George Washington vs. the Licensing Cartels
(posted by kevin_carson)
The economic effects of licensing and certification regimes have been the subject of a couple of recent posts by Angelica, and of extensive discussion in the comments: “Call Me Street Food Libertarian“ and “The Rats of El Toro.”
One frequent effect of licensing regimes is that they stand in the way of transforming one’s skill into a source of income, and raise the cost of doing so. The result is that they raise the overhead cost of daily living by several orders of magnitude for the average person, so that (as Paul Goodman put it) decent poverty becomes impossible. The minumum amount of labor required for comfortable subsistence is inflated unnecessarily–and guess who collects the difference? You guessed it: the controllers of the various licensing cartels, the owners of “intellectual property,” and the wage employers who profit from the artificial restriction of self-employment alternatives.
For example:
“Washington had no schooling until he was 11, no classroom confinement, no blackboards,” notes John Taylor Gatto in the first chapter of “The Underground History of American Education.”….
He immediately took up geometry, trigonometry and surveying. Before he turned 18, Washington had been hired as the official surveyor for Culpepper County.
“For the next three years, Washington earned the equivalent of about $100,000 a year in today’s purchasing power,” Mr. Gatto, the former New York state Teacher of the Year, reports.
How much government-run schooling would a youth of today be told he needs before he could contemplate making $100,000 a year as a surveyor — a job which has not changed except to get substantially easier, what with hand-held computers, GPS scanners and laser range-finders? Sixteen years, at least — 18, more likely.
George Washington attended school for two years.
–Vin Suprynowicz
Another example, mentioned by Ivan Illich in Tools for Conviviality, is self-built housing. As late as the 1940s, some one-third of housing in Massachusetts was still self-built. In the sixty years since, we’ve seen quantum increases in the user-friendliness of modular housing technology, and alternative techniques like earthships, cob houses, papercrete, and the like. The population surely has more average years of schooling (albeit probably a lower literacy rate) than the people who constructed their own homes sixty years ago. And yet the legal barriers to self-built housing are far greater now than then. The main function of the building codes is not to enforce objective safety requirements, but to define “safety” in such a way that the standard can only be met by licensed contractors. The main practical effect is to add another contributing factor to the inflation of housing costs. The average worker who might have owned his house free and clear in less than ten years, back in the 1940s (and therefore have been not utterly at his boss’s mercy for keeping a roof over his head), will be mortgaged for most of his life today. Housing costs, which were maybe 20% of the average monthly budget back then, are pushing half these days.
The Democratic Freedom Caucus (a vaguely Georgist-tinged libertarian group within the Democratic Party) includes in its platform one promising suggestion that might serve as a consensus position for scaling back licensing regimes: “license fees should be no higher than administrative costs, and there should be no arbitrary quotas on the number of licenses issued.” In other words, eliminate the power of licensing bodies to restrict the number of practitioners based on some estimate of what the market will bear, or to enable the monopoly profits of current license holders by inflating the costs of market entry.
To take just one small example of the effect of such a reform, imagine what it would do to the taxicab “medallion” system that exists in so many large American cities, with a license to operate a cab costing into the hundreds of thousands of dollars. The effect of the medallion system is to criminalize the countless operators of gypsy cab services. For the unemployed person or unskilled laborer, driving carless retirees around on their errands for an hourly fee seems like an ideal way to transform one’s labor directly into a source of income without doing obesiance to the functionaries of some corporate Human Resources department.
The primary purpose of the medallion system is not to ensure safety. That could be accomplished just as easily by mandating an annual vehicle safety inspection and a criminal background check (probably all the licensed taxi firms do anyway, and with questionable results based on my casual observation of both vehicles and drivers). And it would probably cost closer to fifty bucks than three hundred thousand. No, the primary purpose of the medallion system is to allow the owners of licenses to screw both the consumer and the driver.
March 12th, 2008 at 3:53 pm
I’m all for getting rid of licenses. The only thing I wonder is that, as long as roads are public (a bad idea, according to DiLorenzo they were just fine private in the past) isn’t there a tragedy of commons so that increasing the number of cabbies increases congestion? I’ve suggested “urban apartheid” elsewhere as a way to get free-loading suburbanites to carry their share, perhaps there should be something similar for road-users.
March 12th, 2008 at 4:19 pm
Charles Johnson (aka The Rad Geek) also did an excellent article on this subject over on fee.org.
Without all these government-made barriers more poor people would be able to work themselves out of it, it would be easier to be self-employed and there would be more competition in the market.
Heck, in my city the local government almost drove the local gyro stand out of business. The reason? Another restaurant filed a complaint that the stand didn’t provide a bathroom to it’s customers. WTF!?
March 12th, 2008 at 8:46 pm
Kevin Carson, are you seriously claiming you would be willing to purchase floral arrangements from unlicensed florists?
March 12th, 2008 at 9:54 pm
Do you really think licensing issues are the chief barrier to people building their own houses nowdays? I doubt most people even know how to build a structurally-sound doghouse on their own. I certainly don’t.
I think the code should definitely be reasonable and not full of arbitrary restrictions, but if you are building a house, especially to sell, yeah, I do think you should have a license and the house you build should stand up to certain standards. After all, a house is a long-term purchase. By the time problems manifest themselves, the builder could have high-tailed it far away, leaving the buyer with no recourse. There is a reasonable need to guarantee that the building is sound before it is sold.
