Thursday, March 19, 2009

Licensing to steal

My wife is a nurse. One of the things coming with that particular piece of territory is a license to commit nursing.

After we arrived in Alaska, my wife had to get an Alaskan nursing license, which differed in absolutely no particular from her Michigan license: it served as proof of having passed the NCLEX. Exercising the privileges associated with the license requires completing some amount of annual continuing education.

Despite still having two years to run on her MI RN license, my wife had to get an AK license.

This is the list of additional professional requirements required to become a registered nurse in Alaska: $256, payable by check or money order.

As it happens, in Michigan, the license is valid for three years from the issuing date. In Alaska, RN licenses become invalid on November 1st of even numbered years, even if the license was the day before (AK pro-rates the fee from 12 months prior).

In mid-February, my wife happened by sheer chance to look at her license, by then 19 months old, to discover it had expired three months previously. She self-reported to the licensing powers that be. Graciously, because of her honesty, they reduced her penalty from $1000 to a mere $500.

This is stampeding idiocy. If the license is indicative of anything at all besides coughing up an amount of money equal to one solid day's work, its valid period would not be subject to whims of the calendar. In what parallel universe is a license good for two years invalid after 19 months?

As if that wasn't sufficient sign of arbitrariness pure and simple, in re-issuing her license, they did not cast even the tiniest glance in the direction of her continuing education records. Precisely one thing mattered: the $756 (three solid days of work) check clearing.

Which made it glaringly obvious that Alaska's (and all states') RN licensing requirements are principally about extracting money. They do not prove competence, or experience, or proficiency. Such educational requirements that they do have are scarcely ever audited. They demonstrate nothing other than having passed the board exam, a task which one would think the test score itself would adequately demonstrate.

This brings to mind my last trip to the hair cuttery. Framed on the mirror (for some odd reason optically engineered to make my hair look completely gray) was the barberian's Beautician's License.

In what parallel universe does a such a license demonstrate anything worth knowing? Other than her check for some goodly portion of a day's work had cleared the bank, that is.

Are there any state licensing requirements that are anything other than jumped up theft?


Blogger Susan's Husband said...

Yes, they also form a guild system to reduce competition, the most extreme example being the bar exam.

I have long been a contributor to the Institute for Justice because fighting to overturn this kind of licensing scam is one of their top priorities. The people who suffer most from it are the poor who are trying, through actual hard work, to better their situation only to run in to this barrier. It's a big part of why I am generally anti-regulation.

March 20, 2009 6:39 AM  
Blogger Bret said...

Hmmm. Don't pilots have to be licensed?

March 20, 2009 7:45 AM  
Blogger Harry Eagar said...

I hope so.

Licensing requirements generally have a history, often to do with public health. That, I believe, is the origin of the beautician's license.

It sounds as if Alaska needs to spiff up its reciprocity procedures.

My objection, you will not be surprised to learn, is that not enough businesspeople are required to be licensed, of which a part would be to demonstrate that they are able to do what they take money for claiming to do.

Chiropractors, for example. (Yes, they are licensed, but in this case, while any could apply, all should be denied.)

I know that in a free market, I should be required to make the investment of learning what it takes to be a capable nurse, and then in each instance in which I need the assistance of a nurse, I should do a background check before accepting that assistance.

March 20, 2009 10:50 AM  
Blogger Hey Skipper said...


Yes, of course pilots have to be licensed. Mine says:

-- Airplane multi-engine land

-- MD-11

-- Commercial Privileges

-- Airplane single-engine land

For each I had to pass a written exam and an FAA checkride, so the license documents meeting or exceeding some level of knowledge, experience, and expertise.

I have no problem with this. There are some professions where someone pretending, but not possessing, competence could do some real damage. Provided the bars to entry are reasonable, and the ability to exercise the privileges of the license is based on pertinent education and currency criteria, then I think licensing makes sense.

Overtime, my FAA license cost $8 total, $2 for each qualification. It is good until my 65th birthday. In order to exercise the privileges of the license, though, I must pass at least three checkrides, two physicals, and take one full day of in-class academics plus 12 hours of online instruction each year. I must also fly three instrument approaches and landings every 90 days.

So, to me, this is a licensing scheme that makes sense: it is proof of possessing required knowledge, skill and experience, and ensures continuing expertise and proficiency. It in no way acts as government's grubby fist in my wallet, and it doesn't pose baseless barriers to entry.

I think you can make the same case for doctors, lawyers, nurses, architects, plumbers, electricians and the like, to the extent the licenses are honest indicators of knowledge and experience, rather than just a thinly veiled excuse for money grubbing.

