Insightful post. Occupational licensing is regressive because it hurts lower income families the most. Single mother wants to run a salon from her apartment in the projects? Illegal. Guy wants to hustle cigarettes on the street? Death sentence.
Makes things more expensive for consumers, and totally chokes out small startups.
Licensing should be voluntary, and paid for by premium prices. Instead we have all these artificial monopolies crushing competition and distorting prices.
I agree, these kinds of regulations and over-licensing is what's killing jobs, not taxes (or at least not as much).
You don't see many big corps complain about licensing or regulations, that's because they can afford to pay for them, small business and even individuals are the one who get screwed. This kind of stuff is what I would like to see Bernie complain about but I see very little from him on this front. The funny thing is that Northern Europe countries have way less regulations and licensing, this is why they survive despite super high taxation but you never see Bernie rooting for that, he just wants wants the high taxation from Sweden and high regulation/licensing from the US, ie the worst of both worlds http://reason.com/archives/2016/04/18/bernies-rightamerica-s...
Sigh. Really? Is this really what is passing for high quality discussion here these days?
Occupational licensing is a form of consumer protection in almost EVERY case.
We have taxi licensing because at one point, people being extorted by being dropped off in bad areas in the middle of nowhere unless they paid massive amounts of cash to a driver was common. Hell, it still is in a lot of parts of the world where licensing isn't enforced.
When a single mother with her salon causes a staph outbreak in your Randian paradise of no regulations because she can't be bothered to wash her scissors properly, what then? How does that help the "lower income families" that now can't pay for the medical services they need because they couldn't afford an extra $10 for a proper haircut?
We have medical licensing because too many quacks called themselves healers and fostered bullshit on too many ignorant people. Same with legal licensing, real estate licensing, etc, etc.
Your assertions fall apart with a thirty second google search into the history of why we have enacted these things coupled with some basic common sense. Yes, certain reliance on regulation has been used to stifle competition by established players, no that does not mean all regulation is bad. Cons and scams are a real reality in the free market, and not everyone has the means to avoid them, or worse to recover from them when they are victims. Any just market will have sufficient barriers and safeguards in place to provide a reasonable protection to consumers to ensure those consumers actually use their money on new services and products instead of being scared into a position of paying much higher prices for services from entities they trust.
Licensing is an incubator of a stronger economy; it allows people to be mobile with their money because it creates a lower boundary of competence and expectation.
> In the "poverty" regime of approximately $0-$15k/year (I put "poverty" in scare quotes because in India this would be considered "rich")
Cost of living is what makes $0-15k/year poverty in the US. It's disingenuous to suggest that one can equate the US dollar amount poverty level designation with that of India.
So when Uber and the other transportation companies will be introducing automated cars and truck and one of the only industries that isn't possible to outsource and doesn't require education, become replaced by robots then what?
The Taxi Medallions where obviously out of touch with reality because technology allow anyone to be able to drive a car and find the right address, but it does so by lowering the money you can actually make and so removing restrictions creates more jobs but at lower salaries (especially in ubers case where they dont allow drivers to hire other drivers).
It's ironic how many people who normally claim to be free market proponents simply ignore the consequences of the free market when it works against their argument.
Nothing in that post changes the fact that there are less and less jobs and that there will continue to be so as long as technology progresses.
We can hope that prices comes down so we don't need a lot of money to get by, but unless something fundamentally change not just robots, technology is going to take over all functions on what we today consider jobs humans can do.
In the linked article op misses the critical variation of occupational licensing and regulation over time. Never, ever, ever constant over time and thats the real problem.
Nobody, and I mean nobody, wants to go back to Upton Sinclair's "The Jungle" wrt the linked article's discussion of street food providers. The current establishment system sucks about as bad as "The Jungle" yet in a totally different way. A pre-FDA, pre-OSHA, pre-FCC, pre-FAA world? No thanks!
The solution is that historically the establishment changes as little as possible with the exception of riots, revolutions, and guillotines. Status quo till the collapse. A new cultural solution such as all laws and regulations having a sunset date might help us smooth over the human nature boom bust cycle of laws and regulation.
