The Immorality of Licensing Laws

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Licensing Laws: Punishing the Righteous

When Adam was cast out of the Garden of Eden he was given the following injunction: “By the sweat of thy face shalt thou eat bread, until thou shalt return unto the ground…” (Moses 4:25) For most people this statement carries negative connotations, but perhaps another way to view this commandment is that God was granting to Adam, and to all men for that matter, the right to work to provide a living for himself and his family. This right man was to have from the cradle to the grave, to be unimpeded by government. Licensing laws, although cloaked in the veneer of public utility, serve to destroy this principle of work and those governments who enact such laws are in violation of the Golden Rule. According to natural law and the non-aggression axiom it is illegitimate to exercise compulsion over the souls of men when they have indeed engaged in no crime and when their only ambition is to provide an honest living for themselves and their families. When the Nephites began to build up secret combinations and adopt corrupt laws their liberty began to be compromised. The laws that they incorporated into their political and economic structure actually served to punish the righteous while simultaneously rewarding the wicked. This allowed the wicked to profit at the expense of the righteous. In the 7th chapter of Helaman we learn that these Gadianton robbers were engaging in the following:

Condemning the righteous because of their righteousness; letting the guilty and the wicked go unpunished because of their money; and moreover to be held in office at the head of government, to rule and do according to their wills, that they might get gain and glory of the world, and moreover, that they might the more easily commit adultery, and steal, and kill, and do according to their own wills. (Helaman 7:5)

Licensing laws allow the wicked to do precisely as Mormon suggested above: to condemn the righteous because of their righteousness, to let the guilty off the hook because of their money, and to permit those who hold such licenses to get gain and glory of the world. In order to understand how licensing laws serve these very ends, we must first comprehend basic laws of economics. When government coercively places restrictions and barriers to entry in certain industrial and occupational fields the supply of commodities and labor in those fields necessarily contracts, leading to an artificially induced shortage. This leads to restricted competition because new firms are barred from entry while existing firms are allowed to remain and are even granted monopolistic privilege. Contrary to popular belief, the ripple effect caused by licensing laws actually diminishes public utility because consumers have to pay higher prices for fewer goods and services. Thus, the overall effect of such laws is to impoverish society. Murray Rothbard, a 20th century historian and economist, explains the debilitating effects of licensing as follows:

Little attention has been paid to licenses; yet they constitute one of the most important (and steadily growing) monopolistic impositions in the current American economy. Licenses deliberately restrict the supply of labor and of firms in the licensed occupations. Various rules and requirements are imposed for work in the occupation or for entry into a certain line of business. Those who cannot qualify under the rules are prevented from entry. Further, those who cannot meet the price of the license are barred from entry. Heavy license fees place great obstacles in the way of competitors with little initial capital. (Rothbard, Man, Economy, and State with Power and Market, pp. 1094-95)

Condemning the Righteous

Licensing laws serve to punish two groups; those who wish to enter a trade or occupation in order to obtain an honest living, and those who wish to purchase goods and services from whatever patrons they choose. The irony of these laws is that neither of these two groups have committed a crime yet are prohibited from acting in their own self-interest by government. According to natural law men are only justified in using coercion against another human being when an act of aggression has been committed, i.e., rape, murder, theft, or violation of contract (lying). Licensing laws presuppose that unqualified patrons will harm consumers in some future transaction and thus use compulsion as a preventative measure. Such preemptive interpositions are illegitimate because government cannot determine the future and has no way of guarantying that licensed “professionals” will not act dishonestly toward consumers. Moreover, another possibility exists in which the unlicensed individual may provide a better service at a lower price to the consumer, regardless of his lack of official “qualifications.” The truth behind the matter is that government officials who sit on a license board are not omniscient, and therefore have no way of arbitrating decisions for the millions of consumers that constitute their constituency. And rather instead of protecting these consumers as they boast, they are merely serving to curtail individuals from making their own choices.

