621. Is Professional Licensing a Racket?
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What is the relationship between licensing and professional fields?
What does a hairdresser have in common with a lawyer? How about an interior designer and a doctor, an auctioneer and a funeral director? These are not jokes. I'm sorry. I wish they were. What these jobs all have in common is that they require a professional license, which is administered by a licensing board that is often made up of other doctors and funeral directors and hairdressers. This may not be something you've ever thought about, and I wouldn't blame you. It's one of those things a friend of mine calls a MIGO topic. MIGO standing for my eyes glaze over. But when you think about how our economy works, these labor licensing rules are pretty important.
It is the most important regulatory institution we have in labor.
Rebecca Allensworth is a law professor at Vanderbilt University, and she's written a book about professional licensing. We Americans like to think of our economy as open and dynamic. Allensworth shows that in many ways it's not, and that these licensing boards help too many bad actors stay in their professions and keep too many good ones out. And that's why she called her book The Licensing Racket.
Professional licensing is too onerous for certain professions. And it just makes the barriers too high. It keeps people out. And the investment in what you're getting for that regulation is not worth it. And then for the professions that are left, medicine, nursing, law, now we need something like a licensing board. Only what we have is terrible. By the way, a working title for the book was Bored to Death.
How do professional licensing boards operate?
B-O-A-R-D, presumably.
Yeah. So it had three problems. One, it was dorky wordplay. Two, there was this problem that maybe I was over claiming by talking about death in the title of a book about licensing. And then the other one, of course, being that it sounded like the book was going to be boring. But the over claiming point, you know, I do think that it's dangerous. Literally, in the sense that there's a lot of doctors and lawyers out there who are just plain dangerous. And we give them a lot of trust and a lot of power as professionals.
Around 20% of the American workforce is subject to professional licensing. The system is sanctioned by state governments across the country, and it has been expanding like crazy. Today, in an episode of the Freakonomics Radio Book Club, how much licensing is too much? And where has this system gone especially wrong?
80% have a history of major discipline, often for overprescribing, for malpractice, for sex with patients.
The racket is real. The solution? That's the hard part. But we'll get into all that starting now.
This is Freakonomics Radio, the podcast that explores the hidden side of everything with your host, Stephen Dubner.
At Vanderbilt Law School, Rebecca Allensworth teaches contracts and antitrust law. Those are pretty standard law school topics. But when she was starting out, she got obsessed with a topic that very few legal scholars, really few scholars from any discipline, have studied closely, professional licensing boards. Let's start by defining some terms.
A licensing board is a regulatory body that's ostensibly part of the state that decides who can enter a profession, what qualifications they're supposed to have, and then also whether somebody has done something that deserves a revocation of their license or a restriction on their license. It's created by a state statute. But these boards are mostly made up of members of the profession.
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Chapters
6 chapters
1
What is the relationship between licensing and professional fields?
0:54–2:39
2
How do professional licensing boards operate?
2:39–7:18
3
What are the criticisms of licensing boards?
7:18–12:52
4
How do licensing boards handle misconduct and discipline?
12:52–20:46
5
What are the challenges faced by licensing boards in legal and medical professions?
20:46–28:52
6
Can the public access disciplinary records of licensed professionals?
28:52–55:11
Speakers
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