On Teeth, Braids and Liberty

RALEIGH – When the news broke last week that the Federal Trade Commission was challenging a North Carolina regulation that prohibits non-dentists from selling teeth-whitening services, some North Carolinians seemed to be surprised that the FTC had inserted itself into the controversy over occupational licensure of dentists.

In the Raleigh News & Observer story on the FTC’s claim that the state North Carolina is protecting a special interest rather than the public interest, the commission’s complaint is described as “the first of its kind in the nation.”

Perhaps that’s true with respect to the controversy over teeth-whitening services. But this is hardly the first time that the FTC has intervened to challenge anti-consumer occupational licensing regulations. In fact, it isn’t even the first time the FTC has challenged the use of state regulations to protect dentists from competition.

Back when I first started researching occupational-licensing issues, I discovered that the FTC had begun to question the wisdom and legality of such regulations in the 1970s. Particularly when states attempted to use licensing laws to inhibit interstate commerce on behalf of the special interests they were supposedly “regulating,” federal intervention became not only desirable but necessary to defend congressional prerogatives and economic liberty.

In 1991, for example, the FTC took the California Dental Association to court for using its state-granted licensing authority to adopt a number of anti-competitive policies such as restrictions on advertising and money-back guarantees. The commission’s economists estimated at the time that state licensing laws were responsible for jacking up the cost of dental services nationwide by hundreds of millions of dollars a year, thus dissuading millions of Americans from purchasing dental care altogether.

The only reasonable justification for state occupational regulation is to deter fraud. In some cases, it may be reasonable to require professionals to disclose the details of complicated procedures, services, or transactions. It may further be reasonable for the state to create certification programs to give consumers useful information about the qualifications and performance of individuals in certain professions, such as medicine.

But there is no need for the state to engage in actual licensure – in prohibiting individuals from offering a service for sale to informed, willing consumers unless they possess a state license. The policy sounds like it’s aimed at consumer protection. In practice, it always begins from the opposite direction. I’ve seen the process unfold many times. Owners of established businesses approach state officials about either having their professions licensed for the first time or tightening the standards for licensure. Their stated goal is to protect consumers from unscrupulous providers. The real goal is typically to protect themselves from unwanted competition.

Carolina Journal recently reported on a common example of the problem: hairdressing salons using state licensing laws to restrict competition from businesses specializing in traditional African braiding. As Associate Editor Sara Burrows wrote:

Braiders have a year — until July 1, 2011 — to take a written and practical exam administered by the North Carolina Board of Cosmetic Art Examiners. Those who fail must spend 300 hours and thousands of dollars at a cosmetology school to relearn a skill most braiders mastered as young children.

One problem: the vast majority of hair braiders emigrated from West Africa, and most can’t read or write English. Moreover, traditional African hair braiders do not use chemicals, so they say there’s no need to provide instruction on hygiene and other safety concerns that do not apply to their skills.

The regulation isn’t really about hygiene or safety concerns, of course, just as dentists aren’t trying to monopolize teeth-whitening services for the good of consumers. State officials shouldn’t be going along with this.

Hood is president of the John Locke Foundation.