tv Dick Carpenter Discusses Bottleneckers CSPAN April 1, 2017 2:45pm-3:25pm EDT
and then we will be live in maryland's state capitol with discussions on criminal justice, income inequality, and terrorism and intelligence featuring former director of the cia and national security agency michael hayden. that is a look at some of the programs booktv will be covering this week. many events are open to the public and look for them to air in the near future on booktv on c-span2. >> good morning. i am president of the george
public policy foundation and i would like to welcome everyone to your breakfast. we have a great event lined up on an issue that is near and dear to our hearts and a key part of something we feel strongly about and that is coming activity. i want to bring up our vice president, anita dos. [applause] >> good morning. i am a little shorter and closer to the mic so i hope you can hear me a little better. i would like to welcome dick carpenter today but i want to tell you how much we have worked with the institute of justice over the years. i think otheir motto is we sue government.
but dick is co-authorer of bottleneckers. don't miss your opportunity to get a copy. it is excellent and shocking. bottleneck is gaining the government for power and private profit. he is director of strategic research for the institute for justice where he worked with staff and attorneys to define, implement, and manage social science research related to the institute's mission. he is an experienced researcher. he has presented and published on a variety of topics ranging from education policy, to the dynamics of presidential elections. catch him later to talk about that. his work has appeared in academic journals including the economic development quarterly, economic affairs, the urban law journal, international journal
of ethics, education and urban society, urban studies, regulation in governance and manage magazines including regulation, and the american school board journal. moreover, the result of his research have been quoted in newspapers such as the new york city times, the washington post and the "wall street journal." the unintended consequences of campaign finance reform, license to work, private choice and public programs; how private institutes secure sources for georgians, designing cartels and the demographic of domain abuse.
the institute of justice has done excellent work that resulted in the toughest imminent domain legislation in georgia. we thank you for that. dr. carpenter was a school teacher before working with the institute of justice and principal and a public policy analyst and faculty member at the university of colorado, colorado springs, where he is currently a professor. he has a ph.d from the university of colorado and despite what you think he does have spare time in his life and he tells me that he is a classically trained musician and a pilot and promises he doesn't do them at the same time. we would like to welcome dr. carpenter. [applause]
>> well, good morning. it is a pleasure to be with you and talk about the book and chip simpson as well. he is in retirement in utah. if you know chip, he sends his regard. i want to begin by introducing to you to someone from the book and that is kim powers bridges who owns and operates bridges funeral home in tennessee. but she is not from tennessee. she is actually from oklahoma. she started her first funeral business there but she had to leave oklahoma when she ran afoul of the law. turns out that kim was engaged in the dance practice of selling caskets without a funeral directors license. in the early 1980s, kim was on the executive fast track. she grew up in a family of
hardworking entrepreneurs and after leaving college she enjoyed a lot of success in a number of different businesses. eventually, she ended up at one of the nation's largest funeral companies and there she sold pre-need funeral services. she saw it as a way to combine her drive in business with her desire to help people with her work. she realized there was a need to be filled and saw in the funeral industry, the merchandise that was sold was marked up a significant amount. caskets marked up from anywhere from 250-600 percent. she thought how could i put together a business model that would allow me to sell the same
merchandise but at a lower cost? she left the business and got with dennis bridges and spend a year forming what would become memorial concepts online. their business plan was to sell everything, all of their merchandise, particularly caskets, over the internet. they would take advantage of drop shipping from manufacturers so they would not have any inventory on hand keeping the cost low and passed on the savings to the consumers. they thought they had a winning business plan and did buchlt they ran into a problem. the problem is oklahoma state law says if you want to sell a casket to consumers in oklahoma, and you are an oklahoma-based company, you must be licensed as a funeral director and kim was not. she could have gone back to earn this license but it would have
required her to go to school for two years. she would have to complete an internship during which time she would embomb 20 bodies, have to have a brick and motor business with a selection room, preparation room, viewing room, and inventory on hand -- none of which they were interested in. the law also created a circumstances where an oklahoma-based company had to be a licensed funeral director to sell to consumers in oklahoma but companies outside of the state who sold to consumers in oklahoma did not have to have a funeral directors license. so, kim, could have taken her business, which was essentially computer servers, and moved across the state line to kansas and there she could have sold
caskets to consumers in oklahoma all day long. but she didn't want to do that. she wanted to stay in oklahoma. she wanted to raise her family in her hometown of ponca city. she thought the law was wrong because it enabled funeral directors to mark up the their merchandise and take advantage of people at a difficult time in their lives. she stayed in oklahoma and fought the law. she wasn't the only one who thought this law was wrong. legislatures did so as well. beginning in 1999, they began to introduce a series of bills every year to remove the licensing requirement for casket sales. kim testified on behalf of several of these bills and every year they lost. they lost for one reasonand that was the license directors
would go lobby aggressively to protect their license and every year they succeeded. so today in oklahoma if you want to sell a casket and you are an oklahoma-based company, you must have a funeral director's leaseanleas license. what kim ran into is what we call in the book a bottlenecker. they want to restrict the free flow of workers into an occupation in order to enjoy an economic benefit as a result. the bottleneckers are evident throughout the economy. we know our doctors and attorneys have licenses.