In order to understand the absurdity to which governments act in passing licensing laws, it will be requisite to define this idea of what we call quality. Quality is a highly elastic term, meaning that it cannot be arbitrarily or objectively defined by an individual or group. We’re all familiar with the phrase that “one man’s garbage is another man’s treasure,” and when applied to this idea of quality it can be assumed that some individual’s definition of quality is very different from that of others. Thus, quality can be said to be highly subjective, and as such has varying degrees of value and preference depending on the individual choices of consumers. Therefore, governments punish the righteous by placing restrictions and limitations on the myriad levels of individual perception of quality and preference. The problem with these restrictions and limitations is that they are set by government, which cannot possibly possess the appropriate amount of knowledge that is required to serve the millions of individuals that belong to the consuming public. Rothbard explains the absurdities associated with the idea that only governments can set standards of quality as follows:

One of the favorite arguments for licensing laws and other types of quality standards is that governments must “protect” consumers by insuring that workers and businesses sell goods and services of the highest quality. The answer, of course, is that “quality” is a highly elastic and relative term and is decided by the consumers in their free actions in the marketplace. The consumers decide according to their own tastes and interests, and particularly according to the price they wish to pay for the service. It may very well be, for example, that a certain number of years’ attendance at a certain type of school turns out the best quality of doctors (although it is difficult to see why the government must guard the public from unlicensed cold-cream demonstrators or from plumbers without a college degree or with less than ten years’ experience). But by prohibiting the practice of medicine by people who do not meet those requirements, the government is injuring consumers who would buy the services of the outlawed competitors, is protecting “qualified” but less value-productive doctors from outside competition, and also grants restrictionist prices to the remaining doctors. Consumers are prevented from choosing lower-quality treatment of minor ills, in exchange for a lower price, and are also prevented from patronizing doctors who have a different theory of medicine from that sanctioned by the state-approved medical schools. (Man, Economy, and State, pp. 1096-97)

Rothbard’s example of medical doctors makes it easy to see how government licensing indeed injures the righteous. Those with lower incomes or ailments that require less intensive care are prohibited from patronizing lower “qualified” practitioners who would charge lower prices. In consequence these people are forced to patronize a “qualified” doctor, who by virtue of his license can charge a much higher price for his services. And we must realize that a higher price cannot and will not guarantee better service and quality. This entire system serves to create monopolistic privileges for doctors, which is ironic that government would allow this status quo to exist while it has been vehemently involved in antitrust suits for over one hundred years. If a true free market were allowed in medicine and barriers to entry were abolished, what would actually transpire on the market is that doctors would be forced (by the demanding public, not the AMA) to lower their prices while increasing their quality of service. Voluntary organizations would set standards for doctors in a myriad of variations of conventional and alternative approaches to medicine. Insurance companies, if deregulated, would conform to public demand to cover all of these services, and thus consumers would have increased choices at lower prices. Thus the righteous, or those who are honestly endeavoring to provide for and take care of their families, would no longer be condemned by government to pay higher prices for lower quality. H. Verlan Andersen, an LDS scholar and former professor at BYU, further explains how licensing laws condemn the righteous:

The Book of Mormon does not state what particular type of righteousness was being condemned. But does it matter? The condemnation and punishment of a righteous act is wicked regardless of the type. The Lord has issued the commandment, “six days shalt thou labor.” He has also condemned idleness. Therefore any law which condemns a man for working at a legitimate occupation is evil. (H. Verlan Andersen, The Book of Mormon and the Constitution, p. 147)

Andersen goes even further and points out how these laws neither punish evil nor prevent it:

Although licensing laws always provide for punishing those who violate them, it is not necessary to prove that the defendant either intended evil or caused harm in order to convict him. Such laws can have no effect on the punishment of crime. The reason is that existing criminal laws already cover every type of criminal offence which one might commit in carrying on a business or trade. Neither are they necessary to permit an injured party to recover damages. Tort and contract laws exist which provide relief for such injuries. Licensing laws restrain competition. They grant exclusive monopolies to those who hold them and make it a crime for others to compete. They also prevent the buying public from purchasing goods and services from anyone except the licensees. Although the law seldom mentions buyers, the restriction on their freedom is the same as if they did for if the seller cannot sell, the buyer cannot buy. (The Book of Mormon and the Constitution, p. 149)