All laws and regulations stink after they sit around too long and start rotting. You can use tech and muscle and money to try to prevent change, or you can try something totally new and flow with change.
My bright idea won't help with entrenched interests such as property owners. Nobody who paid $5M for the land for a restaurant is EVER going to make nice with food trucks. In a limited way bureaucracy can help.. crack the path of money... "I'm so sorry mr restaurant real estate landlord, but you don't pay prop taxes that fund the state DMV and we're in charge of the road regulations WRT selling food from a truck, so if you don't like progress you can pound sand or rent to a different type of business other than restaurant."
I for one intend to wait and see how these Universal Basic Income experiments play out. Maybe the decrease in overhead for over 9000 social programs will combine with the increased tax revenue generated by additional low income persons entering the workforce (now that doing so works to their financial advantage) and produce enough revenue to offset the cost of the programs. Maybe not.
considering the projected expenses for Swiss proposal - something around 220 billions of CHF per year (~=USD), and if I recall correctly only about 1/3 of it could be saved by reducing social programs and other savings, rest is a necessary steep taxes hike - not likely. It's ridiculously high amount for this tiny, albeit wealthy country. And it goes in exact opposite of what made this country consistently great over last 800 years - belief that you should be successful only if you put in hard and quality work. citizens are given more rights than elsewhere, but also more responsibility over their own destiny.
it's ridiculously expensive social experiment. vast majority of people around me is very skeptical since we all know plenty of people (ie from childhood) that live whole life on social help, and they don't contribute anything back. their full time job is slacking, drinking and finding a way to screw system and others more and more.
but boy would I wish to see it work! I just don't consider it possible in this century. not even in this great country
Have these jobs existed in the US in the first place? Was it commonplace for people to have cooks for example? Not to nitpick but is it really a matter of jobs disappearing or a cultural/societal difference?
On the street I grew up in, the houses all had maid quarters. These were suburban houses built in the 20's and are smaller than the typical McMansion from the 80's. Also there was that one episode of Baywatch where Mitch hired a cook...
It was definitely fairly common for middle class in my neighborhood (60's, 70's US) to have a cook or a maid, at least for special occasions or maybe a few times a week.
We also had diaper service, dry cleaner, milk, and Charles Chips: all pickup and delivery by a dedicated truck on a regular schedule.
All these service jobs are gone now. Dead tree newspaper delivery is next.
> Have these jobs existed in the US in the first place? Was it commonplace for people to have cooks for example?
IIRC, yes, there was a time (up through the late 19th, early 20th century) where having at least one live-in household servant, often either specifically a cook or a generalist where cook would be part of their duties, was typical of the middle class, and not entirely uncommon in the middle class through the middle or so of the 20th Century.
Women of my maternal grandmother's generation & class expected to have daily help with the washing & children (her class was such that it wasn't unknown for women like her to themselves have domestic jobs). It was really common once upon a time.
Interesting take, but I think SS is still better. Since a person can get some money for basics, he can try to learn something he/she is interested in and get a better job than that pay $20K. In India, though lot of maids would prefer to do something else, they don't have the luxury to take some time off and get skilled to earn more.
But the article makes the case that just acquiring the skill set isn't enough. There are prohibitive costs involved if you want to legally use those skills professionally.
Obviously there is a case of the grass being greener on the other side here, though.
Consumers in India want the quality assurance and standardization of services, that American regulation ensures to a certain extent.
I think one of the difficulties of preserving freedom is that it's easy to get stuck in distortion bubbles where we become unaware of what we're actually missing. We can maintain we have a free market in the US, and it does not appear to be otherwise. Only the few who see outside of the bubble actually have a wider gamut in which to compare.
---
A part I think is missing from this analysis is relative wealth inequality. Prashant's driver and cook can only ever have a fraction of his income. This seems untenable in the US where those servants would be priced out of any wider economy. For example, there is no market for the $1 prepared meal in the US, likely due to those barriers to entry. But this creates a self-sustaining cycle which compounds the low-income trap. In effect, the poor are discouraged from even having an economy.
Yet another article that completely ignores cost of living and cost of working to the worker.