we know our barbara has a license. but the things that might require a license might surprise you. if you want to be an auctioneer, sign language interpreter, florist, crane operator, funeral attendant. the list goes on and on for the list of occupations that have required to be license that never were. for 25 years, we have fought to reform licensing and represented individuals who want nothing more than to exercise their right to earn an honest living. our law firm has represented people from the last 25-26 years. our first case was on the issue of occupational licensing and economic liberty. we have continued to litigate on behalf of these individuals throughout this time.
what we have discovered is there a myth. licenses are created at the request of harmed consumers and citizens. but the truth is legislators create licenses at the request of those in the industry to be licensed. at first that should seem absurd. why would anyone ask for more double intrusion into their business? but the answer to the question, like so many questions is to follow the money. those in the industry recognize a license creates a bottleneck and excludes and allows them to inflate wages as a result for their own benefits. but the push is more than being about economic advantage.
when you hear bottleneckers ask for a license their language is something like we need this license to confer status, recognition. we want to be licensed because we want to be like those other occupations or professions that are already licensed. a certain recognition that only comes with license. as a result, when a reform bill is introduced in the legislature, or a license is challenged in court, the bottleneckers mount a ferocious campaign in order to protect their license and the funeral industry is just one example. in 25 years, we have yet to find a single example of a license that is created by any means or protected by any means other than the bottleneckers. but yet this myth persists by
some need out there. we wrote the book in order to dispel the myth but also to coin a new term. we wanted to create a word that would be descriptive and useful and accessible and perhaps most importantly prejorative. we wanted a word to name and shame those who engage or enable this activity. with the word bottleneckers he drew on a well known word of bottleneck, something that restricts flow or movement. we wanted to take advantage of the negative freight associated with the word. right? we are familiar with the effect of the two hour commute coming with the bottleneck. each industry in our book from
cosmotologist to dietician have existed bottlenecking behavior on behalf of their license. those who are active in the legislature or elected officials recognize this behavior instantly. seems like coordinated letter writing campaigns, crowding out legislative committee hearings, or industry day at the capitol, campaign contributions, going to a committee hearing and spilling testimony full of unsubst unsubstantiated facts and ant dotes. they considered to repeal the licensing bill for interior designers in the south. that bill received enormous
attention. interior designers from florida and from the south spilled hours of testimony during which interior designers talked about the importance of their license. one of them said if you will repeal the law it will result in the death of 88,000 people. our book is backyards looking. but the bottlenecking we describe in the book is not an a historical artifact. this is something that continues today. there is no better example than the music therapy board and the certification. these two organizations have mounted a nationwide campaign to license music therapy.
