.”

A glaring absence, though, is in economic issues. This area is now being addressed by such organizations as (my favorite) the Institute for Justice (IJ). IJ deals with economic liberty, educational choice, and private property. It also intersects with the ACLU on First Amendment issues where it fills in by addressing commercial speech.

A specific area that IJ addresses is licensing and regulation, particularly occupational licensing. I would like to discuss this area. There are a total of 454 licenses in Washington state. This is just state licenses and does not include local jurisdictions such as counties and cities.

While the oft-given reasons for this plethora of licenses are health, safety, and competency, the relationship is often tenuous at best. In many cases, the major effect of licensing is restricted entry into the marketplace and higher prices for services. Innovation is often restricted, especially that which competes with established industries.

Also, the customer is often given a false sense of security regarding the quality of the services rendered. What guarantees or compensation are available to a defrauded or injured customer? What does it take to get compensated?

A major problem is that entry into the supply side of the market is restricted. This is especially true for the poor. It also makes it very difficult for those who have criminal records to rehabilitate themselves as job opportunities are restricted. Of course, reducing regulatory barriers affects those now in the marketplace. Price and innovation competition is increased. The regulatory environment creates special interests which results in political pressure to maintain these barriers.

Sometimes this pressure can be quite high. Teacher union opposition to charter schools, the taxi industry to ride sharing companies like Uber and Lyft, established hospitals to new, are only some examples. This type of influence is felt throughout trades and professions. The housing industry is stuck in 19th and 20th century technologies and high housing costs contribute to our homeless problem.

It might even be said that the same problem exists in the regulatory area. This, in itself, is an ossified, bureaucratic structure. Just this year, Nebraska has instituted a two-step reform of occupational licensing. The first step is to scrub the licensing to occupations that “present, significant, and substantiated harms.” The second step is to consider regulation that is the “least restrictive” and imposes the lowest burdens and harms while preserving consumer protection. The Washington legislature should consider a similar action.

In fact, here’s an additional thought. Many areas could benefit by altering mandatory regulation to a voluntary certification. Businesses could be authorized to display a certificate indicating that it meets established training and occupational requirements. The certificates would require the businesses to submit to and a fee could be charged. Eventually, the bureaucracy to manage the rules could be substantially transferred to private firms including insurance companies. Minimum liabilities could be established with the consumer choosing to pay more for higher liability offerings. The cost would not only allow consumer choice but provide information about the reliability of the supplier. This might be particularly useful in the health care industry.

We are all aware of the role innovation plays in modern society. We are used to innovation but not in government. Washington leads in some areas of public innovation. We led in legalization of marijuana, although as much to increase tax revenue as anything else. Our Top Two system opens up electoral access although it could still use some adjustment.

We are still used to depending on government to order our society. There are some negative consequences. More government control creates temptation to control government for advantage. Governmental bureaucracy, like any other, tends to grow and become more powerful. It is time to change this and innovate by introducing free market principles to the system. We can do this by making it less worthwhile to buy politicians and more worthwhile to introduce individual choice.

Ed Pole is a retired engineer and active gadfly residing in Lacey. He is a member of the 2018 Olympian Board of Contributors. Contact him at ejp.olyboc@gmail.com or comment online.