In contrast, the thought that a barber requires a license is just nuts. Even the worst barber would be unable to inflict lasting damage, and wouldn't stay in business very long in any event.

Traveling that same road, I must also possess a radio-telephone operators permit to fly. Here are the list of tests and examinations required to get that permit:

-- $43 payable by check or money order
-- [crickets]


I think I'm going to add IJ to my charity list.


I don't think many, if any states, have reciprocity procedures. Alaska's on-going licensing is thievery, pure and simple, aggravated by a completely illogical renewal scheme that must have been designed to catch newcomers out the first time.

... is that not enough businesspeople are required to be licensed, of which a part would be to demonstrate that they are able to do what they take money for claiming to do.

I think in almost all cases, the market achieves the same end at far lower cost. Should my car mechanic be licensed by the state? How about the shop that fixes computers, or the bike shop?

Extensive licensing runs one serious risk you have ignored: politicizing economic activity. The further government gets into the licensing business, the more they can decide who gets one, and who doesn't.

In Anchorage, there are a fixed number of cab licenses.

You want to earn some money giving people rides? Tough.

And you want more of that?

March 20, 2009 1:33 PM  
Blogger Harry Eagar said...

Having written extensively about cab businesses over the years, I can tell you that, yes, hacks need to be supervised.

The market has not extinguished chiropractors, despite their inability to do what they claim to do (because subluxations do not exist).

I chose chiropractic advisedly, because it is the very best example of how free market ideology prevents rational regulation and harms public health. See Judge Manion's opinion in the AMA case.

Regulations should be regularly updated and canceled when no longer needed. Cosmetology licenses originated, I believe, to control infectious disease.

Well, nobody worries about infectious disease any more. (Retell joke about guy drumming in bar to keep elephants away.)

Many jurisdictions have laws against spitting. That had to do with TB. Possibly it was not as effective as antibiotics, but when it was passed, there weren't any antibiotics.

March 20, 2009 3:11 PM  
Blogger Hey Skipper said...


I can tell you that, yes, hacks need to be supervised.

You didn't read what I said carefully enough. It may well be that cabs drivers need supervision -- mechanical inspections, vetting driver records, etc.

However, in Anchorage, the city government has fixed the number of hack licenses.

That is a different thing, entirely.

I chose chiropractic advisedly, because it is the very best example of how free market ideology prevents rational regulation and harms public health.

Full disclosure: I think chiropractic is way too many syllables for quack.

However, I have heard plenty of people swear by how much better they feel after a trip to the chiropractor. Who am I, or you, to tell them otherwise?

Cosmetology licenses originated, I believe, to control infectious disease.

That's as may be. That was then, this is now.

And now, cosmetology licenses are a shameless scam.

March 20, 2009 4:15 PM  
Blogger Harry Eagar said...

Historically, unsupervised hack systems tend to be violent. Limits on hack licenses are one way to help control that, which is in the public interest.

The problem comes when the licenses are made transferable. That's the mistake New York City's Hack Bureau made.

It may be that the apparent harmlessness of barber shops would not endure if they were not longer licensed.

March 20, 2009 10:22 PM  
Blogger David said...

One of the points the Institute for Justice likes to make is that many of these licensing schemes started as a way to keep blacks out of the "profession."

Now they're just payback to the state for cartel regulation. Exactly the same reason that many "journalists" want "journalist" to become a licensed profession. The want to keep out the riffraff like, er, us.

March 21, 2009 7:39 PM  
Blogger Bret said...

Well, as usual, I'm diametrically opposed to Harry's viewpoint. I don't think that any profession should any longer require licensing, including commercial pilots (though I don't have any problem with the concept of needing a license or alternatively insurance or a bond to fly or drive or otherwise engage in activities that put others at risk who do not have a commercial relationship with the persons engaging in the activity).

Licensing leads to too much graft, corruption, monopoly pricing, and wasted money. In my strong opinion, a bit of additional risk is worth avoiding those other problems. In this information age, the risk has been greatly reduced.

March 21, 2009 11:08 PM  
Blogger Harry Eagar said...

I have never yet met an American journalist who wants the business to be licensed.

I know many rightwingers who want to license us, but that's not the same thing.

As usual, Bret wants to foist off the risk on those least able to deal with it.

I will have to post my essay about fireproof hotels at Restating the Obvious soon. But you can work out for yourselves what I will be saying.

March 23, 2009 11:08 AM  
Blogger Bret said...

Harry Eagar wrote: "As usual, Bret wants to foist off the risk on those least able to deal with it. "

How am I doing that?

