Is Legal Licensing Necessary?
It is accepted by almost everyone that the licensing of doctors
and other professionals by governments is necessary. How quickly
we forget that this is a new phenomenon. Licenses for doctors
became common only in the last couple hundred years, and as recently
as 1910 medical schools were mostly what we call diploma mills,
much like the training organizations used to make real estate
agents and general contractors legal today. In many states the
latter do not even need to have ever held a hammer to be licensed.
Let's lay out a few background notes and facts before we look
more deeply into legal licensing...
1. A license given by a government only requires a minimum
standard that is primarily measured in terms of education, training,
or paper testing, not performance.
2. While the stated purpose is public safety, the practice
of licensing leads the public to be complacent. In fact, people
are complacent to the point where most will spend much more time
researching which computer to buy than researching which doctors
or lawyers or financial planners to use.
3. Licensing encourages the idea that all who have a license
are roughly equal in ability. This is clearly not true, and nobody
would even claim it to be, but people do act as though this is
the case. In addition to the complacency that results from licensing,
it also discourages pay based on performance. It would make sense
that among surgeons in the same hospital, those who kill twice
as many patients as others should offer a discount, but once
licensing becomes the norm, measuring and making public such
performance statistics is less common (although the internet
may be changing this).
4. It is assumed that if licensing did not exist that we would
all be at more risk, but this has not been proven in any systematic
way. We do see a more safety in an industry as licenses become
the norm, but usually if you look at the history of a given industry
the standards were usually rising well before licensing began.
5. Customers have always had the ability to ask for credentials.
Before there was licensing people certainly considered whether
a doctor went to a medical school and whether he had experience.
6. Without licensing, hiring professionals with just as much
training would still be possible. Customers would simply choose
to hire the person who has the credentials they consider important,
which certainly could include medical school diplomas and other
7. Certifications and other credentials of all sorts are available
even in industries which are currently unregulated. These sometimes
do -- and certainly could -- indicate competency as much as legal
8. It has been, and presumably always will be, criminal fraud
to misrepresent ones experience, education, and other credentials
to customers, so a lack of licensing does not mean anyone can
claim to have qualifications he or she doesn't have.
If we put these facts together we might notice that licensing
is just a legal form of the certifications and paper qualifications
that have and always will exist. The difference once legal licensing
begins is that a consumer's options are limited to those who
are approved by a government agency. Without licensing requirements
in an industry it would be possible to hire a skilled (and cheaper)
professional who happens to have fewer degrees but does a good
job anyhow. If it is really true that the overall risk is reduced
by licensing, it seems there would be more studies and evidence
to supports this (and in industries that are already improving
in safety or according to other criteria, the trend line should
get steeper after the law passes, not just continue in the same
The cost goes up when we have licensing. This is not just
about the cost of getting and maintaining a license, which is
passed on in higher prices for services, but it is also the result
of limiting access to an industry. The harder it is to become
a tree trimmer, the fewer there will be, and then they can charge
more due to increased relative demand. It is basic economics.
We do not prevent any great dangers from poorly-arranged flowers
when we license florists, but we do ensure that they can charge
their customers more money.
Now, here are some questions to get you thinking about the necessity,
and even the morality of licensing laws, as well as the real
1. If my friend wants me to sell his house for him, knowing
I have no real estate license, and I am willing to do it, is
it actually right to send me to jail for such a "crime?"
What is the specific thing I did that is wrong that warrants
putting me in a metal cage?
2. What real purpose does the licensing of "low risk"
professions serve, such as licenses for hair cutters and interior
designers? What constituency do you think originally pushed for
such laws? (Hint: it wasn't a public outcry that brought about
laws in these areas).
3. If licenses were available but not mandatory you could
still choose to go to a licensed builder, mechanic, painter,
or dental hygienist, so why is it a problem if others want to
knowingly choose an unlicensed person or business?
4. Since we now license over a thousand different occupations,
and now 23% of the people in the country need a government license
just to make a living in their chose profession without going
to jail, can we really still claim to be the "land of the