The Rent-Seeking Is Too Damn High
fivethirtyeight.com
fivethirtyeight.com
"Defenders of occupational licensing typically argue that the rules help protect consumers and workers, and that’s undoubtedly true in some cases. I want the people filling my cavities to know what they’re doing. But it’s hard not to suspect that in many cases, these rules serve another purpose: to make it harder for new competitors to enter the marketplace."
While the article seems to criticize rent-seeking behavior only in businesses and professions that require lower levels of education, if we combine this article's statements with the often repeated claim that the US pays roughly twice as much for health care per capita as other developed countries it seems reasonable to ask: Is there a rent seeking problem in the medical and dental fields too?
OTOH, why does the article's author want to deny the poor and less well educated segment of the small business community its fair share of the economic protection which occupational licensing offers?
When I get medical bills, I have a lot of difficulty trying to figure out why the service I consumed could possibly cost as much as I am being charged. But I apparently agreed to pay whatever as a condition of obtaining the service.
You mean there are no "safety reasons" involved in cutting hair? A person with sharp implements around your head and neck poses no safety risk?
Also, even if the "safety reasons" are more compelling for dentists than for barbers, that's still not a reason to have the government doing the safety checks by means of licensing. Private organizations could do the same safety checks--plus, they would have an incentive to do only the checks that actually added value, whereas government has an incentive to impose any requirements that have enough of a political constituency, whether or not they add value.
"value" wouldn't have to mean increased safety for the consumer, though. The incentive on the part of private enterprise could just as well be to impose any requirements that increase profits, whether or not they add value.
A true absence of regulation would mean that individual people would have to make their own judgments about who was reliable, in health care and everything else. Sure, anyone could call themselves a "doctor", but that term would mean nothing by itself; it certainly wouldn't confer any special privileges on the person using it. If you wanted to know if a "doctor" was qualfied, you would look at his actual qualifications: where he got his degree, if he has one (and was it a diploma mill or a real school), where did he do his internship and residency, what sorts of cases has he worked on, what is his success rate in treating various conditions, etc. (Many people already look at these things even in our current regulatory regime, as evidenced by the number of websites whose business model is to provide such information.)
Would some people make bad decisions in such a regime? Of course. But people make bad decisions now. The question is which regime do you think produces worse decisions: a regime where everyone knows they are individually responsible for making good decisions, not just about what health care to get but about who to get it from, or the regime we have now, where people are encouraged to just accept particular credentials (M.D. degree, "board certified", on the list of preferred providers for their health insurance) as sufficient and not look any further.
Laughable. There was days without regulations, they didn't come out of nowhere cause someone was feeling bored. I don't want to go back to that time.
How do you explain the supplement industry then?
What time, exactly?
> How do you explain the supplement industry then?
They are responding to market demand. If people are willing to buy supplements without having any information about whether they are safe and effective, then someone will be willing to sell them.
My solution to this "problem" would be to remind people that they will have to bear the consequences of their decisions, and then let them decide--and bear the consequences. That means people who make bad decisions will have bad things happen to them. But at least everybody is aware that it's up to them to not be one of those people.
Your solution is to have the government do the evaluation of whether the supplement is safe and effective--or at least be willing to prosecute sellers who mislead their customers. In other words, you think the government can somehow prevent bad things from happening to people who make bad decisions--or would, if they were allowed to make their own decisions instead of having the government decide for them. But, as someone else pointed out upthread, the government doesn't actually do that--even with all this government regulation, we still have industries like the supplement industry full of hustlers trying to sell people bogus products, and they don't get stopped by regulators and they don't get prosecuted when they deliberately mislead customers. So bad things still happen to people--but now it's worse, because people think the government regulations are protecting them, so they don't think they need to take any other precautions, but the protection they think is there isn't there.
Unfortunately, no one wants to see the elephant in the room. Both types of entities will do (or at least have the risk-of doing) what is in their own best interest. But only one can have a violence-backed monopoly advantage.
It's constrained by laws, ethics, and economic forces.
It really isn't even very constrained by that. It helps if people are generally virtuous, but even an institution where the majority of the people are of good moral character, can display pathological behavior if it's poorly designed.
2. Monopoly. There is no "but they are doing it so we have to, too" race to the bottom.
For example, the only reason the FDA had the power to go against Elixir sulfanilamide was that it was mislabeled, not that it was killing people.
Government is not better, than private companies.
Reflexive secrecy is antithetical to democratic government, but that's a completely different issue.
Private organisations have an incentive to increase profit, even if it means a loss of public safety.
Accountability only provides economic leverage when legal remedies for tort and malpractice are cheap and easily available.
If they aren't, private organisations have no incentive at all to act responsibility. Often they don't.
I think hairdressing may be a special case because salons serve a local area, and it's a very social profession, so bad word of mouth can do a lot of damage.
But that's not true of most businesses. In fact of the drivers of the corporation as a business model is exactly the freedom it provides from personal and social responsibility. Instead of being personally accountable to customers, larger corporations operate at a level where local reputation is meaningless, and only governments, class actions, and the occasional PR disaster can punish bad faith operation. (Of all of those, PR disasters are often the least damaging.)
There are licensing requirements for corporations trading in specific fields and for specific products. But there's no such thing as a valuable and reassuring general certificate of corporate professionalism and responsibility - which is perhaps a strange thing considering the power and influence corporations have.