March 23, 2009 2:47 PM  
Blogger Hey Skipper said...


I think there are relatively simple criteria that can show which professions should have licensing requirements:

-- there must be some body of expertise
-- failing to possess that expertise can cause significant personal injury or financial loss


-- there is a consensus to maintain a certain level or extent of service

Licensing for pilots, doctors, nurses, civil engineers, etc all qualify with respect to the first two criteria. In these cases, a license acts as a proxy, in the same way that high school or college degrees do.

Licensing cab drivers could also qualify, but only if the license requirements pertain to performance. E.G., the car must be mechanically inspected at some regular interval; drivers must serve all parts of a city; must be able to speak English (being semi-serious here, that endorsement is on my pilots license), etc.

Licenses should never be used as a revenue source, or limited in supply to restrict entry.

My wife's nursing license fails the first, and the Anchorage cab licensing scheme grotesquely fails the second.

In contrast, my pilots license is with respect to easily justifiable requirements, the costs are consistent with administrative overhead, and the supply of licenses is not limited.


I know many rightwingers who want to license us, but that's not the same thing.


March 23, 2009 6:39 PM  
Blogger Bret said...

Hey Skipper,

Your criteria seems like the basis of the nanny state to me. Especially since virtually every occupation requires "some body of expertise" and might possibly cause "significant personal injury or financial loss". The only possible exception I can think of is journalism :-). I mean, even hamburger flipping requires some skill and if a novice burger flipper flipped a broiling hot one onto your head, that would hurt! We better license 'em!

In "Anarchy, State, and Utopia", Nozick describes the Libertarian approach to restricting activities. It basically boils down to restricting those activities that might cause death, injury, financial loss, or even reasonable fear in parties who are not directly involved in the activity.

As an example, Nozick would have no problem with me contracting someone who doesn't know how to fly to try to fly me somewhere, since if I'm stupid enough to want to do that, so be it. However, he would say that society should still (obviously) prohibit that activity since the plane used by us is likely to crash and kill innocent bystanders. Even if it didn't actually crash, if such activity was allowed, people would be in constant fear of planes falling from the sky and killing them and that would also be unacceptable.

On the other hand, if I want some quack to prescribe medicine or perform surgery on me, then I should be free to engage the quack to perform the service. Indeed, I should be the sole judge of who is qualified or not to perform services for me as long as no one else is going to be directly injured as a result of it.

This Libertarian approach maximizes freedom and responsibility. Nanny Staters will obviously disagree with that approach.

March 24, 2009 8:06 AM  
Blogger Hey Skipper said...


Well, yes I suppose one can torture words to include just about anything. However, there has to be some way to distinguish between, say, a doctor and a beautician.

I think you missed my key word above though: licenses are a proxy that, to the degree they are meaningful, provide information. So, the problem that a meaningful license solves is demonstrating the possession of skills/knowledge/expertise to the counterparty. Just like a high school diploma or college degree does.

So, absent the third party risk, I would have absolutely no problem with you contracting with someone who doesn't know how to fly to take you someplace. However, provided there are those out there who care, there should be some means for them to distinguish those who possess the requisite skills etc from those who don't.

Look at it from another point of view -- the Fixed Base Operator at your local airport. Does the presence of a valid licensing scheme affect his ability to rent an airplane? How about me as the renter, does the presence of a valid Avionics & Powerplant licensing scheme for mechanics affect my desire to rent said aircraft? Since I may well never even see said mechanic, how else should I obtain the information to assess his skills?

I don't see anything nanny state about this.

Regarding more localized risk, I to a fair extent agree with you. However, I think the market can figure that one out. There already exists licensing for doctors. Allow anyone who wants to practice medicine.

Then the market can sort out how much people prefer the licensed doctors to the unlicensed.

Presuming the license is meaningful, I'll bet an overwhelming predilection for the former.

March 25, 2009 1:42 PM  
Blogger Bret said...

"...licenses are a proxy that, to the degree they are meaningful, provide information..."

The problem I have is with government licenses and government restriction of licensing organizations (except where there's significant risk to 3rd parties as I mentioned in my previous comment). I have no problem with the AMA licensing doctors. I DO have a problem with the AMA having a government enforced monopoly on licensing doctors. I don't have a problem with beauticians being licensed. I just don't like that the state is involved. (I prefer they be called accreditations instead of licenses).

Having the state do it makes it a nanny state subject to the usual graft, corruption, and extortion that you don't seem to like either. It should be left in private hands.

March 25, 2009 3:59 PM  

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