Governor’s Occupation Reform Proposals Sound

July 31, 2012, marks the 100th anniversary of the birth of Milton Friedman, the famous American economist and 1976 winner of the Nobel Prize. Among his many contributions was a book titled “Free to Choose: A Personal Statement,” in which he and wife Rose “connected the dots” between individual liberty and economics. The chapter “Who Protects the Worker” is as relevant for Michigan today as it was when first published in 1979.

Specifically, despite efforts to rein in its creeping authority, intrusive government micromanagement of citizens’ lives and livelihoods continues to grow. This reality was implicitly recognized when a task force appointed by Gov. Rick Snyder’s recently laid out occupational licensure and other reforms designed to lower unnecessary hurdles to entering certain professions.

According to a news release, the recommendations include eliminating 18 separate occupational licensure mandates, another five licensing “provisions,” and 11 occupational boards.* The Detroit News reports that members of affected professions oppose deregulation, which may seem surprising but really isn’t: By raising barriers to potential new competitors entering their fields, these special interests use licensure to keep prices high. But, as Friedman put it, “The justification offered is always the same: to protect the consumer.”

Recently, evidence of how widespread this anti-consumer protectionism has become was provided in a comprehensive national review published by the Institute for Justice of licensure mandates imposed on lower-income professions. IJ reported that Michigan had the 13th highest number of licensed occupations, many unjustifiable on public interest grounds:

The data also reveal the arbitrary and irrational nature of licensure: Most of the 102 occupations are practiced somewhere without government permission and apparently without widespread harm: Only 15 are licensed in 40 states or more, and on average, the 102 occupations are licensed in just 22 states — fewer than half. This includes a number of occupations with no self-evident rationale for licensure, such as interior designer, shampooer, florist, home entertainment installer and funeral attendant.

Remarkably, in the three states (and the District of Colombia) where licensure is imposed on interior designers, mandated training can consume up to six years, vastly more time than required to become an emergency medical technician. Heaven forbid the curtains don’t match the carpet in Florida or other states that impose such licensure. (Watch a five-minute video presentation of IJ findings, here.)

Michigan doesn’t (yet) prohibit earning a living as an interior designer without a state license, but not for a lack of trying: Catering to existing members of the field, lawmakers here have already attempted to enact it. (See “The Tragedy of Bad Feng Shui.”)

Designers did succeed in getting an official state “registry,” however, which Gov. Snyder’s task force proposed deleting.  This is one of 12 registries that presumably give practitioners an imprimatur of sorts from the state.

At least two other licensure mandates the task force recommended eliminating are relatively recent. Speech pathologist protectionism only began this year. A law prohibiting dieticians and nutritionists from practicing without a license was passed in 2008, but reportedly no licenses have yet been issued.

Most people are surprised to learn the extent of this kind of special interest pleading — and how often the pleas bear fruit in the form of legal protections from competition. Too often, politicians get away with accommodating the self-interested demands of narrow special interest lobbies by hiding behind the “public interest” excuse.

Gov. Snyder’s proposals for rolling back burdensome occupation mandates are a modest if useful first step. The Legislature should use them as a starting point while proceeding with a bolder program to eliminate these “conspiracies against the public to raise prices,” to paraphrase Adam Smith, the founder of modern economics.

* Acupuncturist; Auctioneers; Community Planner; Consumer Finance Services; Dieticians & Nutritionists; Forensic Polygraph Examiner; Forester; Immigration Clerical Assistant; Insurance Solicitor; Landscape Architect; Ocularist; Professional Employer Organizations; Proprietary School Solicitors; Respiratory Care; Security Alarm Contractors; Speech Pathologist; Vehicle Protection Product Warrantor; and Interior Designer.

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Michael D. LaFaive is director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.