> In short, if a person could earn $15k-20k/year as a maid, they have no incentive whatsoever to actually take this job; they can also have $15-20k/year of consumption by taking advantage of the safety net and they don't even have to work.
There's absolutely nothing wrong with this. Based on the cost of living in a certain area, I wouldn't be surprised if the person decides not to work even if the job offered was in the $25k-30k/year range, since the marginal benefits of earning an extra $10,000 do not outweigh the marginal cost of having to work as a maid for a year.
It is not up to an individual person to ensure that their personal utility function aligns with the supply side economics prerogative that work is somehow inherently beneficial to the worker aside from the net benefit that it provides.
If you want such a worker to work - create a higher wage job or create a policy that allows them to receive education to acquire such a job somewhere else. Or provide such worker a means to relocate to an area with lower cost of living, where taking a job with $10,000 marginal benefit will be sufficient to enter the workforce.
Provide, provide, provide. Create a higher-wage job. Provide an education. Provide a means to relocate. Is any part of the "running of one's own life" the responsibility of the individual? Is it not the job of one to take advantage of the opportunities that exist? (e.g. schooling, self-education, moving to areas with higher opportunity, etc.)?
This is a part of the learned helplessness of poverty - waiting for others to provide.
"they have no incentive whatsoever to actually take this job"
A hidden nightmare of the Orwellian paradise of the cashless hyper monitored new society is the way it "really" works in America now is those folks take jobs for $10K that are cash-on-the-barrel untaxed and unregulated and don't legally exist. What happens when cash no longer exists and the IRS gets a live GPS feed from all phones and all the poor people with agency and motivation have their safety valve of illegal employment simultaneously removed? Riots? Burn the cities (again) ? Guillotines?
The really lazy ones are too lazy to work legally, illegally, or riot. It those nice strong motivated construction day laborers who you have to worry about unemploying. They know which end of the pitchfork is sharp and they're really busy today working day labor illegally and untaxed. They'll be really pissed off if nobody ever hires them again due to IRS "improvements". And they'll probably all be pissed off together at the same time. Motivated people have a way of making their own fun.
As the author of the article, I'm glad that even people with wildly different normative premises recognize I'm 100% right on factual matters: namely that automation has not eliminated jobs and that wealth transfers cause people to refuse to work.
We probably disagree on normative premises - I believe even low skill people should also contribute to society - but that's fine. I'm only arguing about facts in this piece.
"I put "poverty" in scare quotes because in India this would be considered "rich""
Yeah, this guy doesn't know what he's talking about. Yes, in India, that might be considered "rich". But he's not talking about India. He's talking about the US. And in the US, that amount of money would make you desperately poor. Further, if you could make that amount of money either doing hard, laborious work, or not doing anything, any rational person would do nothing, as it doesn't have the costs that labor have on the body.
If you really wanted to see that the person took the job as a maid, then what should happen is that they would get the safety net money as well. That way, there's an incentive to take the maid job. (One could also just raise the wages of the maid job, but nobody wants to do that).
Branco Milanovic's numbers support the exact claim I made - 95'th percentile in India is approximately the bottom 5'th percentile in the US.
THOSE NUMBERS ARE ADJUSTED FOR PURCHASING POWER. (I feel the need to heavily emphasize this since whenever I post that graph, people ignore this fact.)
[+] [-] programmarchy|10 years ago|reply
Makes things more expensive for consumers, and totally chokes out small startups.
Licensing should be voluntary, and paid for by premium prices. Instead we have all these artificial monopolies crushing competition and distorting prices.
[+] [-] guyzero|10 years ago|reply
[+] [-] patrickaljord|10 years ago|reply
[+] [-] run4yourlives2|10 years ago|reply
Occupational licensing is a form of consumer protection in almost EVERY case.
We have taxi licensing because at one point, people being extorted by being dropped off in bad areas in the middle of nowhere unless they paid massive amounts of cash to a driver was common. Hell, it still is in a lot of parts of the world where licensing isn't enforced.