So the dentist in the license-free world have no ecnomic motivation to not just rip peoples teeth out with a pair of pliers?
People can self-regulate for risk and safety when they have complete information about the business. That would not have been available decades ago, but today we have the Internet and can easily move to interconnect everyone with common protocols to discern reviews and criticism of business to give consumers a more informed choice when choosing potentially dangerous trades, without crippling innovation and entrepreneurship within their domains.
This is often not the case, as stated above.
Which conveys misinformation as easily as accurate information -- and this is particularly the case when there is any significant interest, including economic/financial interest, motivating the misinformation.
(Also the internet is filled with 95% garbage)
1) Charge someone for dental work. 2) Injure them. 3) Profit?
We have laws against injury.
Someone didn't learn anything from the 2008 crash and the issue of private ratings agencies...
Privatize safety checks and businesses will shop around to get a certification.
Believe it or not, capitalism doesn't solve every problem.
By stamping shit debt as AAA, they were providing a wonderful level of service for their customers -- the bankers.
The whole banking and financial system at that level has its tendrils wrapped so firmly around the gov't (and vice versa) that a failure there is hardly an indictment of free market principles.
But wasn't part of the problem that there was competition among them? They were handing out favorable(fraudulent) ratings becuase they were trying to poach customers from the others?
It doesn't solve the problem of the combination of gov't corruption and private sector corruption, so private safety regulators/inspectors would never be able to keep anything safe.
Will the regulation actually be modest? A person braiding your hair (uncommon among the white middle-class American community but quite common in African-American communities) poses a trivial health risk, and there are many cases of where the relevant occupational licensing required thousands of hours of (substantially unrelated) cosmetology training:
http://ij.org/case/washington-african-hair-braiding/
http://ij.org/case/missouri-hair-braiding/
http://ij.org/case/txbraiding/
http://ij.org/case/utah-hairbraiding/
http://ij.org/case/taalib-din-abdul-uqdah-v-district-of-colu...
http://ij.org/case/cornwell-v-california-board-of-barbering-...
http://ij.org/case/armstrong-v-lunsford/
The stories are pretty much the same. "They used to require 1000+ hours of unrelated cosmetology training. Now they require posting basic sanitation standards, a written test, and a $25 fee. Thousands have entered the business." And these are just some of the cases that one nonprofit has taken and won. You can bet there's plenty more out there in many, many fields.
Of course, if we want to be fully ridiculous, note that Louisiana once required occupational licensing to arrange flowers:
http://ij.org/case/meadows-v-odom/
http://ij.org/case/chauvin-v-strain/
... or look up the cases on interior design... or the sale of headstones...
In New York, regulations have virtually eliminated common frauds. For example, funeral homes are required to place prepayments in escrow in an interest bearing account. That protects you from unscrupulous or failed funeral homes disappearing with your money.
Funeral directors are also not allowed to upsell your relatives after you have pre-planned a funeral.
It didn't occur to me that allowing people to systematically defraud the elderly and grieving folks might save me money.
It seems to me that anyone who is in favor of the regulations should at least have some kind of data to show that the above is not the case.
Economics doesn't work that way. If a company is out to maximize profit (and any company that stoops to fraud is almost certainly out to maximize profit), why would they wait until regulation to artificially raise prices? Their prices are as high as they can go already.
Harmful regulation raises prices by raising the price of inputs and raising the marginal cost of an additional product, resulting in fewer transactions being profitable and a deadweight loss to both the consumer and producer (split according to how price-sensitive the two sides are.)
"As high as they can go" in what sense? If you mean their prices before regulation were determined by supply and demand, then the market was working and there was no need for the regulation. If you mean their prices were determined by something else, what?
> Harmful regulation raises prices by raising the price of inputs
That's one way regulation can be harmful, but not the only way. Another way is for it to outlaw positive sum transactions that, in its absence, would have taken place. You're assuming without proof that the regulations in question "know" exactly which transactions are the "right" ones to outlaw. No real regulation has ever been anywhere close to that accurate.
I was thinking that this example of rent-seeking would come from non-governmental associations trying to justify their existence. If all safety checks were unnecessary, would that entity really phase them out or try to find more checks and initiatives to remain relevant?
Ah, but this isn't really for "safety reasons", it's for "legal reasons". Sweden is widely regarded as one of the (if not the) most safety concerned countries, after all we "gave"(1) the world Volvo and Autoliv (among others). Yet the idea of regulating barbershops for safety reasons is totally alien here. We tend to trust that people have a common sense. This seems not to be the case in the US. This is mostly because of the legal system, whereas in Sweden you cannot sue someone else because you lack (or pretend to lack) common sense. In fact, the idea would never even occur to most people here.
(1) No, we're not giving away Volvos, you need to buy one yourself.
> This is mostly because of the legal system [..]. [T]he idea would never even occur to most people here.
As far as I understand it, your argument was that the US regulates hairdressers because of its legal system. Germany also regulates hairdressers but doesn't have the US's legal system (in fact, it's closer to Sweden's with regard to suing over common sense). So as far as I can tell, Germany invalidates your assessment.
The stereotypical image of an all male barber shop giving men buzz cuts with a clipper is appealingly boring, but the work clusters inseparably with womens beautician type work, and that work can be crazy.
