There is not a lot of rhyme or reason about why we license certain businesses or professions and not others. Nor are we entirely coherent in how employers must or must not accommodate religious views that affect how people do certain jobs. This may not change, but we should recognize the inconsistencies of accepted practice.
We face several such issues right now. Supermarkets want to sell wine but need state permission. Liquor stores must have special licenses and pay special taxes that other businesses do not. They argue that allowing grocers to sell wine would rob them of a valuable franchise that government granted them in the past. Moreover, they say, it would harm public safety.
Some Muslim taxi drivers don’t want to carry fares with dogs or visible alcoholic beverages. Taxi drivers and companies must have special licenses or permits that other businesses don’t. Should this entail special requirements to serve all?
If we don’t let taxi drivers refuse fares for religious reasons, why should we indulge pharmacists who don’t want to handle certain contraceptives or drugs that induce abortions? Pharmacists, like taxi drivers, must be licensed. But they also have societal status as “professionals.” Should that entitle them to refuse to sell a legal product? If they may not refuse to sell RU-486, may they decline to sell soft-porn magazines?
What about pharmacy owners who want to sell RU-486? Should we ban their firing of licensed pharmacists who won’t dispense the product? If we give pharmacists such “freedom of conscience” job protection, must we extend the same to Muslim cashiers who won’t scan pork or beer?
Economic libertarians who follow Nobel laureates Milton Friedman and Friedrich von Hayek have a simple, coherent stand. For them, all these issues are matters of private contracts between consenting adults. Government should not interfere, period. If someone feels cheated, inconvenienced or offended by the outcome, that is too bad.
Most people are not willing to go that far. But many find it difficult to establish an alternative set of coherent criteria for exactly when or what government should regulate.
Some of the people who are most vociferous in asserting that pharmacists be free to refuse to dispense “morning after” pills, even if their employer wants to sell the product, are equally vociferous that retailers should be free to fire anyone who refuses to handle pork or liquor.
Most economists argue that government should intervene when there are external costs to some activity or when imperfect information would lead to bad outcomes in an unregulated market.
Drinking alcohol, for example, causes large external costs since it can lead to traffic crashes and harmful behavior. Licenses to serve or sell alcohol can be a tool in ensuring that it is not sold to juveniles or served to those already inebriated.
We have to recognize, however, that requiring licenses to produce or sell liquor has its roots in medieval taxation of liquor. Permits were instituted to protect a government revenue source, not to correct external costs.
Moreover, liquor licenses also protect monopoly power that makes Minnesotans pay 8 percent more for wine than in states where it can be sold by supermarkets. The liquor dealers’ representative boldly asserts that once the state has extended some degree of monopoly power, it is wrong to take it away.
Educational or competency standards for medical practitioners exemplify the “information problem” argument for licensing. In an unregulated market, consumers really don’t know enough about doctors’ qualifications to make informed choices. State licensing corrects for the fact that information on doctors is scarce and costly to individual households.
However, is there a similar dangerous lack of information about barbers? Will scalp diseases or traumatic amputations of ears run rampant if we let anyone cut hair? Or are barber’s licenses an outdated vestige of the medieval guild system established to restrict competition? If barbers must be licensed for health reasons, what about people who do nails or braid hair?
Logical consistency probably is not a high priority for most voters. There is nothing wrong with legislators reflecting their constituents’ desires even if those desires are not neatly structured. It is good, however, for us to stand back and think through what we do and don’t regulate.
© 2007 Edward Lotterman
Chanarambie Consulting, Inc.