Free Market

A State Sponsored Monopoly You Might Not Be Aware Of

There is a type of monopoly out there that is escaping the attention of lawmakers, and no, it’s not tech monopolies that frequently swirl into public discourse. Instead, as Reason writes, it is an “antagonistic, state-empowered monopol[y].” Specifically, the type of state-sponsored monopoly Reason highlights takes the form of an occupational licensing board. 

Unlike private businesses that consistently face new and innovative competitors, an occupational licensing board almost has absolute power over an industry. A licensing board does not fear competition because it can squash it. It doesn’t have to respond to innovation or the introduction of a better method. 

In Utah, licensing boards effectively have a godlike say on who will be granted access to the exclusive club of licensed professionals. This almost monarchical process causes a number of issues. 

First, if you or someone you know has had to obtain an occupational license, you probably know that these boards set forth a list of occupational licensing requirements. Such requirements include expensive fees, expensive education, and often long experiential learning programs. Such barriers to becoming a licensed professional establish a system of economic protectionism. Those who are already licensed enjoy the licensing board preventing many new competitors in order to maximize their earning potential. 

By keeping newcomers out of desired professions, a number of businesses run into significant labor shortages. These shortages mean that consumers cannot receive the quality or quantity of services they desire in a timely manner. 

Additionally, this system of economic protectionism decreases the competitiveness of the labor market. This, ultimately, drives up prices consumers must pay for basic necessities and contributes heavily to the current inflation experienced in Utah.

Such “antagonistic, state-empowered monopolies” also diminish state-to-state communication about occupational licensing requirements. A lack of effective communication, for many professionals, makes moving states or working in multiple states next to impossible. Reason’s article also highlights that for businesses in industries like telehealth that require employees to serve multiple states, they must jump through costly and time-consuming hoops to be able to operate.

State legislators might explore holding licensing boards and other government monopolies accountable to current antitrust laws. After all, if we hold private corporations to this standard, shouldn’t we also hold the government to it? Being subject to these laws is one solution that could keep these currently powerful, minimally supervised entities in check. 

Licensing boards and other state-sponsored monopolistic programs must be open to the same level of competition that often produces beneficial and innovative products in private industry. To have a cutting-edge government, we must foster innovation, not control.