They use corrosive dyes and peroxides and bleaches that will damage your skin or destroy your eyes both as a victim or as an employee. Used correctly its safe as a surgery scalpel.
They insist on mixing technologies that are very problematic for the general untrained public to mix, like water and electricity, as either victim or employee.
There can be disease issues, not quite of the level of a biohazard lab, but you want at least some minimal standards and of course some of the chemicals used for sterilization are not necessarily safe for the general public to screw around with as either victim or employee.
This was a "local news issue" a couple years ago where the big bad state was attacking "retired beauticians cutting hair in their basement part time" but they carefully don't mention its more than cutting hair, there are open containers of high strength hydrogen peroxide in a residential house with kids in it, or the hair dryer not plugged into a GFCI outlet next to the running water sink, etc.
WRT danger and risk its about one or two steps beneath the truck driver with a CDL and hazmat cert, or the electrician who does the wiring for a public pool, or the welder at the local nuclear plant... and the hoops to jump thru are also, appropriately, about one or two steps lower. From a high risk down view as opposed to low risk looking up, its not unreasonable.
If you propose separation of the harmless hair cutting stuff from dangerous stuff, then the tear jerking starts about problems of scale and unless there is a level playing field of identical training only giant salons will be able to afford the specialized and soon to be rare training to color hair or whatever.
It makes a great straw dog, but is a pretty good match compared to other fields.
And as others have pointed out, it's more than a bad haircut at stake. Especially if you're a female -- some jackass wielding some dye or chemical can damage your hair or scalp permanently.
It's easy to criticize this stuff when you live in a society where you benefit from a well-regulated trade in all manner of services.
There may be some free-market lunatic who is in favor of unlicensed Dentistry, but I am not one of them.
So many currently licensed professions should remove the school requirement.
If you can pass a Hard state test, why not issue a licence?
Of the top of my head get rid of the education requirement for contractors, realtors(get rid of this profession all together, never understood the need for them.).
In California, under certain circumstances you can sit for the bar exam without going to school. I always felt if you can pass the bar, especially a hard exam, like CA, NY, why not let the person practice? Why make them go to joke non-ABA approved schools, and then take the test? Or, waste money in ABA approved law schools? Especially these days, when we have the Internet?
For profit career schools weren't previously eligible for federal student loans -- and were cheap. Now you have largely unaccredited, for profit institutions sopping up taxpayer guaranteed loans and ripping people off.
I totally agree about realtors though. It's such a tautology - they're "necessary" because they have access to private information, but that information could just as easily be public if the system worked a little differently.
I'll see myself out.
You can't take a person off the street and have a fully functional barber in a day. The professions above, you can.
This is not a point that transfers 1:1 to a hair stylist.. the odds and consequence of a stylist cutting me vs a dentist tapping a nerve is.. huge.
I don't see how licensing makes a difference.
When anyone can practice dentistry, both the range of bad experiences and their distribution gets much worse.
Sometimes this license is very light like "yeah I can pass a written driving test".
It actually is logical to require a license to cut hair, specifically for safety reasons you mention.
Barbers / Hair Stylists are waving sharp pointy blades around your scalp, eyes, ears, mouth. If you don't know what your doing, you can cut or seriously injure someone (even just accidentally).
Additionally, those tools are easy transmission vectors for diseases (both from potential cuts, and from bugs like lice).
It doesn't take a lot of training, the two years for licenses mentioned in the article is ridiculous and should be reduced. (As an example, Michigan's license requirements are less than half the time+cost of Nevada's requirements mentioned in the article).
But Barbers have been licensed for 70-100 years (depending on the state), and there's a good reason for that -- you really do want to ensure everyone practicing that profession has some basic safety training and experience first, and the government seems like the best organization to ensure happens.
And, note, this creates a public health issue, not just one affecting their direct customers (even though the direct effect is on customers.)
going further, where I am, pretty much everyone in the food supply chain does actually have that training, and the food supply chain is very trustworthy because of it. Perhaps you just didn't notice because it all works so well.
I know several people in the profession and they're severely underpaid if you consider both their skill and knowledge.
It certainly is. It's just that the crux of this article is that occupational licensing for low or medium skilled trades is inherently problematic rent-seeking, whereas the requirement for a license to practice medicine or dentistry isn't itself a problem, it's the artificial limiting of those who can get the license that presents a problem.
Minimum wage of $12 or $15 is great, but in many places still not a true middle class wage, especially for a head of household. But, still it's a worthwhile law to put on the books and it does help entry level workers and others.
On top of that, union wages are great for those who are in them and actually have enough work to be full time.
In addition, to address another group in society, we can empower service providers who are small business owners with state licensing boards to help them control their market segment and truly attain durable middle class living standards.
We can have it all. What's not to love?
So if we set up service providers with a way to prevent new entrants into the market, what that means is that they get monopoly-like control over pricing (because the simplest mechanism for fighting that is new market entrants) and then that means that everyone overpays for their services. Including the people who now discover that their $12 or $15 wage is still not enough.
Or put another way, the technical term for "small business owners who control their market segment" is "cartel"...
Considering pretty high educated professionals immigration numbers, it is surprising dental costs staying so high (which is not the case with other professions).
