Tuesday, November 23, 2010

Registration, Certification or Licensure?

I believe in a free-market economy. In order to have one, government regulation must be kept to an absolute minimum. The market, or peoples' willingness to purchase, should be the controlling factor as to the success of a product or service. Whether your product is "approved" by any governing body should have little, if any, ability to control your right to offer such product or service. How do Registration, Certification, and Licensure affect a free-market economy?

Registration - The listing of a thing in order to keep track of it. If by government, in order to know how many exist and in order to tax. If by private parties, in order to be associated or known with that thing. Registration is not used to control the quality or quantity of something.

Certification - Attesting to the fact that a thing meets a certain standard. Certification standards can be created by private entities (i.e. Good Housekeeping, Microsoft) or by the government (i.e. OSHA, EPA.) The claim "Certified" lets the public know that you meet the standard set by the certifying organization. Certification normally is not used to control the quantity of something, but does advertise a minimum quality.

Licensure - The granting of a privilege not available to all. If by government or another official body, used to restrict the quantity of a thing (i.e Doctors and Lawyers must be Licensed.) The licensing body is usually made up of practitioners of the profession to be licensed, who have an inherent interest in restricting competition in the profession. Some licensing bodies are private (American Medical Association), while some are quasi-government or government agencies (State Bar.) Although often claiming to be concerned with quality, Licensure is most used to control quantity in a profession.

Registration is good when used to help the public to find a product or service. Registration is necessary if the government wants to tax a certain product or service. Voluntary certification allows a product or service to set itself apart from or above those not certified. Certification allows the public to believe that a product or service meets the minimal standard required by the Certification. Registration and Certification can be good for the market when not abused. Abuse normally comes in the form of some type of Licensure.

Licensure is bad for a free-market economy. In order to be free, the market for a product or service must be decided by the public's willingness to purchase it, not by a group who, in almost every instance, have their own interest, and not those of the public, at heart. Why is healthcare so expensive? Because the American Medical Association, made up of doctors already well-established in the profession, control the number of doctors (competitors) that are allowed in the market. They do this, not by setting standards, but by setting quotas. In fact, the AMA has done such a good job of controlling competition that they are able to not only restrict where a doctor may practice and what field the doctor is allowed to practice in, but even if the prospective student is allowed to attend medical school (the medical school also has to be licensed by the AMA.) The State Bars are even worse. Why do you think lawyers are able to charge $200, $300, $400 PER HOUR or even more for their expertise? It is because the Bar can do everything the AMA can do, and in addition, their members write the laws and regulations that assure there is no competition for services.

The requirement to be Licensed is leading us into a caste system not seen since medieval times, and it is restricting our free-market. When those already in the profession can control who is allowed in the profession, competition will always be restricted and prices will always be high. Those in control will be enriched, while those wanting to provide the product or service and not accepted will be forced into other fields. In addition, new products and new techniques, especially those "outside the box", will be stymied as those in control are reluctant to change, and those with the new ideas are afraid of being kicked out of the club.

1 comment:

  1. Great post about something I haven't thought a ton about. Even in the details, the government is controlling everything. I heard a great quote yesterday that went something like this: It is not what is illegal that is a travesty, it is what is legal.