As for taxi medallions, obviously they are a form of tax. I would argue an efficient form. Perhaps that’s another post for another time.
March 12th, 2008 at 11:43 pm
I’ve actually recently looked into the possibility of living in a house made from shipping containers.
Shipping containers are dirt cheap, because of the manufactured goods trade imbalance between North America and China. Here in British Columbia, we send mostly coal, sulfer, wood pulp, etc east. They send manufactured widgets. That requires containers that can stand up to Pacific storms, and be stacked 12 high. So we know they’re structurally tough, and there are plenty of projects in which they’ve been turned into artist’s studios, temporary worker housing, and so on.
Average housing costs in my hometown of Langley, B.C. are now more than $200,000 for a condo, (which are rare, as it’s still mostly suburban sprawl) about $350,000 for a townhouse or rowhouse, and more than $500,000 for a single family home. The lowest priced detached house listed in Langley is about $330,000.
Most of that cost is land, a lot in Langley City costs about $250,000.
Keep in mind that any home I live in will require several thousand to tens of thousands of dollars in renos because my significant other is in a wheelchair. So unless we can find one of the half a dozen homes available that’s already modified, it’s obviously in my best interests to have my home purpose-built. I want something that I can move into in the next year or two, and be carried out of in a box half a century or more from now.
The upshot is, according to what’s available on the web, the cost of basic, bare bones shipping container housing is about 40 per cent lower than building a stick-built house. If I could carve up and then weld back together four 8 by 40 containers, I’d have about 1200 square feet on one level. That’s a good sized starter home. Or, it’s possible to stack container housing (of course) and create inexpensive condos. Either way, I can have extra-wide doors and proper bathroom and kitchen fixtures installed before the house is even shipped here. Super-cheap modular housing. And there are local firms that build worker’s housing in containers.
So, can I build my house here? I asked an acquaintance who happens to be a municipal councillor. He said yes, in theory. But I’ll have to jump through a bunch of hoops first. The provincial building code will force me to have anything I build vetted by a professional engineer, because it isn’t traditional. There are other problems as well, some of which may or may not be solveable. They add up to more time and, of course, more money. So my super cheap way of getting my own house isn’t so cheap anymore.
Forget building your own house; just having one built for you will cost you if you try to save a buck.
March 13th, 2008 at 1:37 am
TGGP,
Good question. I’m guessing the level of congestion would affect calculations of profitability for the marginal entrant, but it’s just off the top of my head.
Rorschach,
That was an excellent article by Johnson. He also made some good points about the role of government in evicting squatters from abandoned apartments.
Mona,
Unlicensed florists– But WHAT ABOUT THE CHILDREN?!!
Angelica,
I don’t know if I’d say it was the *chief* obstacle. No doubt cultural changes have a lot to do with it.
I strongly suspect the educational system has a lot to do with it. In part, this would mean stigmatizing the DIY ethos and inculating respect for the cult of professionalism (cf. concerted efforts by the public school home ec programs back in the ’20s and ’30s, in league with the USDA, to stigmatize home canning and baking as “old fashioned” and atavistic, and promote the “up to date” value of buying foamy, pre-sliced white bread and warming up stuff out of cans. In part, it might also mean career tracking and encouragement of narrow specialization and the encouragement of practical incompetence in other areas.
Some of it might be the broadr cultural effects, since the 1940s, of demographic mobility, the erosion of the family as a unit for transmitting knowlege, and in general the atomizing effects of capitalism.
Probably all these other things, and the effects of housing codes and licensing of building trades, have been mutually reinforcing.
But I believe the state has been at the heart of the process, by promoting the dominance of large organizations and the professionalization of all aspects of life.
Matthew,
Shipping containers are the basic housing unit in some Third World slums, and there’s a giant black market shopping mall in Russia made from hundreds of shipping containers.
March 13th, 2008 at 9:41 am
First, to Kevin: There’s much to criticize about our education system (and I say that as somebody who makes his living in it) but holding up the very brightest of the past, especially the very brightest from elite backgrounds, and saying “Look, they made it, anybody can!” seems like a bad way to analyze things. There are many who do make it without the “benefits” of the system, and we should look at the lessons to learn from them, but I’d rather consider more representative cases.
What’s occupying my attention right now is that even within the system there are some students who do really well in parts of it but miserably in others. I have a guy in my lab class who does poorly on tests of material from lecture, but in his lab reports he always comes up with an extra analysis step to try and compare. I tried to recruit him to my research group despite his low grades on tests (unfortunately, he had conflicting obligations). I have a senior project students with a lot of bad grades who does really well when coming up with his own project and working on it on his own time. I wrote him a kickass recommendation.
Angelica-
Yes, I’d agree that amateurs with no experience or useful knowledge shouldn’t be putting up homes. However, that doesn’t mean the state should set the rules. The state could just stipulate that every home must be inspected by an insurance company and insured against harm to occupants from defective construction. That would accomplish the goal without heavy state involvement.
March 14th, 2008 at 8:07 am
Thoreau,
I’m not sure the solution is to trust in the insurance companies. They are certainly more conservative than state regulators. And they would be unlikely to care if the structure had adequate septic systems etc, as long as it wasn’t an immediate threat to the occupants.
Our trades are trapped in a legacy which stems from their guild-like past. That, plus restrictive zoning law has distorted both the building codes and the regulating environment. But that’s no reason not to have clear building requirements that can be inspected by a well trained inspector.