(I had a bodgy root canal reworked over 3 visits for $3k and a tooth extracted and bone abcess cleaned out under general for ~$1500 all up, including initial consultations. I didn't hunt around for a cheaper option, since that was how I got the bad root canal in the first place...)
1) at the time you need treatment, you may not have any choice (or you may be in pain, or ...). So expect to see free root canals with $10k pain relief "option". Or have "normal" medicine (e.g. mild ear pain) priced into the ground and get gouged on emergency procedures (e.g. acute inner ear pain).
2) it is somewhere between very hard and impossible for normal people to see the quality of medical treatment. Given what can happen with bad quality medical treatment ... I find this a very scary prospect.
Well, obviously, no one deserves a particular "fair share" of a business. That's basically saying that they own a certain number of people as customers, which is almost like micro-slavery. (And if there's enough businesses where someone owns the rights to you as a customer, it gets progressively more and more so.)
But beyond that, who would be the competition for the "poor and less well educated segment of the small business community" afforded protection? Surely a new entrant into the hair-braiding business is more likely to be poorer and less-well educated than someone who is already in the business and influential enough to be lobbying occupational licensing boards.
No, it's slavery when you own a certain number of people as workers.
Since nurses actually deliver your care and have the training to actually help you, it is a cost saving measure of dubious value.
Of course, insurers and hospital cartels aren't rent seeking!
No mention of doctors, lawyers, civil engineers, architects, librarians, actuarians, dentists, pharmacists .. in that article.
These all professionalized in the late 19th/early 20th century, to great benefit of practitioners in these fields, in terms of remuneration or job security or even both. If those get to benefit from rent seeking, it is not surprising that others would seek the same advantage.
In the US, we have a fair number of "must be this well educated in the field to work" legal requirements in these fields. In terms of, if someone walked in off the street, tried to X, and screwed it up, then there would be fairly serious consequences of the screw up.
We expect excellence (or at least competency), which means education, which means substantial upfront monetary investment in oneself to prepare for profession X.
Certainly there's a lot of archaic & unmodernized baggage in these fields, but the basic bargain of "if you put up your own money (or borrow) to successfully train yourself in these fields, then we will provide some stability on the demand side to bound your risk."
And before it gets tossed out, no, the amount of education to become a practicing software engineer in the US is nothing like any of the above fields in terms of financial risk and calendar time learning.
Your argument reads a little like an after the fact rationalization. Yes, we need good doctors, but that's not the reason why SelfStudy Steve can't practice wart removal or write medical marijuana prescriptions without an MD. Physicians have been very succesful in defending the status quo. One particular sleight of hands is perpetuating the myth that the financial commitment when entering medschool is akin to taking a risk. It is decidedly not because the payoff is virtually guaranteed. I'm not necessarily disagreeing, don't get me wrong, that we need skilled medical practitioners, but the profession is the text-book example of rent-seeking, yet somehow it's unseemly to say this out loud.
Anyways, I don't want to make it seem like doctors don't deserve their pay. That's a different question But I think it is perfectly OK for barbers to pursue job security, and do so through means that have a proven track record.
A small unrelated comment, and I forget where I picked this up, but it tickles my funny bone and just wanted to share.
Paradoxically, the professions that are least likely to be able to guarantee a successful outcome, are paid the most. For example, engineers can reasonably guarantee the bridge will stay upright. Once the work is completed, the client too can easily evaluate by having their donkey walk over it first. A librarian can usually say if she'll find an original primary source within a collection, and the patron can verify with a certain amount of confidence when taking delivery that he's handed the real deal.
However, a lawyer will most likely hem and haw if you ask if he can win your case. If you end up losing, it'll be because of a biased jury, or unfavourable public opinion, perhaps the judge was drunk. Grandma died from that infection? The doctor will say it was old age, or the cancer was really strong, or "god works in mysterious ways". And when you are an insurer, did your actuarian really miscalcute the fire risk in that new township, or do you take him at his word and was it really just all a minuscule coincidence that the place burned down?
The bolder the bluff, the higher the reward. Because you didn't go to law school, how would you know if the lawyer didn't miss this&that amendment to this&that ordinance? You didn't go to med school, so how would you know that the doctor did not wing it that particular night, paying more attention to his fantasy football game than meemaw? And are you confident enough in your high school maths to verify the calculations that yielded that bad actuarial table?
Anybody can recognize a bad from a good haircut though.
That's my argument. That the payoff is virtually guaranteed precisely because of the supply controls via licensing.
A Canadian friend gave me a kind of counterexample: Canada decided it was at risk of running out of X (some profession, specialty doctor I think), so they pulled levers to ensure a bunch of students trained in that. Those students graduate, oversupply, salaries crater, too bad for them.
It's not only the monetary cost as a risk, but the opportunity cost of entering a profession that requires extended training.
These are people's lives. Maybe they should be paid less, but it seems pretty shitty to say "We need you to do this really important job really well, so train really hard and then..." (you have some security)|(cross your fingers and hope the labor market hasn't changed while you were in a decade of school)?
Western countries with same or even stricter bars to become a doctor/dentist etc manage to have 1/3 to 1/10 the prices the US has.
So I don't think it's "rent seeking" that's responsible for this. I'd put the blame more on insurance companies and the bizarro US ideas about employment insurance and healthcare.
Nor I think "occupational licensing" for e.g. cabs which can be considered rent-seeking is the same as requiring higher levels of education from doctors, lawyers and such things.