When a single mother with her salon causes a staph outbreak in your Randian paradise of no regulations because she can't be bothered to wash her scissors properly, what then? How does that help the "lower income families" that now can't pay for the medical services they need because they couldn't afford an extra $10 for a proper haircut?
We have medical licensing because too many quacks called themselves healers and fostered bullshit on too many ignorant people. Same with legal licensing, real estate licensing, etc, etc.
Your assertions fall apart with a thirty second google search into the history of why we have enacted these things coupled with some basic common sense. Yes, certain reliance on regulation has been used to stifle competition by established players, no that does not mean all regulation is bad. Cons and scams are a real reality in the free market, and not everyone has the means to avoid them, or worse to recover from them when they are victims. Any just market will have sufficient barriers and safeguards in place to provide a reasonable protection to consumers to ensure those consumers actually use their money on new services and products instead of being scared into a position of paying much higher prices for services from entities they trust.
Licensing is an incubator of a stronger economy; it allows people to be mobile with their money because it creates a lower boundary of competence and expectation.
[+] [-] acaloiar|10 years ago|reply
Cost of living is what makes $0-15k/year poverty in the US. It's disingenuous to suggest that one can equate the US dollar amount poverty level designation with that of India.
[+] [-] yummyfajitas|10 years ago|reply
http://economix.blogs.nytimes.com/2011/01/31/the-haves-and-t...
THESE NUMBERS ARE ADJUSTED FOR COST OF LIVING.
(Since this keeps coming up, I added a link to that article to the post.)
[+] [-] ThomPete|10 years ago|reply
The Taxi Medallions where obviously out of touch with reality because technology allow anyone to be able to drive a car and find the right address, but it does so by lowering the money you can actually make and so removing restrictions creates more jobs but at lower salaries (especially in ubers case where they dont allow drivers to hire other drivers).
It's ironic how many people who normally claim to be free market proponents simply ignore the consequences of the free market when it works against their argument.
Nothing in that post changes the fact that there are less and less jobs and that there will continue to be so as long as technology progresses.
We can hope that prices comes down so we don't need a lot of money to get by, but unless something fundamentally change not just robots, technology is going to take over all functions on what we today consider jobs humans can do.
[+] [-] VLM|10 years ago|reply
Nobody, and I mean nobody, wants to go back to Upton Sinclair's "The Jungle" wrt the linked article's discussion of street food providers. The current establishment system sucks about as bad as "The Jungle" yet in a totally different way. A pre-FDA, pre-OSHA, pre-FCC, pre-FAA world? No thanks!
The solution is that historically the establishment changes as little as possible with the exception of riots, revolutions, and guillotines. Status quo till the collapse. A new cultural solution such as all laws and regulations having a sunset date might help us smooth over the human nature boom bust cycle of laws and regulation.
All laws and regulations stink after they sit around too long and start rotting. You can use tech and muscle and money to try to prevent change, or you can try something totally new and flow with change.
My bright idea won't help with entrenched interests such as property owners. Nobody who paid $5M for the land for a restaurant is EVER going to make nice with food trucks. In a limited way bureaucracy can help.. crack the path of money... "I'm so sorry mr restaurant real estate landlord, but you don't pay prop taxes that fund the state DMV and we're in charge of the road regulations WRT selling food from a truck, so if you don't like progress you can pound sand or rent to a different type of business other than restaurant."
[+] [-] excalibur|10 years ago|reply
[+] [-] saiya-jin|10 years ago|reply
it's ridiculously expensive social experiment. vast majority of people around me is very skeptical since we all know plenty of people (ie from childhood) that live whole life on social help, and they don't contribute anything back. their full time job is slacking, drinking and finding a way to screw system and others more and more.
but boy would I wish to see it work! I just don't consider it possible in this century. not even in this great country
[+] [-] blfr|10 years ago|reply
[+] [-] SamReidHughes|10 years ago|reply
[+] [-] imglorp|10 years ago|reply
We also had diaper service, dry cleaner, milk, and Charles Chips: all pickup and delivery by a dedicated truck on a regular schedule.
All these service jobs are gone now. Dead tree newspaper delivery is next.