when they make their requests in the state legislatures, their language is also the same. it is also the same. we need to protect the public health and safety from the unlicensed practice of music therapy. every bottlenecker going back decades said the same thing. through the advocacy of the regulation and state base task forces they go state by state asking for a license it for music therapy. half a dozen states have adopted such a license. and the fact these states have adopted these licenses is not as a consequence of some need. instead it is because the music therapists have mounted this campaign. there is no better example than here in georgia. georgia in recent years adopted its own music therapy license
bill. the bill's adoption was classic bottlenecking. georgia bill senate bill 414 went to a committee, they had a hearing at which time the only people to testify on behalf of this bill in support were music therapists, both from the national and state organization. they received a packet of information in which they had letters of support from other music therapists, letters of support from consumers, a professor from georgia college who was a faculty member in music therapy. at no time did anyone testify against the bill. at no time was any empirical evidence introduced demonstrating a public health threat. at no time did a single legislature or anyone else ask a challenging question or express
any skepticism about the bill. now if you want to work as a music therapist in georgia you will earn a bachelor from an approved program that has to be approved by the music therapist association, you will pass a national examination offered only by the music therapists and pay more than $300 for that, you will complete 1200 hours of clinical internship, you will have to be 18 or older, pay fees it the state and pass a criminal background check. research on occupational licensing, that we and others have done, indicate consumers in georgia will now pay as much as 15% more for their music therapy services but not necessarily enjoy greater quality of service or protection. if at some later date, the legislature tries to reform the
music therapy license, they will be overrun by licensed music therapists but they will now be joined by members of the state music therapy board who are also seeking to protect their license. often, those of us who advocate for the reformed economic license do it by using license. this is an issue of creating a just society. a society that is built in part on preserving the right to earn an honest living free among government regulations. friends, there is nothing just about telling someone he may not work in the occupation of choice simply because it introduces too much competition for someone else who is more politically
savvy. in 1787, james madison wrote the protection of property rights is the first object of government. for madison, property rights extended to more than real estate or personal property as we think of it. for madison, property rights covered everything to which a man may attach a value and have a right including opinions in the free to the faculty and free shorts of the objects on which to employ them. madison's disdain for the cooperation of government for one group of citizens at the expense of another was unevequivalent. as was his economic liberty under the property rights. here is what madison said quote that is not a just government nor is property secure under it where the property in which a man has in his perm safety and liberty is violated by seizures of one class of citizens for the
service of the rest, where arbitrary restrictions, exemptions and monopolies deny free use of faculties and the free choice of their occupations which not only constitute their property in the general sense of the world but in the means of acquiring property strictly so-called. in condemning quote, arbitrary seizures for one class of citizens for the rest or exemptions and monopolies, madison could have been talking about this today. to fulfill madison's call for a just government, elected officials today should work to protect property rights, including the rights of free occupational practice. and those of us who love liberty, we should prod
legislatures toward reforming occupational licensing and support the work of those who seek to break open bottlenecks. our book talks about bottlenecking in various operations but we tell the story of courageous men and women who have worked to break open bottlenecks in their industry not just for themselves but also for millions of other people like them that they represent. and 25 years, we have had the privilege of doing that. with that, i will stop and we want to open it up for questions and discussions. remember, we have a microphone that needs to be used. >> georgia's secretary of the state. i was going to see what you have
seern with the supreme court and the ftc and the dental board. what are you seeing other states doing as a result of that case? >> it is a little early to say. the case is fairly recent. i think a lot of states are still in a position where they are trying to figure out what they need to do. my colleague lee mcgraph at the institute of justice has been spending time going to the various states to help them understand the case, the implications and what might you do as a result. i think states are looking for systems that create more oversight over the licensing the board. the occupational licensing boards have been operating without oversight for decades. conseque consequently, the behavior is essentially monopoly behavior and anti-competitive.
they have been able to do so because no one has paid much attention. i think states are looking at how can we create systems of more oversight of these activities. but it is too early to say what form many are taking. >> the alcohol wholesale business in georgia seems to have a lock hold on everything. is that common congress -- across -- the country? >> that is chapter one in our book. that is where, in part, where the name of the book comes from. the word bottleneck draws on the general metaphor but alcohol distribution as well.
