Stossel: Licensing Madness

I don’t in general disagree.

What is praxis?

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It seems to me both cases — lawyers and health care providers — have many similar aspect to consider in re licensing, but have very significant historical factors that make them separate issues in the net out.

And as you say the most troubling case of abuse of licensing is that of lawyers, for it does create a special entitled class before the law. That ‘Esq.’ designation is true in our time, yet yet should be detested by any American.

It is not the professions that decide, it ends up being some politicians that decide to license this or that in a locality — and that IS a valid exercise of LOCAL governmental authority, albeit nearly always an abusive and harmful one.

Most often it is the professions putting pressure on the politicians to protect them from new entrants into the business.

for example, an insurance company, whether Health or P&C, that is dominant in a state lobbies with the state regulatory commission to structure the regulations in such a way as to prevent new entrants into the state that would increase competition. How do they do this? Creating complex reserve requirements the prevent out-of-state reserves counted the same way as in-state reserves, or creating licensing of captive agents different from independent agents, There are many examples.

The same is true of barbers/beauticians. When I get a haircut from an unlicensed person, the quality is no different than from a licensed person. The licensed ones, and especially the schools that get government grants and benefit from government loans to students, don’t like it and do their best to put the unlicensed ones out of business.

That seems to be the case from anecdote and observation. A realtor knows in advance what his commission is likely to be, and human nature is inclined to put less effort into a scenario where the pay off will be approximately the same regardless of the output - especially on an entry level home. The realtor is better served seeking new contracts that will yield 3k for himself than haggling for an extra 3k for the homeowner, which will only yield $90 for the realtor (1/2 6% commission on a 100k home).
So, if the professional does not put out signs on the nearest major street, for instance, he is out nothing in payment, and saved some work. But the homeowner who goes four months without a single call on a reasonably priced home is out four months of interest on the mortgage payments, which can be equivalent to dropping several grand off the asking price.
This creates pressure (in this market especially) for the homeowner to sell at a lower price and move it quickly for his own benefit as well.
Not having read the book you mentioned, I suspect that realtors in your study do not have the same pressure to sell right away because their homes are more likely to be investment properties, without the pressure facing a homeowner to quit paying on a home he has left or will be leaving so he can apply it to a new one.
If one must use a realtor to sell a home, the best recourse may be to take advantage of the fact that they can’t charge you extra every time you call (like an attorney could), and get them to push your house early just to get rid of you. Then you might have the time to reject a few low bids if necessary.

Attorneys have another intrinsic conflict of interests with their clients built into the fact that their relationship with the client is only temporary, and their relationships with other attorneys and judges is career long. This can lead them to be “nice” to the colleague or judge (redundancy?) when “mean” is what would serve the client best.

Yes, there needs to be oversight of various professions, as it is one of the legitimate functions of a government to protect the weak from the strong. A “professional” or a corporation can be no different from a criminal on the street with a gun, and often should be treated no differently by the law; unfortunately, the former two seem to have more protections afforded their rights than the latter, or those of the victims of their negligence or malfeasance.
Rather than protecting the public, licensing boards often seem to create a class of people who are protected in their actions and allow the rules to be such that the pressures on the professional will very often be opposed to the pressures on the client, who has no choice but to apply to a licensed professional for help. If this is the case, government would better protect the governed by removing the barriers to tort (I am aware of the inconsistency of apparently calling for more lawyers here) than by making lots of rules via licensing boards, most of which seem to indicate the the ‘client’ of the government is the profession rather than the people.
That this is an uphill battle for most people and cases is only natural given that the politicians who decide on such things are in large numbers members of these professions themselves.

Other “professions” have more pressure to act in a manner more in line with the interests of the client. A licensed plumber may have pressures to use the cheapest material he can and work as rapidly as he can so he can move on to the next paying client, but he knows well that if he doesn’t do it well, he will lose more money from clients lost by word of mouth than he saved in parts, he may have to redo everything until it is done properly (also losing time on new jobs), he may be reported to the BBB or a number of websites, or he may be sued. Not surprisingly, very few plumbers (are you out there, Joe?) are represented in the ranks of our representatives.

I’m indifferent to whether ior not lawyers should be licensed, but they certainly shouldn’t be elected.