The Democratic Policy Which Keeps Poor People Poor – Walter E. Williams

To criticize occupational licensing laws is not to argue that information about the quality of a licensee’s services is not important to consumers. However, it is by no means clear that licensing is the most effective way to provide that information. Indeed, licensing may lower the “received” quality of the service in question. By making entry costs higher, there are fewer practitioners, which, as noted above, increases the cost of the service rendered and leads some consumers to resort to do-it-yourself methods that generally results in a lower-quality end product. For example, even the electrician who failed a licensing examination, scoring 65 when a score of 70 was necessary to pass, is likely to know more about electrical work and safety measures than the average consumer who undertakes a do-it-yourself project because he cannot afford to hire a licensed practitioner.

 

In addition, higher standards imposed by licensing requirements make consumers as a whole worse off. A spectrum of quality, from high to low, is consistent with the optimal stock of goods and services. Being forced to purchase a higher-quality good or service, when a lower-quality would suffice or is what the customer wants, hurts consumers economically. For example, in the name of safety, a law could be enacted requiring that the only cars that can be sold are those whose occupants would emerge uninjured after a fifty-mile per hour collision. However, such cars would cost so much that most people could not afford to buy them. The existence of less crashworthy cars is clearly part of the optimal stock. People are always better off if they have knowledge about quality and the right to choose quality levels.

 

There are methods to produce information about quality without having the restrictions imposed by occupational licensing. Certification is one method. A practitioner can take a test and, if he scores in the 90s, have the right to declare himself a Class A practitioner; an 80, a class B practitioner; and so on. Such a method would give consumers information about quality while leaving them free to choose.

– Walter E. Williams, Ph.D., Race and Economics