Licensing standards need to be scaled back
There’s a reason organizations like the Mackinac Center describe themselves as “free market” rather than “pro-business.”
Too often, businesses — especially, but not exclusively Big Business — self-servingly try to use government to limit competition and keep prices high. For true defenders of the free enterprise system, the benchmark of good policy is what benefits consumers, not what serves the narrow interests of a particular firm or industry.
Michigan’s licensed barber shop colleges provide a case study of such a price-hiking “conspiracy against the public," to use the phrase coined by Adam Smith, the father of modern economics.*
Recently, a bill was introduced in the Michigan House to repeal the law making it illegal to earn a living as a barber unless one first obtains a state license that, among other things, requires taking a 2,000 hour “course of study” at a licensed barber college. The state Office of Regulator Reinvention suggested last week that 18 occupations should be deregulated.
The prohibition and mandate is a good deal for Michigan’s five licensed barber colleges that are guaranteed a regular stream of customers. It’s also a good deal for incumbent barbers, because it dramatically reduces the chances of some plucky newcomer opening a shop down the street offering lower-priced haircuts.
Not surprisingly, the beneficiaries of the anti-consumer status quo are mad as heck and aren’t going to take it.
According to MIRS News, Michigan Barber School Director Darryl Green called it “the craziest thing I've ever heard of" and "total irresponsibility." He also trotted out the usual “public health and safety” scare tactics that are the common refrain of licensure protectionists, summoning the specter of AIDS and Hepatitis C should freedom reign and consumers be allowed to use their own judgment.
Here’s the specter that really scares the industry’s incumbents though: Repeal of the licensure mandate would mean more barbers, more competition and lower prices for consumers.
In Michigan and elsewhere, this same spectacle plays out all the time. Here are some recent examples provided by the Institute for Justice, a public-interest law firm that assists individuals victimized by licensure protectionism:
- Eyebrow threading is a booming business in Texas. But state bureaucrats and business interests force threaders to take 1,500 hours of instruction at beauty schools that don’t even teach the practice.
- Interior designers in Florida are forced to get a degree, pass a licensing exam and complete a four-year apprenticeship before they can earn a living on their own. A well-funded industry group fights to restrict competition by keeping these regulations in place.
- Hair braiders in Utah must obtain 2,000 hours of cosmetology training.
- Independent limo services in Nashville, Tenn., offering an affordable alternative to taxicabs were hobbled by a series of anti-competitive regulations forcing higher prices.
- Tour guides giving Segway trips around Washington, D.C., must obtain a license for people who merely communicate for a living.
- Funeral homes are forced by Minnesota to have embalming rooms — whether they use them or not. This benefits larger providers and harms consumers by prohibiting smaller competitors from outsourcing embalming and use the savings to charge less.
- Barber licensure mandates are endemic, and result in perverse outcomes like the 80-year-old man in Oregon who has been cutting hair for 50 years but was forced to go back to school to keep his license.
No one has a stronger incentive to provide a clean shop and avoid harming customers than the owner of a barber shop, or any other consumer service provider. “The tragedy of a bad haircut” should be the punch line for a joke, not the rationale for laws that harm consumers and diminish opportunity.
* “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776.