It isn't entirely responsible, just as no other factor is entirely responsible. But they sure do reinforce each other. For example rent seeking by the AMA means that doctors cost more. Because doctors cost more, more people who need doctor services will need a payment obfuscation service (aka "health insurance"). Because "health insurance" is doing a lot of the paying, it encourages other parties (eg medicine and equipment) to rent seek against them, as it is easier to convince one party than every patient. I'll stop here, but can keep going!
It totally is.
The AMA get to accredit, or not, medical schools. They also get to set rules for doctors with non-US training to be able to practice in the US.
The result is that the number of medical school slots has historically not remotely kept pace with population growth, while doctors from other countries face a pretty uphill battle unless they go to medical school in the US. The net result is artificial limits on the number of doctors who graduate from medical school.
This has several effects, of which the most important are the insane hours demanded from medical residents (and all the errors they make as a result) and the high pay of doctors. This last provides the incentive for the AMA to not increase the number of available medical school slots and leads to the observed differences in the income doctors get in the US and elsewhere.
Of course, in the wake of new rules to limit the insanity of medical resident hours the number of medical school slots in the US went up by 30% or so in the last 6 years. We'll see what that does to salaries going forward, but I'm pretty sure the effect will be downward salary pressure.
"one benefit of licensure requires that it confer monopoly rents upon physicians." pg. 58
There's a lot more in the book.
All of the other mechanisms in place prevent that.
[0] https://www.healthcareers.nhs.uk/i-am/outside-uk/information...
Wait, are you suggesting that the regulatory barriers to private competition in medicine and dentistry are higher in the US than other developed countries?
You read that right. Planning on building anything innovative around a .au domain registration? Please, first funnel all your anchor customer registrations to a competitor. Oh, and build your stack and business processes around their platform, workflows, APIs &c.
Can anyone give an example involving innovation around specific domain registration?
Unemployment is quite a bit more expensive to governments than subsidizing retail and commercial space. Buying land when it's very cheap and holding on to it forever, as part of the city's bylaws. And perhaps doing sponsorships deals with big business in the city, to generate additional revenue to support the properties.
Also you generally only realize any gain / loss when you sell property.
If the operating company goes bankrupt, it doesn't take down the real estate company with it. The real estate holding company just has to find a new tenant.
Yes, especially capital expenditures
I suggest you get another accountant. What happens is that the costs are spread over several years but you do deduce the costs.
It seems to be a rehash of this: http://www.aei.org/publication/the-terrible-economic-burden-...
In my experience, these landlords are amongst the most scummy to deal with -- unresponsive, inflexible and unrelenting on rent increases. They'll take months to fix anything, but damned if they won't raise your rent by the maximum legal amount at every opportunity, and there's very little room for negotiation. Given a choice between losing a good tenant and maybe getting more rent, they'll choose the latter. It's like having Comcast control your living situation.
The corporatization of our residential real estate market is just one more step toward the future predicted by Terry Gilliam in Brazil.
There is some institutional money chasing single-family market as well (AMH, ARPI, soon to be merged into a single entity, and a few others), we'll see how well that model scales to single family residences.
That sounds like a nightmare!
PS what do you mean maximum legal rent increase. I am in Colorado and as far as I know, the only limit on a rent increase is the market. Does SF have laws around this?
That said, it's interesting that you asked, because I lived in Colorado for years and the corporatization (and corresponding market behavior) of apartment managers there was as bad as any place I've been. If you stayed in the same complex for a few leases and weren't an aggressive negotiator, it was easy to end up paying more per month than someone who had moved in the week before. You had to move every year or two to keep your rent from skyrocketing.
It's one of the tangible reasons I prefer thoughtful systems of rent regulations (like SF's) -- it leads to more stable communities. When people have to move every year, nobody puts down roots or cares about their neighborhood.
Perhaps the city I am in (Boulder) has different characteristics, or I was lucky, or things have changed.
My neighbor is renting out a studio apartment.(1/4 of a basement. One room. $30 dollar parking tickets/ per night.) He's getting $2500 month. That was one, or two years ago. I don't want to guess what he's getting now. I know there's a procession of renters. I can usually hear the wife of one of the victims begging for baby sitting work from their balcony.
He weaseled the house from a very lonely lady. "I'll remodel the house, if you give me half ownership, and give me your portion in your will. She got cancer. He got complete control of the house, and her kids got nothing. Why did I out this guy; because the way he gets his money is immoral. Getting money this way is immoral. That it--it's just wrong.
As to alternatives, section 8 is closed. Even if you do get a voucher, and get put up in a ghetto, you need to sign the most one sided lease I have ever read, that's 43 pages long. Yes--43 pages of "can't do this". Down to a covered lid on your garbage can that has to reside only under your sink. Two, or three day notice if a relative wants to spend the night. Absolutely no work on your vechicle in the parking lot. I hope a lawyer eventually brings Marin Housing to their knees.
O.k. move! Many people in my county have been here a long time. The one, or two people who care if they are breathing live here. Some are just old.
O.k. Pitch a tent. Where? There not one campground that accepts full time campers. The minimum fee is, I believe $25/night--no shower, just a out house. Don't stay more that three days!