If licensing laws neither punish nor prevent evil, of what use are they? Logic tells us that they can only serve the fudiciary interests of those who hold them. Thus it can be said that the only thing they prevent is legitimate competition from those who wish to enter the forbidden industries. This enables the existing firms to slacken in the areas of service and quality while simultaneously propping up their prices. Again, this creates an economic bad for the righteous, because ordinary and honest consumers now are forced to patronize a select few businessess at higher prices. Andersen’s point that there are already tort and contract laws in existence for the express purpose of punishing actual crime is valid and was in fact in force among the Nephites before they corrupted their laws. We learn in the 30th chapter of Alma the extent of such laws:

But if he murdered he was punished unto death; and if he robbed he was also punished; and if he stole he was also punished, and if he committed adultery he was also punished; yea, for all this wickedness they were punished. For there was a law that men should be judged according to their crimes. Nevertheless, there was no law against a man’s belief; therefore, a man was punished only for the crimes which he had done, therefore all men were on equal grounds. (Alma 30:10-11)

It is evident from the text that during this time the Nephites only punished crime ex post facto, rather than ex-ante. Also, punitive action was only pursued if there were actual victims of the accused crimes, otherwise men would not indeed be “on equal grounds.” As the Nephites devolved toward a government controlled by secret combinations they began to ignore these laws. Unfortunatley, the United States has embarked on a similar devolution as now we pay more attention to licensing laws than to tort and contract laws. Thus, certain licensed individuals and businesses who engage in unscrupulous business dealings or contract violations can actually be protected in their wickedness by the issuance of government licenses. The final way that licensing laws condemn the righteous is not as obvious as our other arguments. For the reader to envision the economic disutlity that these laws spring on societies they must use their imagination in an attempt to visualize what is unseen, or the unseen effects of government intervention. It is easy to see the causal phenomena that manifests in the form of public works, high wages for licensees, and long lines in industries like medicine that have excessive barriers to entry. But what of the unseen consequences of such irresponsible policy? We will again defer to Andersen for what an economy without licensing laws might look like:

Even admitting the practical impossibility of distinguishing between the qualified and the unqualified, some may contend that licensing laws protect the public by allowing only the best qualified to serve them. But who are the best qualified? If there is a sound reason why only the most superior should be permitted to make a living at law, medicine, engineering, banking and plumbing, then why don’t we permit only the top ten percent of those now engaging in these activities to have licenses? If the public is entitled to have only the best, why allow this other ninety percent to sell their inferior goods and services? The obvious answer to this proposal is that it would have the effect of eliminating approximately ninety percent of the goods and services now being produced. That which the less qualified group is providing is needed even though it is somewhat inferior. It would be harmful to the public to prevent them from working merely because they are less skillful and more apt to make mistakes than the superior ten percent. Where does this argument lead to? If we follow it through the next step, we must conclude that existing licensing laws are even now denying the public an untold amount of goods and services which would otherwise be available. If they were abolished so that twice as many people could enter into a given trade or occupation, we might find approximately twice as much being produced. If that were true, the buying public would be benefitted enormously because the price would necessarily have to be lowered to sell that much. The demand for goods and services is literally unlimited. There are millions of people who now need dental, medical, legal, engineering and other professional assistance who cannot afford to pay the fees charged by those who have been compelled to spend a large portion of their lives and tens of thousands of dollars obtaining a license. The same can be said of trades, occupations and businesses of all kinds. If the bars were removed, the unemployed and other venturesome souls would flood into these areas, become proficient and being exchanging goods and services with each other to the benefit of everyone—except possibly present license holders and the bureaucrats who serve them. (The Book of Mormon and the Constitution, p. 152)

Letting the Wicked Go Unpunished Because of their Money

At this time in our study we must act a pertinent question; can licensing laws actually assist dishonest businessmen in swindling the public? To answer this question we must first ask another; do licensing laws actually protect the public against incompetence, malpractice, or fraud? The anwer is, of course, no. The Book of Mormon teaches us that we live in a fallen world full of imperfect people. Because perfection is denied us on this side of the Garden of Eden we are forced to accept the reality that nothing is really guaranteed or secure. In fact, security itself is a grand illusion, it does not and cannot exist in this mortal sphere. Therefore, to assume that a government licensing board can by force create competence, security, or perfect goods and services is to believe in a lie. This premise can be proven easily when we use logic to strip those arguments in favor of government licensing down to their most logical conclusions. Speaking of regulations in the medical industry Rothbard cleary demonstrates that such laws do not protect consumers at all:

How much these requirements are designed to “protect” the health of the public, and how much to restrict competition, may be gauged from the fact that giving medical advice free without a license is rarely a legal offense. Only the sale of medical advice requires a license. Since someone may be injured as much, if not more, by free medical advice than by purchased advice, the major purpose of the regulation is clearly to restrict competition rather than to safeguard the public. (Man, Economy, and State, p. 1097)

Rothbard’s assessment of the true purpose of regulation and licensing laws has answered our first question. These laws can indeed assist wicked men in exploiting the public. How you ask? By simply restricting competition. The restriction of competition allows the unscrupulous businessman to continue his dishonest transactions because he knows that others are prohibited from entering his industry. He also knows that the public has to choose him because he, and perhaps only a few others, have managed to put forth the money and capital to obtain the license. If others were allowed immediate entrance into his industry by the abolition of such laws, he would be forced to immediately forsake his practices or face the inevitable consequence of bankruptcy. The free market, the consuming and demanding public, and tort and contract laws would indeed offer far more security and competence in goods and services than any government board of bureaucrats. We will again defer to Rothbard for a simple overview of how this system would function:

In a free economy, there would be ample means to obtain redress for direct injuries… No system of government “standards’ or army of administrative inspectors is necessary. If a man is sold adulterated food, then clearly the seller has committed fraud, violating his contract to sell the food. Thus, if A sells B breakfast food, and it turns out to be straw, A has committed an illegal act of fraud by telling B he is selling him food, while actually selling straw. This is punishable in the courts under “libertarian law,” i.e., the legal code of the free society that would prohibit all invasions of persons and property. The loss of the product and the price, plus suitable damages (paid to the victim, not to the State), would be included in the punishment of fraud. No administrator is needed to prevent nonfraudulent sales; if a man simply sells what he calls “bread,” It must meet the common definition of bread held by consumers, and not some arbitrary specification. However, if he specifies the composition on the loaf, he is liable for prosecution if he is lying. It must be emphasized that the crime is not lying per se, which is a moral problem not under the province of a free-market defense agency, but breaching a contract—taking someone else’s property under false pretenses and therefore being guilty of fraud. If, on the other hand, the adulterated product injures the health of the buyer (such as by an inserted poison), the seller is further liable for prosecution for injuring and assaulting the person of the buyer. (Man, Economy, and State, pp. 1098-99)

It is interesting to note that Rothbard mentions lying as a breach of contract because we have similar language in the Book of Mormon. In the 1st chapter of Alma we learn the following:

Nevertheless, they durst not lie, if it were known, for fear of the law, for liars were punished… And they durst not steal, for fear of the law, for such were punished; neither durst they rob, nor murder, for he that murdered was punished unto death. (Alma 1:17-18)

According to the Nephites the sin of lying was punishable by law. We have to ask ourselves if Nephite law enforcement really went around and endeavored to punish every white lie told by the population. This type of undertaking would be completely impossible and absurd, however a much easier thing to punish would be the violation of a contract wherein two parties were involved with one injuring the other. One way that a lie would become “known” is if a party to the contract brought forth a complaint against the other party before a court of law. As this scriptural reference was given after the reign of the judges set up by Mosiah, this could’ve easily been accomplished. Thus, we have to assume that the Nephites used tort and contract laws to enforce voluntary contracts made between parties on the free market as a method of protecting consumers from fraud.

Contrast this above method of protecting consumers to the one now in common practice in the United States; that of licensing laws and regulation. A government issued license does not guaranty a doctor from accidentally killing a person on an operating table, or a plumber from flooding a house, or an electrician from leaving dangerous wires exposed in a garage. The license serves to instill a false sense of security into the consumer and guarantees virtually nothing except a higher price. Tort and contract laws, although far from perfect, protect consumers in at least a measure by allowing them to bring complaints before a tribunal thus enabling them to obtain some form of restitution when wronged by another. Keep in mind that this restitution, as Rothbard pointed out, would go directly to the victim and not the government as it does today.

