How Gov’t Licensing Works

You have a big business or even a bunch of smaller business that form a cartel. Businesses don’t like competition. They prefer to a monopoly on a product or service or to own a big market share of the product or service (which I will call “output” for brevity for lack of a better term). So, the business(es) decide to do something about this output problem.

They contact their local gov’t official—state, city or even federal lawmaker. The lobbyist for the business(es) tell this lawmaker that their particular business is really technical or it is really complicated and that no-one else can do it unless they get a license from the gov’t.* Oh, yea of course there will be a big fee for the license plus whatever education you have to do in addition to the license.

After all the customers have to be protected right? That’s what the license is for. So, the customer knows this business is legitimate. This is what the lawmaker is being told. What the lobbyist is actually thinking is: It’s not the customer I am concerned about it’s other competitors. I want to make it hard for other competitors to start a business. To persuade the lawmaker even more the business(es) tell the lawmaker if you get this license into law they will monetarily support you in the next election.

Now, am I being cynical? Possibly. Not every business lobbies for licenses of course.  But licenses (especially the stupid one) happen for two reasons: One, the business(es) who want the license  are too stupid or too lazy to compete with other businesses. So, they have the gov’t do their work for them. Two, the lawmaker believes the argument the business is making. Since most lawmakers are not businesspeople they probably will fall for the argument. Add to this that if the lawmaker believes the business is some sort of Elite that has to be protected then the license will be introduced.

People complain that life is unfair. That’s true. But it is really unfair when gov’t starts issuing dumb licenses.

 

 

*Never mind that these business(es) didn’t have to have a license in the first place.