Treasury Admits Regulation Hurts Business

For years adherents to the Austrian school of economics have been making the case that regulation bars access to economic opportunity, making it harder for the average producer to access and process from the boons of capitalist interactions.

Now validation of that principle is coming from an unlikely place: the federal government.

A report recently released by the Office of Economic Policy in the Department of Treasury in conjunction with the Department of Labor details how a rise in licensing requirements necessary for many professionals to legally practice business are often not reflective of marketable and necessary skills within a given profession and add to the cost of business:

“The evidence in this report suggests that licensing restricts mobility across States, increases the cost of goods and services to consumers, and reduces access to jobs in licensed occupations. The employment barriers created by licensing may raise wages for those who are successful in gaining entry to a licensed occupation, but they also raise prices for consumers and limit opportunity for other workers in terms of both wages and employment. By one estimate, licensing restrictions cost millions of jobs nationwide and raise consumer expenses by over one hundred billion dollars.”

Amongst those hardest hit: immigrants, those with criminal convictions and military spouses who must reapply for a license every time they move.

Though the report also states there are benefits to licensing, such as creating an increased professionalism amongst tradesmen, there is another obvious market mechanism that has the same results: discretion.

Anyone who patronizes a business and finds the workmanship shoddy and underwhelming will not return. When enough of a consensus in a community is reached, that business fails, allowing more meritorious practices to rise up. Discretion is the natural weedkiller of the capitalist wilds.

Also of note is the discrepancy in licensing requirements between older, more traditional occupations and those that have risen from recent innovation.

Almost ninety percent of health care practitioners- who coincidentally are part of the largest sector of the U.S. economy- are most heavily licensed, contributing to the cost and inanities of an already over-regulated, inefficient field.

Meanwhile, the licensing for computer and mechanical professionals is negligible. Most economists believe that the increased in automated production will lead to a significant shift in the work force, dramatically increasing the need for computer technicians and maintenance experts. So, any increase in licensure requirements could dramatically impact future prosperity. And, with the slowest recovery in American history still an exigent political issue, this is something to watch out for in future.

The rise of bureaucrats and the extra-constitutional abilities they have through regulation make it a heady seduction. Indeed, the passage of Net Neutrality already threatens the future of Internet freedom, particularly for small businesses whose customer base is expanded through online sales and marketing.

This is a rare moment of honesty for the federal government, perhaps speaking to the fact that the effects are so overwhelmingly negative they cannot be equivocated away. But, will the temptations of power prove a powerful enough piece of witchcraft to cause would-be regulators to overlook this? History suggests so, but, as the 2016 election cycle moves forward, this should become an integral talking point for conservatives.