I haven’t been overly impressed by VOX until I saw this great piece on occupational licensing.
Licensing raises costs and reduces consumer choice, and research has found that these costs are economically significant. For example, economists Morris Kleiner and Alan Krueger have found that licensing is associated with about 18% higher wages on average, and those higher costs are often passed on to consumers. Economists have estimated that entry restrictions on non-physician health care workers cost consumers over $100 billion per year.
The clash of interests – consumers versus workers – leaves the poorest consumers with less money and, sadly, worse care. One of the surprising graphs at VOX shows how people in states with more dental licensing end up with fewer teeth.
Frustration with occupational licensing is a source of bipartisan agreement. Economist left and right are against it; politicians left and right are for it. However, it’s also an issue where you don’t hear much meaningful discussion of alternatives, and I think that’s because the only real alternative is libertarian.
There’s a larger parallel to education and health policy. The tendency is for governments to “solve” problems by centralizing authority and then setting standards which the public must then obey. Is this effective? Common Core is the latest effort to set standards, Meanwhile, parents are given fewer choices over which school or teachers they have to accept. I suspect that the market is much better at setting informal standards on teacher quality than the school district is at setting formal standards — if a true teacher choice market existed (imagine parents having complete control over which public classroom their children were assigned).
Do you think education consumers would prefer formal standards or choices? Would you prefer choosing your college and major or an alternative world where the US Dept of Education established and enforced college-level education standards for all courses?