Opinion: Daily Journal

Two N.C. Licensing Battles End Well

North Carolina is one of the more aggressive states in the nation in licensing occupations. This is a significant impediment to freedom in a state that once boasted, and ought to be able to again, of being “First in Freedom.”

This is a state that recognizes — as a self-evident right, plainly obvious to all — the right of all persons to “the enjoyment of the fruits of their own labor.” It is prominent in the North Carolina Constitution: Article 1, Section 1.

Occupational licensing is practically a return to the medieval guild system, denying those fruits to many to the detriment of even more. It effectively turns incumbent service providers into a cartel, artificially boosting their earnings at the expense of consumers and the would-be competitors kept out. Meanwhile, the safety and quality benefits supposed to result from licensure tend to be illusory.

For those reasons and more, I have urged state leaders to rethink North Carolina’s heavy regulation of occupations. A new political direction in favor of freedom and job creation would be compelled to deguild the state’s economy.

Two recently concluded, long-running legal disputes over actions by licensing boards in North Carolina should give responsible leaders even more justification to rethink the state’s approach to licensure.

Anti-competitive to the core

My “Rights & Regulation Update” warned last October of a pending U.S. Supreme Court decision over the North Carolina Board of Dental Examiners actions excluding nondentists from offering cosmetic teeth-whitening services. This week the justices announced their decision. Carolina Journal reports:

In a decision released Wednesday, a 6-3 majority of the U.S. Supreme Court ruled that the North Carolina State Board of Dental Examiners violated federal antitrust laws by engaging in self-dealing in ordering service providers that do not have dental licenses to cease and desist from whitening teeth.

The ruling is hailed by some as a victory for free-market enterprise, turning back regulatory overreach. But the dissenting justices warned that the Supreme Court has strayed from precedent in a manner that erodes states’ rights and will cast sweeping confusion nationwide on an array of state regulatory bodies.

Even the dissent, as CJ pointed out, acknowledged the anti-competitive nature of the dentistry board and licensing boards in general. Justices Samuel Alito, Clarence Thomas, and Antonin Scalia were concerned about the confusing repercussions of the ruling, warning it would lead to “a morass. Determining whether a state agency is structured in a way that militates against regulatory capture is no easy task, and there is reason to fear that today’s decision will spawn confusion.”

Still,

“[There is not] anything new about the suspicion that the North Carolina board — in attempting to prevent persons other than dentists from performing teeth-whitening procedures — was serving the interests of dentists and not the public. Professional and occupational licensing requirements have often been used in such a way.” (Emphasis added.)

Here is how the tooth-whitening exclusion benefited licensed dentists and harmed consumers and competition. Costs ranged from $400 to $1,300 at dentist offices, as opposed to $75 to $125 at day spas, mall kiosks, salons, etc.

Also, this month the North Carolina Board of Dietetics/Nutrition adopted new guidelines that will allow people to give “ordinary diet advice without a government license.” The change puts an end to diet blogger Steve Cooksey’s free-speech lawsuit against the board, first reported by Carolina Journal in 2012.

The Cooksey case provided the background for my Carolina Cronyism report on occupational licensing:

In 2009, Steve Cooksey was hospitalized with Type II diabetes, the same disease that had killed his grandmother. Determined not to suffer the same fate and not wanting to spend the rest of his life on insulin and other diabetes drugs, the Stanley, N.C., man turned to dieting. Through the carbohydrate-limiting, high-protein “Paleo” diet and exercise, Cooksey lost 78 pounds, got off the insulin, and then got into blogging about his experiences.

Through his blog, DiabetesWarrior.net, Cooksey freely answered readers’ questions about controlling diabetes through diet and also offered paid life-coaching services to readers adopting the Paleo lifestyle. In doing so, Cooksey ran afoul of the North Carolina Board of Dietetics/Nutrition. In January 2012, the State Board told Cooksey that, free or not, he could not offer personal dieting advice without a license and even that his private email messages and telephone conversations amounted to unlicensed and illegal dietetic assessment and advice. The board gave Cooksey 19 pages’ worth of his own writings with passages marked with red pen to explain what he was not allowed to say. Threatened with a misdemeanor conviction, jail time, and thousands of dollars in fines, Cooksey discontinued his life-coaching and advice column.

Such anti-competitive overreach and protectionism — serving the interests of the licensees and not the general public — is commonplace. As the justices wrote, “Professional and occupational licensing requirements have often been used in such a way.”

The General Assembly could help consumers, excluded competitors, and the cause of freedom and job creation by (1) greatly reducing licensing boards and licensed job categories, (2) putting in sunset provisions with periodic review on the remaining boards, and (3) resisting the self-interested pleas from other industries for new occupational licenses.

Jon Sanders (@jonpsanders) is Director of Regulatory Studies for the John Locke Foundation.