Wednesday, June 13, 2012

Should It Really Be Illegal to Braid Hair Without First Getting a License from the Government?

NPR's Planet Money reporter Jacob Goldstein explains "Why It's Illegal To Braid Hair Without A License" on the NPR website, and in a longer NY Times Magazine article, with the following disturbing factoids:

"In 1950, fewer than 5 percent of Americans worked in jobs that required licenses. Today, it’s roughly 30 percent, and that number is likely to grow. 

There are more than 1,000 licensed professions in the United States. As the country industrialized, state governments wanted to protect their citizens and create standards not just for lawyers and doctors but also for basic services. It didn’t take long for professional groups to find that they also stood to benefit from the regulations. Over the years, more and more started to lobby for licensing rules, often grand­fathering in existing professionals while putting up high barriers to new competitors. In fact, businesses contorting regulation to their own benefit is so common that economists have a special name for it: regulatory capture."

MP: And along with regulatory capture and occupational licensing, we get concentrated, well-organized "industry cartels" that devote resources towards rent-seeking to protect and expand their cartel power, inevitably with outcomes that damage consumers. For example, according to University of Minnesota professor Morris Kleiner, who is mentioned in the NY Times article, licensed workers earn 15% more on average than their unlicensed counterparts, a premium that raises prices to consumers and adds more than $100 billion a year to the cost of those services to consumers.

30 Comments:

At 6/13/2012 10:44 AM, Blogger Mike said...

Humorous info from Commonwealth Foundation via Patriot News (http://www.commonwealthfoundation.org/policyblog/detail/hair-braiding-drama)

According to this article, you could be trained to become and EMT in one-third the time it takes become a licensed hair-braider.

 
At 6/13/2012 1:19 PM, Blogger Pulverized Concepts said...

, licensed workers earn 15% more on average than their unlicensed counterparts, a premium that raises prices to consumers and adds more than $100 billion a year to the cost of those services to consumers.

Yeah, well, that's why they want licenses.

 
At 6/13/2012 3:29 PM, Blogger Methinks said...

No. It should be illegal to allow malevolent busybodies to interfere with decisions regarding our coiffures.

They will knit their brow and wheeze out some theatrical concern about chemicals. Never mind that braiders use no chemicals stronger than hairspray (if any at all), anyone can buy the exact same chemicals in drugstores and beauty supply shops.

In my youth, I made liberal use of hair dyes and bleaching agents which I easily bought at the drugstore which could have all easily resulted in green hair and baldness - something that happens in salons where everyone is properly licensed with shocking regularity.

 
At 6/13/2012 3:33 PM, Blogger Hydra said...

I liked the story of the Panera restaurant that opened in a shoping mall. As a function of their lease agreement the Mall agreed not to lease to another sandwich shop.

When the Mall leased to a Mexican restaurant, Panera's invoked their lease protection, saying a burrito was a sandwich.

The court disagreed, so, at least in one jurisdiction a burrito is not legally a sandwich.


Government meddling, or rent seeking by Panera's?

 
At 6/13/2012 4:10 PM, Blogger morganovich said...

hydra-

that's an interesting case.

my view is that it was not "rent seeking" per se by panerras. it was a decision to invest based on exclusivity.

this sort of thing happens all the time. ATT got the iphone early by laying big bucks to apple.

it's not rent seeking, but rather two private parties reaching a voluntary agreement. rent seeking involves coercion.

one of the tricky issues with any contract are definitions. they get spelled out in great detail and used as Capitalized Phrases to make it clear.

when there is a disagreement over what the terms of a contract means, you wind up in court.

my personal view is that a burrito is not a sandwich, so i find the courts ruling reasonable.

to me, this seems like the system working.

2 private parties engage in mutually agreed commerce, later disagree about precisely what was agreed upon, get it adjudicated, and a reasonable seeming resolution emerges.

 
At 6/13/2012 4:41 PM, Blogger Methinks said...

Aha! Hydra cottons on to "rent seeking" and then goes on to misunderstand it.

We all seek rent (excess returns). There's nothing wrong with seeking rent. It's quite good.

When two parties agree to a contract they find mutually beneficial, it is not the odious rent seeking that people engage in when they seek subsidy and protection from competition from the government. This is a private, voluntary arrangement with each side giving up something to get something else.

I realize that just as Larry can't wrap his mind around the law of supply and demand, Hydra is incapable of understanding the ocean of difference between voluntary private arrangements and coercive government imposition, but this is ridiculous.

Panera sued because Panera thought the mall breached the contract. It was sorted out in court - the proper place for such disputes to be settled. End of story.

There was no government meddling and there was no rent seeking.

Gordon Tullock is one of the parties who is credited with coining the term "Rent Seeking". He wrote of his discomfort with the term in his primer on public choice. It gives the impression that there's something untoward about seeking rent. There isn't - not unless you're seeking to harness the violent force of government in search of rent. In other words, not unless you seek rent through coercion. And, of course, that's what the term "Rent Seeking" has come to mean in the popular lexicon. Unfortunately, it creates a lot of misunderstanding as well.

