Red Dirt Liberty Report: Professional Licensing


Having been involved in classes for testing to obtain some professional licenses myself this past week, it’s a subject on my mind. Therefore, it has found its way into my column.

The world is full of professions for which the government finds need to license for a fee. Typically, these licenses must also be renewed for other fees, and many have different jurisdictions where still more licenses must be obtained with more fees. A prominent question becomes, are all these professional licenses really necessary?

First, let’s examine the normally-stated reasons given for the necessity of these licenses:

  1. It provides for a mechanism to demonstrate a level of competency within the profession in order to protect the public from negligence and poor practices.
  2. The fees are used to fund a protective entity that can both act as watchdog to the profession and police it to ensure the public is protected, not only for potential incompetency, but also criminal practices.

When it comes to understanding what a person needs to know and understand, as well as be able to perform required tasks, no one understands better than those who actually participate in said profession. For nearly every profession that requires a license, there is also a professional organization that represents the profession and is made up of people who practice in it. For example, there are plumber and electrician unions, there are associations for insurance producers, for acupuncturists, and even for hair dressers. Many of them even provide training and education, as well as continuing education. Wouldn’t it make sense to allow these organizations to both train for and test for competency?

While government agencies that oversee various professions are usually made up at least partly of people within those professions, people who are nearly exclusively in the profession are much better at training and gauging competency. They are outstanding sources for implementing guidelines of best practices and prevention of failures. Such organizations could even be able to have the power to take actions to ensure such best practices are used – such as censure, civil fines, or even being ousted from the organization.

If professional organizations were in charge of providing some sort of certification in place of professional licensing, it would work something like this:

The professional voluntarily joins the organization to begin education and testing to obtain certification to prove his competency to potential clientele. People would know not to use professionals without the certification, because they’d likely being dealing with a bad actor. The membership has various required fees that are used to fund the organization, and the member agrees by joining to adhere to various codes and rules, each with potential remedies, such as fines, censure, suspensions, etc.

Furthermore, people within the profession are far more adept at spotting potential criminal behavior amongst their fellow practitioners than are government agents. Typically, public agencies in charge of oversight rely on people within the professions to report suspicious behavior. Even agents trained in how to spot such evidence are not nearly as adept at spotting the signs as someone who practices in the profession. It would be simple for professional organizations to be involved with audits of members and oversight of their operations. Members would have agreed to it in order to maintain their memberships. Anyone breaking criminal laws could be referred to a criminal agency for review, along with all evidence.

I know some would argue that placing professionals in charge of the very profession in which they practice is a conflict of interest that represents enormous potential for corruption. However, those who are in the active practice of the profession have more at stake than a government agency. The less people trust their profession, the more the profession will be adversely affected. It hurts them right in their wallets when potential clientele have lost faith.

The real key to it is that the organization needs to be both voluntary and private. The voluntary nature instills confidence to potential clientele that the organization is selective and the people joining it are selective, thereby providing economic scarcity and increasing the value of the certification. The organization must be private in order to protect it from the kind of corruption that comes from a lack of involvement in the profession. Those who oversee the profession should have much at stake in its oversight. A public official in charge of an oversight agency has relatively little at stake in the profession when he gets hurt neither in reputation nor financially when those he oversees act poorly.

Wherever private institutions can replace public ones, the public is nearly always better served. People place much more faith in certifications than they do in licenses. Ask anyone who they’d prefer to use – a person licensed to do something or a person verified to do it by a professional organization. The stated purposes of professional licensing may be to protect the interests of the public, but in practice, it often serves only to protect the interests of government. It gives them both power over segments of the economy and an additional revenue stream that they don’t have to term as a tax. The public interests are best served by a private organization with skin in the game.

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Danny Chabino

Danny Chabino has a background in operating small businesses. He has been involved in managing and/or owning the operations of multiple retail establishments, a sub-prime lending company, a small insurance company, a small telemarketing venture, and insurance consulting. In addition to these activities, he also has spent many years managing investments in stocks and stock options as a successful trader. He is the married parent of two adult children, living as a proud lifelong Oklahoman and a part-time redneck. Danny writes for the enjoyment and pleasure of sharing ideas and for the love of writing itself. His opinions skew libertarian, but he enjoys hearing open debate and listening to or reading of opposing ideas. As an odd confession, he personally detests politics, but enjoys writing about political ideals and philosophies.

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