License? We Don't Need No Stinking License!

Kevin Lacy, a stupid bureaucrat who is the chief traffic engineer for the state of North Carolina, lodged a complaint with the N.C. Board of Examiners for Engineers and Surveyors because a computer scientist sent him a justification for installing traffic lights in his neighborhood.

Lacy claims the presentation was so well put together it rises to the level of engineering and it was done without a license. Keep in mind here that the guy who put together the report does not even claim to be an engineer. David Cox, who wrote the proposal is claiming that Lacy is just trying to stifle dissent (which seems evident).

The licensing board has promised to look in to the allegation but said that the worst likely outcome for Mr. Cox would be a letter telling him not to do it again. Practicing engineering without a license is a misdemeanor in North Carolina. Cox is not employed by anyone as an engineer and had no power to implement his plan on his own; how could he possibly be guilty of anything?

This brings up the larger question of why the state should require professional licenses. Is it necessary? Switching to California, there are 44 different categories of licensing with different types of licenses in some of those categories just by the Department of Consumer Affairs. Other agencies handle other types of licenses ranging from real estate to to legal stuff. Potentially there are several hundred professions that require licensing (including their specialties) in California.

Why, for example are hair dressers required to have a license by the state? The answer is simple. It limits competition. There can be no other reason for it. Anyone can cut hair. I've even cut my own hair. Sure, it takes some training, practice and skill but so does any profession. Simply put, because only licensed cosmetologists can cut hair, it drives up the price by limiting competition because not everyone who can cut hair has the resources or desire to spend 1600 hours (200 days of 8 hours each) in the classroom just so they can cut hair for a living (or a hobby). Let's say you really like the idea of cutting hair part time to supplement your income. Are you going to spend about a year of your life in class to do it? Probably not.

So let's say we can agree that hair dressers don't really need licenses. What about doctors? I don't think they need a state license either. WHAT?! If doctors don't have licenses, we're going to have a bunch of quacks out there practicing medicine and people will DIE! I can hear the arguments already. Personally, I would not go see a doctor who did not have medical training. But I would much rather rely on a private certification agency to determine that my doctor is well trained and does not have too many complaints against him. There could even be several competing private certification boards. These boards could publish their qualification criteria as well as complaints lodged against their members. The public, via the web, could also have a place to complain about doctors that was independent of those agencies.

I see no advantage the state could possibly have over one or more private certification boards. Hospitals could (and would) refuse to hire people who were not certified by one of the boards. In fact, they might be inclined to only hire doctors certified by one board over the other because they might have different standards in different areas. Specialists could have their own boards as well if they liked.

So what happens if someone wants to practice medicine without belonging to one of these boards? I've probably violated rules against practicing medicine. I've taken out stitches, I've pulled out slivers, I've treated colds, flu, etc. I've even performed what could be termed minor surgeries. And if I messed up? Well, I suppose there is always the risk of infections or other complications. But I wasn't taking out a spleen or anything like that. But so what if I did? If someone trusted me enough to take out a spleen and I represented that I could perform that action then it's just like any other economic transaction between two parties. If I lie about being certified or it turns out I misrepresented my qualifications there are already legal remedies for that. No state licensing board is necessary.

Anyway, it's not as if state licensing has even come close to eliminating misconduct, malpractice, fraud, stupidity or even simple mistakes from the medical or other professions.

The only reason for government based licenses is that governments like to have control and other people in various professions want to artificially limit competition.

Who Still Things We Have A Free Market?

The SEC permanently banned naked short sales and is considering other moves to stop free falls in stocks.

No kids, we don't have a free market and we haven't for a long time. The SEC is evidence of that.

Static Thinking About The Market

I've heard from several people who are arguing that the government must do SOMETHING to help us out of this "crisis" we're in with the credit markets, toxic assets, etc. If the people telling me this were normally of a socialist bent I could understand and I'd let it pass without comment but they're generally very conservative leaning Republican types.

Their thinking goes like this: We need some sort of government intervention in this market because it's so broken that the market can't fix itself. This is what we pay our taxes for. I don't like the bailout but its better than ending up in a depression. They don't care that there's no Constitutional authority for it, the market is too corrupt to be left on its own.

Is the market corrupt? Sure, sometimes. But ask yourself, what's more corrupt, the market or the government? Here's what people don't seem to get; if the government wasn't involved, the market would have a different nature than it does now. If we have a market that the government can so easily usurp, then we don't have a free market to begin with.

The government needs to step away and let it reform itself with a lighter regulatory framework. Risk will be priced in to the investments. If there is fraud, prosecute. But to break stupid regulatory rules that aren't actually fraudulent only inhibits the market and prevents true market reform from taking place.

I'm not just pointing to this crisis. Start thinking in terms of drastic change in the very nature of the market. Think of it as a swap meet for investments. Sure, some people are going to lose, but the market will take care of that by drying up funds for it. The competitors will keep an eye on each other and bark loudly when someone is out of line. The market would actually simplify and be easier for amateur investors to understand.

This is the problem when you're talking about reform of any system. We can only seem to picture tweaking how things are now. We can't imagine such serious change that the entire current model has to be thrown out. Who'd have thought 30 years ago that electronic trading would be available to people sitting at home in their underwear? Who'd have imagined that the transaction cost of a trade would be so low? Despite the heavy regulations, the market found a way.

Change your mode of thinking. Things can change. Government does not have to be involved to fix problems (even this big). We just have to stop accepting the lies and the vomitus spewing that comes from the media and the politicians. They don't know how to control a market, they only know how to destroy one.