No, rent seeking does not always involve coercion. Morganovich, you seek rent for your investors every day. You just aren't greasing palms in Washington in search of subsidized alpha.

 
At 6/13/2012 7:16 PM, Blogger t.j. said...

Hey, we've seen the dangers caused by having hair braided too tightly; just look what the long-braided-hair crowd (mostly guys) managed to get suckered into putting in the White House for the past 3+ years. If their hair wasn't so tight it was cutting off the blood-flow to their brains, maybe we'd still have some limitations on our runaway government.

 
At 6/14/2012 12:16 AM, Blogger Dave Thomas said...

The guild mindset from the Middle Ages is alive and well in the 21st century, restrict the number of workers and drive up wages for the chosen few.

 
At 6/14/2012 12:17 AM, Blogger Dave Thomas said...

The guild mindset from the Middle Ages is alive and well in the 21st century, restrict the number of workers and drive up wages for the chosen few.

 
At 6/14/2012 2:22 AM, Blogger Ron H. said...

Methinks: "In my youth, I made liberal use of hair dyes and bleaching agents which I easily bought at the drugstore which could have all easily resulted in green hair and baldness - something that happens in salons where everyone is properly licensed with shocking
regularity.
"

But green hair is cool, isn't it?

Baldness maybe not so much.

 
At 6/14/2012 2:33 AM, Blogger Ron H. said...

"Government meddling, or rent seeking by Panera's?"

Neither: A private agreement between Panera and the Mall.

Dispute arises? Take it to court, court rules. End of story.

What do you think is interesting about that story?

 
At 6/14/2012 2:42 AM, Blogger Ron H. said...

"Government meddling, or rent seeking by Panera's?"

Sorry, I see this has already been dealt with twice before I posted.

At least you have gotten the message.

Any questions? Just ask me.

If you want correct or meaningful answers, I'll refer you to morganovich or Methinks.

 
At 6/14/2012 8:51 AM, Blogger Hydra said...

What do you think is interesting about that story?


Yes, but the court ruled against what Panera saw as the agreement. Having made that ruling, the definition of burrito becomes an element of law, increasing the regulation of "sandwiches", or at lest the wording of private agreements regarding sandwiches.

As I see it this is a form of de facto regulation brought on by business attempting to gain market protection (in the case of Panera) or trying to weasel on the agreement made (by the Mall), in order to protect its market.

Other malls with similar lease resriction in place will see this, and use it to their advantage. There is nothing wrong with using the law to advantage of course, but it is an example of how we get into an ever increasing regulatory environment.

Regardless of how you look at it, the court (government) has to get involved, and the free market becomes a little less free. eventually you wind up with licenses for hair braiding as a means to forestall such disputes (and also to raise licensing monies).

=================================

Aha! Hydra cottons on to "rent seeking" and then goes on to misunderstand it. --- "is an attempt to obtain economic rent by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth"

Isn't that what Panera was doing? By first signing an agreement and then suing to enforce it, Panera was seeking protection from the government rather than creating new wealth.


Whether there is anything wrong with that is another matter.

 
At 6/14/2012 8:53 AM, Blogger Hydra said...

it was a decision to invest based on exclusivity.

=================================

Exclusivity gained by manipulating (or attempting to manipulate) the market -- reducing the opportunity for free market activities by the next guy.

 
At 6/14/2012 8:56 AM, Blogger Hydra said...

ATT got the iphone early by laying big bucks to Apple.

================================
Did Apple agree not to sell it to others? Did Appl come up with some slightly different phone and sell that to ATTs competitors after having made an agreement?


I don't see the analogy is similar.

 
At 6/14/2012 9:07 AM, Blogger Hydra said...

Panera sued because Panera thought the mall breached the contract.

=================================

Somebody wrote a lousy contract.

Undoubtedely the Mall equally thought that restaurants other than sandwich restaurants (as generally undertood) were not covered by the agreement.

Panera was first using existing law to protect itself rather than creating new wealth, then it asked the court (government) to intervene and essentially redefine the word sandwich to include burritos.

Either way it was rent seeking rather than creating new wealth (by sticking to its business of making better sandwiches). Whether the mall was seeking a loophole in its agreement or legitimately thought there wasn't (or should not have been) a problem, at least the Mall was seeking to expand the market and not by restricting someone elses market.

Then you wonder how we get to silly reguations: it is because business asks for them.

 
At 6/14/2012 9:10 AM, Blogger Hydra said...

my personal view is that a burrito is not a sandwich, so i find the courts ruling reasonable.

to me, this seems like the system working.

================================

I agree: the court essentiall ruled against rent seeking. The result is that such "agreements" to restrict the market will be harder to make in the future, thanks to government intervention (the fact that the intervention was requested by Panera, notwithstanding).

 
At 6/14/2012 10:52 AM, Blogger Methinks said...

Having made that ruling, the definition of burrito becomes an element of law, increasing the regulation of "sandwiches"

That's only because you don't know what the word "regulation" means.

but it is an example of how we get into an ever increasing regulatory environment.

