Regulation of business: Another scam on the American people.

One of the most widely accepted myths in America is that business regulation is necessary to protect the consumer. When asked the question, what is the purpose of business regulations, Robin Keenen an LPN in Dr. Russell Perry’s office answered after long deliberation that she guessed it was to protect the consumer. This is the answer you would get from most people.

The sad truth of the situation is much different. The real function of business regulation is to perpetuate a monopoly position for those writing the regulations.

This is of course very counter to what we have been taught all of our lives.

A review of the histories of the various bodies of business regulations reveals the following pattern:

First, the impetus for any set of regulations for a particular area of business almost always originates with the people in the business. There is rarely any grass roots push from the customers for business regulations.

Second, the regulations are invariably written by the leaders in the business being regulated. After all they are the only ones who know what the regulations should be.

Third, the regulations are usually written so that those main players already in the business have very little work to do to comply with the regulations.

Fourth, the regulations are usually such that newcomers to the field must exert a lot of time and effort to meet the regulations.

Another insight is gained by noting that licensing is often required when issues of public safety are non existent or very remote. At one time interior decorators were required to have licenses.

Maybe the public was being protected from the trauma of “bad taste decorating.”

Looking at all of the trades that are subject to restrictive licensing one quickly sees that public safety is quite often irrelevant.

Economist Milton Friedman pointed out that even if a body of regulation were to start out from a ”grass roots” origin the incentive and financial power is with the profession or industry being regulated.

Therefore, in the long run the leadership of the affected industry or profession would take control of the regulation one way or another.

Sometimes protection is afforded by regulation but it mostly comes as an accidental afterthought.

In particular, the reader should be aware that the history of the licensing of physicians follows the pattern outlined above. There was no demand from the public for strict guidelines on who could or couldn’t be a physician.

The classically trained doctors decided they didn’t want to have to compete with everyone and got together and hatched the plot that resulted in the present rigid set of standards and licensing requirements for becoming a doctor.

There is no doubt that today’s procedure for becoming a physician produces excellent physician training, but it virtually closes any other path to becoming a physician. For example, it is extremely hard for a nurse to transition to becoming a doctor. Yet what better training ground is there to becoming a doctor than being a nurse.

What is so bad about licensing and regulation of business and professions?

The quick answer is that it raises the cost to the consumer substantially and keeps people from earning a living. It does this all without doing much good for the public.

It is ironic that in New Smyrna one of the worst plumbers in town made it his personal business to see that no unlicensed plumbers were at work.

The next time you are flying at over 30,000 feet in the air, reflect on the fact that virtually none of the people involved in the design of that airplane or its’ electronics had a license to do so; if they did the license was irrelevant to their job.

I personally worked in electrical engineering for 35 years doing some pretty sophisticated work and have never had a license.

I observed that most of the people who did have professional engineering licenses were often not very good at what they did. On the basis of this I would say that licensing is totally irrelevant to the actual practice of engineering.

If licensing is irrelevant to engineering it is extremely tempting to say that it is irrelevant to virtually all professions and industries in real terms.

What this means is that if you have a difficult job to be done you still have to find out on your own who is the best person for the job.

The licenses and diplomas on the wall are no guarantee of quality.