I don't have an answer. These towns weren't built to scale, and there's a lot of NIMBY's. It not just the NIMBY's, it's small town code enforcement squads that make remodeling a room very difficult/expensive. Plus, traffic on 101 has not improved.
I can't fight everything. My gripe is landlords whom are immoral. It's time to out them. It's time to call people out on their greedy behavior, in all aspects of life. I've never bought this, "If it's legal--I'll do it!".
I see you people daily, and don't like you. I see you in ties at work. I see you with a stethoscope around your neck. I see you going out of your way to screw someone. Someone usually with not much power.
You are not fooling anyone. We see whom you've become. Ever wonder why you are so lonely? Why people don't give you the respect you think you deserve?
Without getting to cynical, but why do you think these people don't get respect or are lonely? Most crooks I know have families and friends that love them and accept them for who they are. Being immoral is pretty acceptable for most people as long as the larger society doesn't penalise their dependants.
Which kid has a harder time in school, the one with a crook for a father, or the one without the new Nike's?
That said, I'm all for unions, because they provide protection for workers from rent-seeking behavior by corporations. If it makes my prices a bit higher, so what.
But I think the answer is to amateurize the medical profession. "Amateurize" means to use algorithms and tools to reduce complicated activities into bite-sized pieces that are easier to learn. Henry Ford amateurized automobile manufacturing.
This would enable doctors to begin their careers faster and with less debt, and would enable more people to become doctors because the skills and aptitudes required to become a doctor would be reduced.
Doctors now are still in the craftsman mindset, much like a carriage maker in 1910. I believe most doctors could be reduced to technicians much like CRNAs or PAs without affecting health outcomes. There would still need to be a core of highly trained physicians as there are now, to do research and bridge the knowledge gaps between the technicians, and perhaps this core could be the same size as the current yearly crop of MDs.
But does a family practice doctor need 8 years of post-high school education and 3 years of residency to do routine diagnoses when the most likely course of action is, "Eat less and exercise more"? I don't think so.
http://ordinary-gentlemen.com/2013/11/08/the-anti-rent-seeki...
http://ordinary-gentlemen.com/2013/11/11/the-anti-rent-seeki...
These types of misguided laws should come with very short expirations (if they come at all).
Why would thousands of entrepreneurs open GM, Ford, and Chrysler dealerships when the manufacturers could just open a store and undercut them? These laws were a promise to protect that business model.
That doesn't mean that such laws are a great fit for our current economy, but it started out innocent enough.
On a sidenote: One could argue whether these laws made any sense, even back then - just image how ridiculous it would be if every industry enjoyed the same "protections".
Worse many of the jobs that require these licensees don't pay that much which brought up a whole industry of schools which pass off the costs through student loans and such to get a career which long term isn't going earn a lot of money or even come with benefits
Sometimes i feel like something like that must be introduced into software development, too: too many random people here, trying to compete only in price. It doesn't work of course, savvy clients see the real picture, but it drops the shadow on the industry in general, like people don't want to learn now to code out of the fear of having to compete with $5 an hour Indians.
Now it'd be nice if we could have an amount of competition that is "just right" - just enough to improve the product, not enough to ship half-baked stuff while desperately trying to conceal its problems. Unfortunately, I have no idea how to get there, and since all arrangements that I know of overshoot in one direction or the other, we have to pick one of the extremes, and I think "too much" is way better for the consumer than "too little."
Would society be better off if programmers managed to restrict entry into the profession as did lawyers and doctors? On general grounds, I rather doubt it as described above, but those programmers who're already in the profession would most certainly benefit from it!
So where to increase income/profit you need to have more hours worked. So the only way for that to happen is to hire more people or work longer hours.
The document is a little odd as some jobs specifically call out licensing in the state while others mention national certifications (baking food anyone?). Interesting that Computer Engineer is in there, broad enough to catch a lot of people who might not expect it.
There are a lot of people working in the field who just barely know how to cut hair. But the better ones do more than just design work.
EDIT: For context, in my country (Germany) a lot more occupations are regulated than in the US, including hair stylists / barbers (I don't think we have the distinction). While I agree that for some of the jobs the regulations are too harsh and there are too many hurdles to get foreign qualifications and job experience recognized, I think that the existence of these regulations, especially for jobs that involve exposing customers to hazardous materials, is for the better.
Even professional licenses are like this, unless you are a complete idiot it's not the knowledge that's the problem (e.g. passing the exam, if there is one), it's paying for the requirements (e.g. the degree and/or the continuing license fee) or fitting the requirements (e.g. being a foreign worker).
For a good example of what a non-scalable industry without a barrier of entry looks like, go to every freelance programmer marketplace. You can compete in such a marketplace in just one way: working dirt cheap AND scamming your clients. Not a win for either freelancer or a client. If you needed to pay $1000 a month for being on the freelancer site (imagine there is just one freelancer site out there, i.e. we are speaking of cost of a license to be a programmer), things will turn out much better instantly. Same works for barbers and real estate agents.
The reason you usually need to work dirt cheap to compete in those freelance programmer marketplaces is that you live in a place with a high cost of living.
The possibility of outsourcing does force people to face this fact head-on, but even with barbershops barriers to entry mean higher prices for the end-consumer, higher operating costs for the barbers and unemployment for the almost-barbers who are excluded.