H. Verlan Andersen, in his book entitled The Book of Mormon and the Constitution, examines a critical argument put forth by governments. The argument says that only the government can determine the criteria that enables an individual to become the “best” qualified to serve the public. This arbitrarily divides the population into two distinct groups; those who are qualified to serve the public and those who are not. Governments suppose that the masses are not intelligent enough to choose for themselves which individuals and businesses they will patronize and thus should be subject to the regulations of the government. However, this supposition is problematic, for those who make up the government are imperfect human beings themselves, and as such cannot possibly be the best arbiters of human judgment. It is therefore more logical, moral, and ethical to allow the public to choose for themselves rather than to subject them to government compulsion. Andersen makes the following succinct argument:

…Since all men are imperfect and prone to make mistakes, virtually every act of any consequence we perform might possibly injure someone. No matter how careful, well-trained or well-intentioned we may be, the possibility of human error is always present to threaten the well-being of others… Now is it possible for any licensing agency (who are erring humans themselves) to classify this infinite and every-changing diversity of human imperfection into two groups—the qualified, and the unqualified—and be just to everyone? Any line which is drawn must be purely arbitrary with nothing more to support it than the prejudice or selfish interest of the one who drew it because all he has to choose between is varying degrees of constantly changing ignorance, incompetence and inexperience. (The Book of Mormon and the Constitution, pp. 150-51)

Andersen asserts that it is impossible for a government bureaucracy to justly arbitrate varying degrees of inept and imperfect human judgments of quality. Because these autocrats are “erring humans themselves” it must be logically deduced that their judgments are erring as well. Therefore, when a licensing law is passed what is really transpiring is that one group of erring humans is forcing another group of erring humans to except a set of erring standards. It therefore follows that such a group is acting outside the bounds of its legitimacy when it purports to engage in violations of inalienable rights that would be immoral for an individual to inflict upon another individual. Yet we are prone to rationalize that when government (a group) does this very thing it is somehow moral and legitimate. Collective violations of natural and moral law are still violations. When the Lord revealed the Ten Commandments to Moses he did not include a caveat that allowed the commandments to be broken when done collectively. They applied to groups as well as individuals, and in fact, when groups failed to obey these commandments collectively, they were destroyed collectively. In the 29th chapter of Mosiah we learn that king Mosiah set up a constitutional republic much like the one set up in America. The Nephites called this system the reign of the judges. This decentralizing political policy gave the people more accountability and responsibility as evidenced by the following verse:

Therefore they relinquished their desires for a king, and became exceedingly anxious that every man should have an equal chance throughout all the land; yea, and every many expressed a willingness to answer for his own sins. (Mosiah 29:38)

Licensing laws create an unfair playing field and ultimately result in placing men on unequal grounds, i.e., allowing some men to profit at the expense of others, or in other words, one group is protected by law in exploiting another. To have “an equal chance throughout all the land” literally means that government is not to superimpose unecessary ristrictions on free trade in the economy. Licenses place men on unequal terms by precluding all others from entry except he that has obtained a license, especially when others could outcompete or outperform licensees. Also, the willingness of king Mosiah’s people to “answer for their own sins” is alluding to the fact that the ultimate responsibility of evaluating the quality of goods and services rests solely on the consumers themselves. That way if a bad product or service came onto the market the people couldn’t blame the government, and could eliminate the economic bad by simply refusing to patronize the incompetent businesses until those firms are forced out of the market. Profits, losses, supply, demand, and company reputation are far better indicators of quality (or what individual consumers really want) than government licensing boards. The free market has a mechanism for eliminating waste and misallocation of resources on its own, however, government actually impedes this process when it intervenes for the “good” of the public. Joseph Smith also understood this principle as king Mosiah did. As governor of Nauvoo he convinced the municipal authorities to repeal the licensing laws:

I also spoke at length for the repeal of the ordinance of the city licensing merchants, hawkers, taverns, and ordinaries, desiring that this might be a free people, and enjoy equal rights and privileges, and the ordinances were repealed. (History of the Church, Vol. 6, p. 8)

