How the Regulation Game Works

It seems you need a license to do anything in this country. So many career paths require a stamp of approval from the state that starting a personal business is becoming harder and harder. In fact this licensing craze has reached such an absurd level that it's actually illegal to braid hair in Utah without a license:

Then, one day, she got an email from a stranger. "It is illegal in the state of Utah to do any form of extensions without a valid cosmetology license," the e-mail read. "Please delete your ad, or you will be reported."

It takes nearly two years of school and about $16,000 in tuition to get a cosmetology license in Utah. And schools teach little or nothing about African hair braiding.

This article is a good read because it explains how the licensing game works:

But it's also been driven by a push from professions themselves. Licensing rules make it harder for new people to enter a field. That's good for people who are already in the profession, because it limits competition and allows them to raise prices. So professions go to lawmakers and say: You need to regulate us.

"Everyone assumes that private interests fight like crazy not to be regulated," Charles Wheelan, who teaches public policy at the University of Chicago, told me. "But often, for businesses, regulation is your friend."

Whenever you hear a business owner demanding the state regulation his industry don't cheer him for being "socially responsible" because he's merely trying to push competitors out of his market. The biggest threat to an established business are new startups entering the market. This is why taxicab companies demanded cities put a cap on the number of taxicabs that can operate within city limits. Such limits allow taxicab operators to charge absurd amounts of money knowing that there is a permanently fixed supply and a demand that increases with population.

Let's face it, braiding hair isn't rocket science and you don't need a college degree to do it. The worst outcome of braiding hair incorrectly is a tangled mess of hair. The only reason the state of Utah requires a cosmetology license to braid hair is because cosmetologists wanted to prevent new competitors from entering the market, and $16,000 in tuition is a pretty big barrier to entry.

The next time you heard some business owner telling the state, "Regulated me!" give him a one finger salute. He's trying to use the state's gun to prevent competitors from entering his market so he can charge more for his services. There is no altruism going on, he's merely trying to enrich himself at your expense.