Same for "moral hazard". I'm not sure what phenomenon that phrase should be applied to, but it certainly shouldn't be applied to the phenomenon of people taking more risks because they won't have to deal with the fallout. That phenomenon should be called something like "risk asymmetry".
For better or worse, that is what you are doing when you lease a property. You want to be paid just for owning something, not for doing anything.
Analogously, if you provide service X, you can seek "rent" in addition to the value you provide.
One way to do this is by manipulating the market for X by reducing the supply of those who provide X, e.g. through an unnecessarily onerous licensing process. The additional amount you make with the licensing process in place falls under the category of economic "rent".
I think I figured it out. "Rent seeking" means "trying to get something for nothing" economically.
This would be a lot less confusing if people would just use straightforward terminology ("getting something for nothing") rather than an opaque phrase that sounds like something else ("rent seeking").
It is perhaps not the most reasonable thing to expect specialists conversing with their peers in the argot of their field to reduce all their conversations to the point of intelligibility to the average layman. It's also perhaps not the most reasonable thing to expect all terms of art to be re-named every few decades as language shifts. Never mind the challenges of achieving consensus every time someone wants to rename something.
"If you behave badly because you know you'll get away with it, that's being "bad."
A Moral Hazard is different. If you behave "worse" than you would have otherwise, solely because you know that you won't have to bear the consequences, then you have a Moral Hazard.
I'll emphasize: the key is that your behavior is in itself not necessarily "bad." It is simply worse than your behavior otherwise would have been, because you know there won't be consequences.
Here's why it's called a Moral Hazard: if there are no external consequences, the only thing that would prevent you from behaving worse is an internal set of rules.
Where do these internal rules come from?"
That sentence does not at all explain why it's called "moral hazard".
"Insurance: If you have no car insurance, you drive very, very, very carefully. The Moral Hazard describes when a person, upon getting insurance, drives “worse” (read: less slowly, rolling stops; doesn’t avoid talking on cell phone.) NB: he is not driving badly; he is actually driving normally. But he's driving worse than "very carefully." The term “worse” is relative to other behavior. The point is that his behavior has comparatively worsened because he doesn’t have to worry as much about the consequences."
You're rather missing the point. As you say, the phenomenon described in the essay is more specific than "a hazard limited only by someone's morals". That means the phrase "moral hazard" is too vague to describe said phenomenon.
2. Not acting badly, acting less good. A moral hazard can reduce your charitable gift from $100 to $50.
From the Wikipedia page on moral hazard:
> [...] the term dates back to the 17th century [...] Dembe and Boden point out, however, that prominent mathematicians studying decision making in the 18th century used "moral" to mean "subjective", which may cloud the true ethical significance in the term.
From the Wikipedia page on rent seeking:
> The word "rent" does not refer here to payment on a lease but stems instead from Adam Smith's division of incomes into profit, wage, and rent. The origin of the term refers to gaining control of land or other natural resources.
While we clearly need to ensure that bad doctors stop practicing medicine, that crooked accountants can't take advantage of people, and...that loud librarians can't be librarians anymore (or something ;)), perhaps this is a better role for the government than a private professional association that is motivated to engage in rent-seeking?
The demand stays the same and the supply is reduced （due to the barrior to entry and hoops you need to jump through), which results in higher prices.
The same principals can also be applied to most unions.
A union job is great for me. But it's bad for me if my plumber has a union job because then it will cost more to fix my sink.
In economics (and ecology, evolution, etc.) it's actually quite strange for something not to be a paradox. Straightforward linear behavior in complex living systems is weird, and if you think you have an example you're probably missing something.
Under the "absurd statement turns out to be true upon research" consider how weirdly we distribute risk. So hire an unlicensed plumber he causes a leak that destroys the house, foreclose, bankruptcy, and all the risk lands on the govt guaranteed mortgage loan provider aka the taxpayer. So I can save $50 today with 99.9% odds and if something bad happens, all the risk falls on other people not solely on me. You'd be a fool to ever hire a union plumber, and the government would be a fool not to prosecute unlicensed plumbers because they pay every failed mortgage.
Risk estimation is very interesting because much like accumulation of capital, it seems only a tiny minority of the population are any good at it.
There's also the fake free market situation. If you can't have a meeting of the minds between you and your doctor or plumber, you can't have a free market transaction. Rather than sending the whole population thru med school and plumber school, it seems cheaper as an overall total societal cost to certify practitioners in both fields. That's the paradox of a regulated uneducated market being closer to a free market WRT identical decisions and outcomes than an unregulated uneducated market, how could adding regulation make something freer, well, clearly it doesn't, but it makes the outcome indistinguishable from an actual free market.
What do you mean by "a meeting of the minds"?
https://en.wikipedia.org/wiki/Meeting_of_the_minds
"[...]it refers to the situation where there is a common understanding in the formation of the contract."
If everyone made more money, everyone would be better off, right? Except in order for this to happen, everyone would need to charge more for their goods and services, so prices would rise and the raises everyone got would be sucked up by rising prices, leaving everyone in the same place as where they started, relatively.
The sad truth is that every economy must pick winners and losers. If everyone wins, no one wins.
Whether this selection process aligns with productivity determines the trajectory of nations. Productivity measures actual wealth creation, and hopefully politics does not lag too far behind it.
