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Reeder: State licensing hurts consumers, stifles competition

Published: Thursday, Jan. 2, 2014 5:30 a.m. CDT

(Continued from Page 1)

SPRINGFIELD – During the decades I’ve covered government, I’ve seen a steady stream of people heading to Springfield wanting to have their profession licensed.

As of Wednesday, the state began licensing yet another – condominium managers.

That vocation joins a litany of jobs such as hair braiders, interior decorators, barbers, auctioneers and others that are regulated by the state of Illinois.

There are some who would have you believe that government bureaucrats are like perched vultures waiting for some unsuspecting entrepreneur to come along before they swoop in.

The reality is something a bit more interesting.

Regulation often is the product of a chummy relationship between elected officials and those in business who want to cut down on their competition to maximize profits. So every year, a parade of folks in various vocations come to the state Capitol asking for their fields to be licensed and regulated.

And it usually works like this:

• Have the state require extensive training for those wanting to enter the field.

• Exempt everyone already in the field from the new regulations by “grandfathering” them in.

By doing this, folks in the profession can create an artificial shortage of “licensed” individuals. This reduces the supply of people who can do the job and enables those still in the field to be paid more.

That, of course, means that the rest of us pay more for their services.

Yes, there are some life-or-death professions such as physicians or dentists for which it makes sense to require a license.

But frankly, I could care less if my barber has been OK’d by the state.

If I’m not pleased with a haircut, I’ll go to someone else the next time. That’s how the free market regulates things.

Or how about interior designers?

What would constitute a gross license violation? Improper use of the word “mauve”? Shag carpeting in the basement rec room? Beaded doorway curtains? Macramé potholders?

An interior decorator license benefits the public about as much as a two-dollar word like “feng shui.”

And such is the case for many of the vocations that government chooses to license and regulate.

We should be encouraging entrepreneurship and self-reliance, not stifling it.

For example, if a single mom on my street wanted to make a few extra bucks cutting neighbor kids’ hair in her basement, her initiative should be a reward. She shouldn’t be punished.

But too often, professional licensing is about protecting turf – not the public.

A 2012 report by the Institute for Justice noted that it costs $671 in fees to be an Illinois auctioneer, and 45 days of training also are required.

It’s worth noting that auctioneering wasn’t even a licensed profession in Illinois until about 2000.

Somehow, the state had plenty of successful auctions long before it began licensing auctioneers. Somebody must have done a lot of fast talking in Springfield to get them licensed.

Barriers such as these hurt lower-income people by creating obstacles for them to enter certain fields.

It hurts the rest of us by reducing competition and increasing costs of the services those vocations offer.

That’s why the best regulator of professions is the consumer – not state bureaucrats.

After all, that’s how the free market is supposed to work.

• Scott Reeder is a veteran statehouse reporter and the journalist in residence at the Illinois Policy Institute. He can be reached at sreeder@illinoispolicy.org.

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