Not even close.

Regardless of how you look at it, the court (government) has to get involved, and the free market becomes a little less free.

No, it doesn't.


Isn't that what Panera was doing? By first signing an agreement and then suing to enforce it, Panera was seeking protection from the government rather than creating new wealth.

No. Panera was seeking enforcement of a contract. And the reason legal documents are so wordy is to avoid getting into disputes about what a "sandwich" is.

Are you really this insane or are you just seeing how much idiocy you can fit in a single blog comment? You're a grown man who doesn't understand the difference between private property and public property and who can't seem to learn when given the opportunity.

 
At 6/14/2012 5:18 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 6/14/2012 5:18 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 6/14/2012 5:19 PM, Blogger Ron H. said...

"Yes, but the court ruled against what Panera saw as the agreement. Having made that ruling, the definition of burrito becomes an element of law, increasing the regulation of "sandwiches", or at lest the wording of private agreements regarding sandwiches."

What nonsense.

The court ruled that a burrito isn't a sandwich in the context of the Panera agreement with the mall. That may be called precedent, and can help in future disputes, but isn't an "element of law". Where do you get this stuff?

As a precedent, this ruling may help future parties to agreements of this nature refine their wording, but in no way increases regulation of sandwiches.

I can open a restaurant at the mall and call the burritos I serve "sandwiches" or any other name I choose to call them, absent a prior agreement the mall is a party to, restricting such.

If I open a sandwich shop at the mall and wish to prevent competition, I know that my agreement with the mall should include the word "burrito" as well as "sandwich" if I wish to exclude restaurants that serve them.

Also, if I were Panera, I could enter into the exact same agreement with a mall, but when they leased to a mexican restaurant, I might know I shouldn't sue to prevent it, unless I found a more sandwich sympathetic court.

 
At 6/14/2012 5:41 PM, Blogger Ron H. said...

"Exclusivity gained by manipulating (or attempting to manipulate) the market -- reducing the opportunity for free market activities by the next guy."

What are you talking about? This is the very essense of free markets - voluntary agreements.

Two private parties agreed to something they both considered was to their advantage. "The Next Guy" is free to choose any location *available* to him, and this mall isn't one of them.

Are you "manipulating the market" by denying "The Next Guy" an opportunity to open a business on your private property?

Keep in mind that such an exclusive agreement might hurt Panera, the mall, and other busineses at the mall when people flock to the restaurants that open on the next block instead of the mall, and do their mall browsing elsewhere.

 
At 6/14/2012 5:46 PM, Blogger Ron H. said...

Methinks: "Are you really this insane or are you just seeing how much idiocy you can fit in a single blog comment? You're a grown man who doesn't understand the difference between private property and public property and who can't seem to learn when given the opportunity."

But you are denying him the opportunity to learn by your insistence on using common sense.

 
At 6/14/2012 5:55 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 6/14/2012 6:02 PM, Blogger Ron H. said...

"Exclusivity gained by manipulating (or attempting to manipulate) the market -- reducing the opportunity for free market activities by the next guy."

Everyone in every market is attempting to "manipulate" it to attract exchange, often your dollars for their products.

Panera thinks their market share will be enhanced by excluding other restaurants, but they could be mistaken.

Keep in mind that consumers like free markets, businesses do not.

 
At 6/14/2012 6:18 PM, Blogger Ron H. said...

"Did Apple agree not to sell it to others?"

Yes. What do you think "got the iPhone early" means?

 
At 6/16/2012 7:21 PM, Blogger OBloodyHell said...

>>>> licensed workers earn 15% more on average than their unlicensed counterparts, a premium that raises prices to consumers and adds more than $100 billion a year to the cost of those services to consumers.

No matter, according to sethstorm, they're all just slaves anyway.

 
At 6/16/2012 7:54 PM, Blogger OBloodyHell said...

>>> If their hair wasn't so tight it was cutting off the blood-flow to their brains

Nope, that dog don't hunt. Gotta have brains in the first place.

OK, maybe that's hyperbole... but saying they have brains is kind of like using a Yugo to pull a 25,000 boat fifty miles up a 10% grade.

 
At 6/16/2012 8:09 PM, Blogger OBloodyHell said...

>>> "Baldness maybe not so much."

Hey -- Telly Savalas. Yul Brynner. Vin Diesel. Crap, even Brad Pitt at times.

I'm not even vaguely bald, but bald is cool, too, if you're cool in the first place. ;-)

 
At 6/16/2012 8:31 PM, Blogger OBloodyHell said...

>>>>ATT got the iphone early by laying big bucks to Apple.

================================
Did Apple agree not to sell it to others? Did Appl come up with some slightly different phone and sell that to ATTs competitors after having made an agreement?


LOL, yes, the iP was unavailable at ANY network except AT&T for two years.... WOW... what tech-free black hole have you been locked in for the last five-odd years?

A rare few voided their warranty and rooted the phone, allowing them to connect (sans some key benefits) to other networks but no apple iP was ever sold in the USA for about 2 years via anyone except AT&T.

 

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