Social status can be fractured, but eventually people come into conflict for people, places, and things. We don't live in independent streams. We fight over the best apartments, the best cars, the best mates, the best stocks, etc. Then status, money, and power come into play.
See eg http://www.nationmaster.com/country-info/stats/Labor/Trade-u...
Indeed in the Scandinavian countries you're citing, excessive trade unionism, among other illiberal measures, in the 80s and early 90s led to economic crisis. There were economic reforms in the mid 90s which restored economic growth by paring back the role of the state and trade unions.
Not necessarily. Unions tend to lower the pay of the top performers.
There are many kinds of union. Your viewpoint reflects a very US-centric view of things.
I work in IT, and am part of a union. I negotiate my pay on my own, as do most of my coworkers, and we get paid considerably more than the union contracts stipulate. The contracts only set a floor on the compensation and benefits.
I'm well aware. I certainly didn't mean to imply that all unions necessarily lower top pay. Just that they generally do, which there is extensive research supporting.
Just look at what has hit HN today - an article about Walmart closing down and leaving entire regions without a less-than-3-hours drive to the next grocery store.
It is vital for a city to be able to prevent big chains from entering a market, destroying the competition by price dumping (made possible by sheer scale) and then packing up - leaving a stripped down town in the process.
Oh the other side, it's unfortunate that these laws and regulations more often than not get abused for clientel politics.
90% of the skill required in many jobs can be learned in a week or a month. It's the 10% you only learn over the course of education that are safety critical, though. Not to mention practicing in a safe environment instead on your customers or their homes.
Let's take your barber as an example, and only the stuff that comes to my non-professional mind:
- highly aggressive chemicals that will ruin your health if you're not taking proper safety precautions
- the fact that you're meddling with a deadly sharp knife at the necks of your customers
- health hazards for the customers: lice, other transmittable diseases, improperly disinfected equipment
- health hazards for yourself that can be carried by your customers and you can pick them up (e.g. you cut the customer by accident, he's HIV+ and you have an open wound on one of your fingers while not wearing gloves - something I rarely see barbers do)
The fact that the IT industry largely consists of self-educated people might be pretty cool but on the other side, how many security incidents could have been avoided by proper education? Even for BASIC security like not doing echo $_GET["name"]? Take a look at https://blog.setec.io/articles/2016/01/07/software-kill.html or literally hundreds of similar articles.
But Walmarts core business depends on the ability to use state aid to subsidize their employees - pay them barely above minimum wage, give them all the welfare pamphlets to get medicaid coverage, food stamps, electric subsidies, etc - and that lets them outcompete everyone since they don't have to assume any burden as a multinational business operating in a local market where their economies of scale and corporate efficiency mean nobody else can compete with them on goods pricing. Their employees make unnaturally high relative wages because they spend so much effort hooking them up with state programs to subsidize their starvation wages.
And a large part of why these cities are in crisis is because archaic and overzealous zoning and building codes, and an immense amount of property-as-an-investment movements in the economy for the ultrarich since 2008 put up immense barriers to natural business growth. When you have all these regulations in your way it becomes way too much of an opportunity cost to try, especially when regulations are often intentionally written to be impossible to interpret for a non-lawyer, and even remain nebulous intentionally by the corporate sponsors who had them enacted as a means to stifle competition.
Most of us here are in software - why? What keeps the software industry growing so much compared to almost any other business? Part of it certainly is innovation and utility, but there is no way that tech valuations are realistic or that the frequency of unicorn startups is reflected at all in almost any other industry today. And I would certainly postulate that is in huge part due to the incredibly low barriers of entry to developing and distributing software as a product. Everything else has huge physical opportunity costs and often magnitudes more logistical and legal hurdles that make competition impossible, so it should surprise no one major entrepreneurial growth is disproportionately coming from software.
So, it's the all powerful Nevada barber cartel that influences legislation in order to keep new people from entering the trade?
Well, I, for one, seriously doubt that.
And I wouldn't call the requirement to have "two years of training" before taking razors to people's necks and scissors to people's hair "a high bar" either.
While there is indeed TONS of rent-seeking going on, I'd look for it in serious industries, with big companies and multinationals involved -- from telcos and ISPs to construction and the health industry for example.
1)A small set of people that have much to gain from a policy change, while it'd be a small visible cost for everyone else. The moment another easily identifiable groups can lose, this weakens considerably
2)Enough political will to lobby. This can be due to single issue voting, or a setup where only the people that contribute economically to a cause will really benefit from it. This is the reason unions are very weak in "right to work" states, as the legislation makes paying dues a suboptimal outcome.
As long as you have that, it's pretty easy to get laws passed that will help you and hurt the public in hard to measure ways. It's easy to sell occupational licensing to people that aren't paying much attention, because the costs of it to the public are not easy to see, but very real to people who know get protected from other people joining their profession.
In Spain, for instance, you'll see a bunch of computer science professional organization that try to recruit people by saying that they will "protect your degree", mainly by lobbying for legislation that would separate someone with a computer science degree from "intruders" (people with decrees in engineering physics and such that can code).
And two years of training before becoming a barber is plenty of barrier: There are other professions that have similar difficulty and pay, but lack the two years of training requirement. So less people become barbers, as losing two years of pay for training is worse than getting a job right away! This leads to decreased competition, and eventually high prices. Two years is A LOT of time to end up getting paid that little.