the wholesa wholesalers are pow special interests. efforts to break it open is probably one of our cases on direct shipping of wine where we opened the market on direct shipping of wine. before that it was illegal in most states. that is probably the most pronounced win. other wins are in the area of micro breweries that operated under strict restrictions. the popularity of the microbrews opened the market allowing more access, shipping and direct consumer access. essentially cutting out the distributor between the producer and consumer. micro brew is where we see most of the movement but it is small
wins along the way so far. >> it appears a lot of license requires you to go to college which may well be a total waste of money. in my opinion we have way too many in college. >> i will address the first one and that is the issue of the role of higher education in license. there is no questioning that higher education makes an enormous amount of money off licensing. it is huge. we are talking about women, young women, who will go to school and pay tens of thousands of dollars. the schools are earning an
enormous amount of money they have those requirements and they know it. liceening bills created will volunteer testifying on their behalf professors from universities, or students from universities, students are sometimes bused down to legislate against a bill. here is a quick antidote. we had a study coming out calls license to work. we examined the license requirements for 102 low the moderate income businesses across the country. i was invited to go talk about the study by lead leader --
leaders. i went to the policy event and i started to give my presentation and you will not be surprised my presentation expressed skepticism about licensing so half way through the presentation the person who invited me came to the front and stood in front of me wanting me to stop. i thought you son of a gun, you invited me and asked me for 15 minutes. and you are going to get 15 minutes. so i just kept going. afterwards, there was a panel of people and the questions were all to me. they were incredibly hostile because they recognized the threat of that message that we
ought to reform occupational licensing so yes, higher education does make an enormous amount of money off it. unfortunately, the research on the topic has yet to be done in a helpful way. so hopefully we in the near future will do research on that to quantify just the extend of their involvement. >> georgia counsel on education. i can see a continuum between appropriate and inappropriate. do you have examples where it is appropriate to have strong licensin licensing? >> for too many years we have lived in a binary world of occupational licensing. there is either no lysicensing full licensing. but that is not correct. we don't live in a binary world of regulation of occupationism
there -- occupation. there is a menu of regulations that can be used. people don't realize this and my colleague is hoping more come to realize. a colleague at the university of michigan we co-authored an article looking at the many regulatory options. think of it in pyramid. at the top is lots of regulations because there is another myth that without licensing there is no regulation. in fact, there is. the market regulates. what does that mean? it means as somebody who provides goods and services, i will being regulated by my reputation and consumer's behavior. consumers have the ability, unlike at any time in history, to influence what happens within the markets for goods and services. on your phone you now have more
information about goods and service providers than any time in history. it is regulation through am the market. at the bottom of thepyramid is full licensinlicensing. in between are regulations that do not necessarily impose upon the free practice of an occupation. bonding and insurance, registration, certification through the government or another organization. these are different forms of regulations that can be introduced short of licensing. so what we say then is first
figure out what is the need to be addressed through regulation. is the need to overcome asymmetrical information? the need to know where someone is so you can access theme bring litigation? what is the need for regulation and match up the regulation to the need. so, we would say there are examples between licensing and no licensing where there may be need. here is one example. florida deals with hurricanes on a regular basis so they have an interest in protecting consumers against fly by night contractors who will come into the state and may be shoty or dangerous work so the state has an interest in
helping consumers be able to contact or be able to know who are these people and where can i access them. registration accompli registrati registration accomplishes and meets that need. >> most of us need to have a license to drive an automobile. now, the real public benefit comes from requiring us to have liability insurance or some sort of ability if we do damage to be
has a way to make you whole because of the damage. bonding or insurance can meet that need. we don't need to restrict entry into the occupation. we need to make sure we are going to protect you against your loss so in our menu that is one of the options. we advocate for that rather than full licensing when the need is the exeternality problem. >> one of the arguments is not just public safe and healthy but reimbursement like a medical issue and physical therapy. they will say we need it license or can't get reimbursed from insurance companies or medicaid. what do you say to that? >> there is a way to address this without a full license. this has come up on a number of cases. the first thing we say is actually check that printed. don't take it on face value.
so, as an example in indiana, there were a certain group och therapists that went to the state and said we need a litcene for the reason you described. they said affordable care act creates these regulations. the regulations say we have to have a license to be reimbursed. so we thought we must find out if this is true. what we discovered is it doesn't actually say that. it says if you are going to be reimbursed under the cms, you have to be recognized by your state with whatever the state requires. if your state says you must have a license you need a license. or the regulation is something less than a license that is all you need. the first thing is to check the premise. then after that if what we say is true there is a way to create
a form of special recognition that doesn't restrict the free flow. if you want to be reimbursed through the cms, as an example, they will create a special recognition of speciality license just for those people. everyone else can enter the occupation. it is only those who want to be reimbursed. special recognition can be created for them without restricting free flow. all right. thank you. [applause] >> thank you very much, dick carpenter and institute of
justice for the work you do. hopefully we can be successful in getting policy advances approved in the future. keep an eye on georgiapolicy.org for next month's announcements. we are adjourned. [inaudible conversations] here is our prime time lineup: >> a look at the history of dodge city kansas, once considered one of the most violent towns in the west. then atal 8:00' "sex sal