Much as I love Silicon Valley, its cultural dominance has disastrously corrupted our sense of what entrepreneurship is. Talking about starting your own business, and too many people think the measure of success is whether you can sell the thing for at least a couple of hundred million dollars. Most entrepreneurship is considerably more humble than that; it is individuals with some talent, or a willingness to work hard, who want to sell their services to the public. They may never employ another person; they may not even work full time themselves. And these people never buy gracious mansions, or endow scholarships, or get buildings named after them. They just make their own lives a little bit better, hopefully, in the process of doing the same for their customers. We are artificially stopping that process, in order to protect insiders who already have the job.
That’s great for the insiders, who get above-average job stability and wages. But it’s terrible for the folks who are outside. And the more industries we put under the control of such regimes, the more the outsiders will show up in our economic data as people permanently stuck at the bottom.
We can do better than that. The problem is that such regimes are politically very stable, because the benefits are highly concentrated, while the costs are diffuse. Every licensed interior designer is passionately interested in shutting out unlicensed competitors, but their potential customers probably have better things to do than phone up their senators to demand to know why they can’t hire this chap they just met who has absolutely splendid taste in early Chippendale.
Megan McArdle, “You’re Gonna Need a License for That”, Bloomberg View, 2016-05-17.
December 13, 2017
QotD: Licensing and entrepreneurship
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