That They Might Get Gain and Glory of the World

Licensing laws, despite all their adulation by bureaucrats and the uniformed public, actually only serve two purposes; they help those that hold them make more money and they facilitate the universal temptation to capitulate to the sin of pride, or in others words, getting “gain and glory of the world.” The Lord revealed to Joseph Smith the reason that not all men who were called were also chosen. While suffering in Liberty jail the prophet lamented that it was the disposition of almost all men to abuse power and exercise unrighteous dominion. These men are not chosen “because their hearts are set so much upon the things of this world, and aspire to the honors of men.” (D&C 121:35) What else is a licensing law but a vehicle to obtain worldly possessions and honors? These licenses tempt those that hold them to place themselves above their peers, equating the time, money, and schooling spent obtaining them with an equivalent elevation in social status. Worse yet, the licensees are further tempted to persecute those who “illegally” engage in the “protected” occupation, even though the unlicensed person may be more adept and offer a lower price.

Joseph Smith goes on to explain that “when we undertake to cover our sins, or to gratify our pride, our vain ambition, or to exercise control or dominion or compulsion upon the souls of the children of men… amen to the priesthood or the authority of that man.” (D&C 121:37) Anderson explains how this verse relates to licensing laws as follows:

Is there a person who cherishes and utilizes a government issued license who is not guilty of each of the sins mentioned in this scripture? If we tried to use force to prevent competition outside of government we would be guilty of racketeering and extortion. Do we not cover these sins with licensing laws? Are we not guilty of gratifying our pride, our vain ambition, and exercising unrighteous compulsion when we forcibly prevent others from competing? (The Book of Mormon and the Constitution, p. 155)

Regardless of all the utilitarian and pragmatic reasons to abolish licensing laws, the strongest moral argument against them is that they simply destroy free agency. Just as Andersen says above, how can coercively excluding certain individuals from competing be construed as anything but unrighteous dominion? We are taught in Mormon theology that there was a pre-earth counsel in heaven where matters of free agency were discussed. One plan permitted us to potentially make mistakes by allowing us to choose, the other precluded choices. The scriptures teach that the entity who presented this other plan had ulterior motives. In addition to seeking “to destroy the agency of man, “ he was secretly plotting to dethrone God and usurp His power. (Moses 4:3) This clue from the scriptures implies that those who promulgate and support laws, theories, ideologies, or doctrines that deemphasize free agency while cloaking such philosophies in the veneer of public safety usually have ulterior motives as well. When one group or individual loses a choice, it logically follows that another group or individual must benefit.

[Obrien]

Ajax - I can't read the whole post now, but had to respond. Those that love licensing, permits, credentials, guilds, unions, trade associations, etc etc etc have a long history, and exercise much control because of their perceived legitimacy. You better be careful when you start to bag on these forces - the tentacles of licensing et al have burrowed deeply in to our lives, and many derive a large part of their identity by virtue of belonging to these kinds of artificial groups (for instance doctors, lawyers, contractors, teachers, police, fire, cosmetologists and food handlers, to name a few).

[Original_Intent]

Great post, ajax! You have been posting some extremely good material of late - thank you!

[light-one]

Licensing is pure evil. There never has been a single benefit to it other than producing revenue for the police state. There has never been any evidence that anyone with a license is any more proficient than a non-licensed citizen of equal training. Licensing costs are added to the service price and the consumer gets screwed again!

Drivers licenses are an example of repeated fee extraction from a group that over time gets more proficient, not because of the license, but because of experience. Arizona has recognized this and drivers licenses are good until age 65 when an eye exam is required. Other states continually penalize the proficient driver until death.

A free market is all that is required to guarantee that service is provided by qualified personnel. Word of mouth will quickly find the shoddy repairman. Lower prices help a beginner obtain his gold ball reputation.

It will be a wonderful day indeed when the Gadianton Robbers are forever silenced.

[Thomas]

Health care is the prime example of the negative effects of licencing. Competition is kept out of the market and health care providers are allowed to charge any price they want.patients stack up in waiting rooms like cord wood, waiting to see a doctor for two or three minutes and get billed a weeks salary for the short visit.

[Ezra]

No drivers licens required in the USA.

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[dauser]

Good thread!

Government is hired to punish crime.

Licensing protects crime.

Lets give freedom a chance and get government out of licensing.