US Debate About De-Regulation Just Got More Nuanced

There has been a noticeable push in the US to de-regulate professions on the basis that regulation restricts access to workers, drives up prices, and is largely unnecessary. In a thoughtful paper, the oversimplification of these arguments is effectively dismantled. The authors acknowledge that some regulatory models may be overly restrictive yet warns against full repeal of many smaller professions where the risk they pose warrants oversight. Further, the authors argue that more effective and directed regulation is required of the professions where the risk of harm to the public is highest. See: Scheffler, Gabriel and Nunn, Ryan, “Occupational Licensing and the Limits of Public Choice Theory”(2019) Faculty Scholarship at Penn Law 2072: https://scholarship.law.upenn.edu/faculty_scholarship/2072.

The conclusion to the paper sums up the arguments nicely:

In sum, the standard public choice narrative about occupational licensing is simultaneously overinclusive and underinclusive. On one hand, it is overinclusive as it suggests that licensing laws are rarely justified, even in the face of plausible alternative explanatory accounts. If policymakers and judges were to take this narrative at face value, they might strike down many licensing laws that benefit the public. Of course, there is a strong case for subjecting licensing laws to greater scrutiny, and there are professions for which the costs of licensure clearly outweigh the benefits. Yet in other cases—perhaps in many cases—the cost-benefit calculus will be less clear.

At the same time, however, the standard public choice narrative is underinclusive as it tends to focus less on dominant professional organizations, such as physicians and lawyers, and more on smaller, lower-wage professions. This is unfortunate, since the former licensing regimes have particularly detrimental consequences for workers and consumers. In addition, the public choice narrative is underinclusive because it has little to say about professions for which there are credible public safety risks of unregulated activity. We argue that there is a strong basis for licensure reform in these professions that, while less radical than complete deregulation, would nonetheless enhance labor market access and benefit consumers.

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