Filed under: Capitalism, Domestic Policy, Economy, Education, Freedom, Law, Regulation | Tags: Eliminating Competition, Licensing Boards, Setting Standards
Many professions have banded together to establish boards for professional licensing. Boards that are composed of people who practice the profession are the norm. Nobody else really knows the details of the profession, what education or training is needed, what is ethical and what is not. In many cases the boards are required by statute to be staffed by a majority of active market participants. So it is easy to slip over into making the requirements more stringent, or to eliminate competition.
In 2006, the North Carolina State Board of Dental Examiners banned salons, spas and other businesses from offering teeth-whitening services — essentially eliminating the competition. The FTC sued, arguing that the move constituted unfair competition in violation of the 1914 Federal Trade Commission Act. In Ninth Carolina State Board of Dental Examiners v. Federal Trade Commission, the Supreme Court affirmed the FTC’s position that state licensing boards controlled by “active market participants” are exempt from antitrust lawsuits only if they are also supervised by the state government.
It’s all very complicated, but it means that professional boards won’t be able to get away with trying to prevent competition.
Here in Washington State, the professional decorators have been trying to get the people of Washington to make it illegal for anyone to be compensated for decorating a home unless they belong to the professional organizations of decorators, and meet the standards required. Hasn’t worked. Most people seem to think that if a friend wants to give you advice on what color to paint your kitchen and help you with the tile, they shouldn’t require a special license.
Probably more people are familiar with cosmetologists and hair- braiders. The cosmetology boards require lengthy education in permanents, hair cutting, styling, dyeing (some of that stuff is dangerous) have wanted to require those who are engaging in hair-braiding to get a cosmetology license, since it’s also involved with hair. Hair-braiding is a distinct art, and quite beautiful, but does not involve the skills of a cosmetologist, and the schooling and licensing is expensive. I have seen braided hair that is so elaborate and lovely that I want to stop the woman and ask if she would mind if I stare a bit, but I’ve never had the nerve.
The ruling would seem to be a very good thing, requiring mostly some common sense. When practitioners just want to exclude competition, they are out of line.
This self-regulation has led to self-dealing: Cosmetologists, for example, are required on average to have 10 times as many days of training as emergency medical technicians. In Alabama, the unlicensed practice of interior design was a criminal offense until 2007. As the dentist case illustrates, even the boards of licensed “learned professions”—dentists, physicians and lawyers—create arbitrary restrictions.
But as with all thing legal and illegal, more lawsuits are possible. In general, the Supreme Court is opposed to cartel activity, and this seems like a good step forward.
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