Right to Work 2.0
Politicians and bureaucrats use licensing and other rules to stop the creation of jobs. Here’s what to do about it. [PDF here.]
By Derek Khanna
Summary: Unions and other advocates of Big Government defend policies—license requirements, for example, and other “barriers to entry”—that make it difficult if not impossible to create new businesses and new jobs. Existing businesses are also often backers of laws and regulations that limit competition, stifling innovation and growth. But real reforms—policies that might be called “Right to Work 2.0”—could knock down these barriers.
if, in 2005, a 21-year-old Mark Zuckerberg decided to launch what was then called “TheFacebook.com”—but before he could do so he had to apply for his organization to be a “licensed social network” in every state.
► Imagine that to apply to be a licensed social network, Zuckerberg needed to pay large licensing fees to 50 states and regular renewal fees, while maintaining addresses in every jurisdiction, and be subject to lawsuits therein. Instead of hiring coders, Zuckerberg may have hired lawyers. He may even have had to hire a lobbyist. If that didn’t work, he may have had to pay PAC donations for political help to get approval across the country.
► What if Zuckerberg had to take an exam to become a licensed social network provider? Not a joke exam, but an exam that had a passage rate comparable to the bar exam?
► What if a licensed social network was only lawful if it followed certain prescribed market models, like prohibiting a private beta version to colleges and requiring it be open to everyone across the country before launching to the public?
► Lastly, what if this exam was created, run, and operated by Myspace and Friendster, then the incumbent social networking companies?
If that were the state of the law in 2005, there would be no Facebook.
This scenario may sound absurd. But today this sort of absurdity is the status quo in most states for many occupations. In fact, such requirements affect more than 25% of all occupations. It is not a coincidence that we see dynamic competition and growth in websites and apps, while the rest of the economy has slowed to a crawl.
The way that occupational licensing stifles employment opportunities is well-known. Across the country, licenses are required for locksmiths, ballroom dance instructors, manicurists, interior designers, upholsters, and, in Washington, D.C., even tour guides. All 50 states require licenses for anyone working with hair, which usually includes all hair braiders, despite the inconvenient fact that hair braiding is not actually taught in cosmetology school. [See the article by Steven J. Allen on page 4.]
Regulations like these affect real people. Clark Neily’s book Terms of Engagement chronicles the story of how regulations on the floral industry impacted one individual:
Sandy Meadows was a widow who lived by herself in Baton Rouge and