[+] [-] dragonwriter|10 years ago|reply
IIRC, yes, there was a time (up through the late 19th, early 20th century) where having at least one live-in household servant, often either specifically a cook or a generalist where cook would be part of their duties, was typical of the middle class, and not entirely uncommon in the middle class through the middle or so of the 20th Century.
[+] [-] zeveb|10 years ago|reply
[+] [-] thisisananth|10 years ago|reply
[+] [-] asdfzxc|10 years ago|reply
Obviously there is a case of the grass being greener on the other side here, though.
Consumers in India want the quality assurance and standardization of services, that American regulation ensures to a certain extent.
[+] [-] mindslight|10 years ago|reply
---
A part I think is missing from this analysis is relative wealth inequality. Prashant's driver and cook can only ever have a fraction of his income. This seems untenable in the US where those servants would be priced out of any wider economy. For example, there is no market for the $1 prepared meal in the US, likely due to those barriers to entry. But this creates a self-sustaining cycle which compounds the low-income trap. In effect, the poor are discouraged from even having an economy.
[+] [-] antisthenes|10 years ago|reply
> In short, if a person could earn $15k-20k/year as a maid, they have no incentive whatsoever to actually take this job; they can also have $15-20k/year of consumption by taking advantage of the safety net and they don't even have to work.
There's absolutely nothing wrong with this. Based on the cost of living in a certain area, I wouldn't be surprised if the person decides not to work even if the job offered was in the $25k-30k/year range, since the marginal benefits of earning an extra $10,000 do not outweigh the marginal cost of having to work as a maid for a year.
It is not up to an individual person to ensure that their personal utility function aligns with the supply side economics prerogative that work is somehow inherently beneficial to the worker aside from the net benefit that it provides.
If you want such a worker to work - create a higher wage job or create a policy that allows them to receive education to acquire such a job somewhere else. Or provide such worker a means to relocate to an area with lower cost of living, where taking a job with $10,000 marginal benefit will be sufficient to enter the workforce.
[+] [-] jackhack|10 years ago|reply
This is a part of the learned helplessness of poverty - waiting for others to provide.
[+] [-] VLM|10 years ago|reply
A hidden nightmare of the Orwellian paradise of the cashless hyper monitored new society is the way it "really" works in America now is those folks take jobs for $10K that are cash-on-the-barrel untaxed and unregulated and don't legally exist. What happens when cash no longer exists and the IRS gets a live GPS feed from all phones and all the poor people with agency and motivation have their safety valve of illegal employment simultaneously removed? Riots? Burn the cities (again) ? Guillotines?
The really lazy ones are too lazy to work legally, illegally, or riot. It those nice strong motivated construction day laborers who you have to worry about unemploying. They know which end of the pitchfork is sharp and they're really busy today working day labor illegally and untaxed. They'll be really pissed off if nobody ever hires them again due to IRS "improvements". And they'll probably all be pissed off together at the same time. Motivated people have a way of making their own fun.
[+] [-] yummyfajitas|10 years ago|reply
We probably disagree on normative premises - I believe even low skill people should also contribute to society - but that's fine. I'm only arguing about facts in this piece.
[+] [-] st3v3r|10 years ago|reply
Yeah, this guy doesn't know what he's talking about. Yes, in India, that might be considered "rich". But he's not talking about India. He's talking about the US. And in the US, that amount of money would make you desperately poor. Further, if you could make that amount of money either doing hard, laborious work, or not doing anything, any rational person would do nothing, as it doesn't have the costs that labor have on the body.
If you really wanted to see that the person took the job as a maid, then what should happen is that they would get the safety net money as well. That way, there's an incentive to take the maid job. (One could also just raise the wages of the maid job, but nobody wants to do that).
[+] [-] yummyfajitas|10 years ago|reply
http://economix.blogs.nytimes.com/2011/01/31/the-haves-and-t...
Branco Milanovic's numbers support the exact claim I made - 95'th percentile in India is approximately the bottom 5'th percentile in the US.
THOSE NUMBERS ARE ADJUSTED FOR PURCHASING POWER. (I feel the need to heavily emphasize this since whenever I post that graph, people ignore this fact.)