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If Government is so Villainous, How come Government Officials don't seem like Villains?

  • Daniel B. Klein (a1)
  • DOI:
  • Published online: 01 December 2008

At lunch one day a colleague and I had a friendly argument over occupational licensing. I attacked it for being anticompetitive, arguing that licensing boards raise occupational incomes by restricting entry, advertising, and commercialization. My colleague, while acknowledging anticompetitive aspects, affirmed the need for licensing on the grounds of protecting the consumer from frauds and quacks. In many areas of infrequent and specialized dealing, consumers are not able, ex ante or even ex post, to evaluate competence. I countered by suggesting voluntary means by which reputational problems might be handled and by returning to the offensive. I said that in fact the impetus for licensing usually comes from the practitioners, not their customers, and that licensing boards seldom devote their time to ferreting out incompetence but rather simply to prosecuting unlicensed practitioners. I mentioned cross-sectional findings, such as those on state licensure, prices, and occupational incomes. Overall, I characterized the professional establishment as a group of dastardly operators, who set the standards, write the codes, and enforce behavior to enhance their own material wellbeing - in brief, as venal rent-seekers.

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George A Akerlof . 1989. “The Economics of Illusion.” Economics and Politics 1:115.

Sushil Bikhchandani , Hirshleifer David , and Welch Ivo . 1992. “A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades.” Journal of Political Economy 100:9921027.

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Economics & Philosophy
  • ISSN: 0266-2671
  • EISSN: 1474-0028
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