tv Dick Carpenter Discusses Bottleneckers CSPAN April 17, 2017 7:15am-7:55am EDT
president trump may face in trying to fulfill his campaign promise. rounding out the list at number 10 is trevor noah's memoir growing up in apartheid era south africa. that's a look at the current best-selling nonfiction books according to the "new york times". >> every weekend look tv offers programming focused on nonfiction authors and books. keep watching for more here on c-span2 and watch any of our past programs online at book tv.org. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> good morning.
i'm kelly mccutchen, president of the foundation and i would like to welcome everyone to our february breakfast. most importantly i would like to welcome our elected officials here today. we appreciate your service. we have a great event lined up today on issues that are near and dear to our hearts and it's a key part of something we feel strongly about as economic opportunity and to introduce our speaker i will bring about vice president, anita dodd. [applause]. >> good morning. i'm a little shorter and closer to the microphone, so i hope you can hear me a little better. i would like to welcome dick carpenter today, but i want to tell you first have much we have worked over the years with the institute for justice. i think about it with we sue government that sounds pretty
good to me, but dick is a co-author of "bottleneckers". don't miss your opportunity to get a copy. it's excellent and shocking. "bottleneckers: gaming the government for power and private profit" he's also director of strategic research for the institute for justice where he and staff and attorneys defined, implement and manage research related to the institute's mission. he's an experienced researcher. he has presented and published a variety of topics ranging from education policy to the dynamics of presidential elections, so catch him later to talk about that. his work has appeared in academic journals including the economic development quarterly, economic affairs, the forum,
international journal of ethics, education and urban society, urban study, regulation and governance and magazines including regulation,-- i'm not from around here. moreover, the result of his research has been quoted in newspapers such as the "new york times", "washington post" and "wall street journal". his research were institute for justice includes reports such as disclose or cost, unintended consequences of campaign finance reform. license to work, private choice in public programs and how private institutions secure social services, designing cartel: how industry insiders cut out competition, and victimizing the vulnerable:
demographic of eminent domain abuse and if you know the us a tip for justice they have done excellent work that resulted in some of that toughest eminent domain legislation in georgia, so we thank you for that. for working with the institute for justice he was a school teacher and principal. he's a public policy analysts and the faculty member the university of colorado where he is currently a professor. he has a phd from the university of colorado and despite what you might think he does have spare time in his life and he tells me that he is a classical-- classically trained musician percussionist and a pilot and he promises that he doesn't do them at the same time, so we would like to welcome doctor carpenter [laughter] [applause].
,. >> good morning it's a pleasure to be with you this morning to talk about our book and ship sent in his regards as well. he's in retirement now when you talk, so that would have been quite a trip for him to come. if you know trip-- chip, he sends his regards. want to begin by introducing you to someone from our book and that is kim power bridges. kim owns and operates bridges funeral home in tennessee. she is not from tennessee. kim is actually from oklahoma. she started her first business there, a funeral business, but she had to leave oklahoma when she ran afoul of the law. turns out kim was engaged in the very dangerous practice of selling caskets without a funeral directors a license. before that, in the early 1980s kim was on the executive fasttrack growing up in a family
of hard-working businesspeople. she learned the relationship between hard work and success and after she left college she enjoyed a lot of success in a number of different businesses and eventually she ended up at one of the nation's largest funeral companies and their she sold preneed funeral services and she saw this as a way to combine her drive into-- in business with her desire to help people through her work. as before, she was very successful in that business. after a few years she began to notice there was a niche to be filled, classic business person and that was she saw that in the funeral industry the merchandise sold was marked up a significant amount. caskets would be marked up anywhere from 250 to six & , so she began to think, how can i
put together a business model enabling me to sell the same merchandise, but had a much lower cost, so she eventually got the funeral business and joined up with dennis bridges who had left the same company and they spent a year for me what became memorial concept online and as the name implies their business plan was to sell everything, all of their merchandise, particularly caskets over the internet and they would take advantage of drop shipping from manufacturers , so they had no inventory on hand enabling them to keep their cost low and they passed on those savings to the consumers and they thought they had a winning business plan and they did, but they ran into a problem. the problem was in oklahoma state law it says that if you want to sell a casket to consumers in oklahoma and you are not oklahoma-based company you must be licensed as a funeral director and kim was not
she could have some back to earn this license, but it would require her to go to school for two years, completing an internship during which time she would embalm 25 bodies and then she would need a brick-and-mortar business in which she would have a selection room, preparation room, viewing room and she would have to have inventory on hand, none of which they were interested in. as if it were not irrational enough to require a funeral directors license to sell a box because that's what a casket is, an empty box, the law also created a circumstance where in the know, -based company had to be a licensed funeral director to sell to consumers in oklahoma , the companies outside 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 taken her
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 and racer family and her hometown and she thought the law was wrong and not only wrong, but injury and because it enabled funeral directors to mark up their merchandise and take advantage of people who were in a and vulnerable time in their lives, so she stayed in oklahoma and fought the law. she was not the only one who thought this law was wrong. the legislators did so as well, so beginning in 1999, they began introducing a series of bills every year to remove the licensing requirement for casket skate-- sales. every yearthey lost. they lost for one reason and one reason alone and that was the
licensed funeral directors, the industry would go to the legislature and lobby aggressively to protect their licenses and every year they succeeded. today, and oklahoma if you want to sell a casket and you are in oklahoma-based company you must have a funeral directors license what can and the legislators ran into is what we call in our book , bottlenecker. a bottlenecker is someone who advocates the creation of punctuation of a government regulation, particularly occupational license to restrict the free flow of workers in an occupation in order to enjoy the economic benefit as a result. the bottleneck verse are evident throughout the economy. we know our doctors and our attorneys have licenses and we
generally know our barber has a license or cosmetologists has a license, but recent research we publish indicate the occupations that now require a license may surprise you, so if you want to be an auctioneer, for instance you have to be licensed or if you want to be a sign language interpreter or a locksmith or florist in louisiana or crane operator or funeral attended. of the list goes on and on of occupations that for years whenever licensed, but now are because of the work of bottleneckers. fort 25 years we have fought to reform occupational licensing representing individualswho want nothing more than to exercise their right to earn an honest living. we have represented people for the past 25, 26 years. our very first case was on the issue of occupational licensing and economic liberty and will continue to litigate on behalf
of these individuals throughout this time. what we have discovered in all this is that there is a myth about occupational license and the misses this, licenses are created at the request of harm consumers and citizens, but the truth is legislators create licenses at the request of those in the industry to be licensed. at first it seems absurd. why would anyone ask for more government intrusion into their business? but, the answer to the question like 70 questions is to follow the money. those in the industry come to recognize that a license creates a bottleneck, excluding competitors and enables them to artificially inflate prices and wages as a result for their own benefit. the push for licensure is more than just about economic
advantage. when you hear bottleneckers asked for a license, their language loss-- often be something like we also need this license to confer to us a certain amount of 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 comes with licensure. so, as a result, when a reform bill is introduced in the legislature or when a license is challenged in court the bottle makers will have a ferocious campaign in order to campaign-- protect their license and the funeral industry is just one example. and 25 years we have yet to find a single example of a license that is created by any means protected by any means other than the bottle makers, but yet this myth persists in these licenses exist for some
demonstrable reason, some mean that's out there went back as not true, so we wrote the book in order to dispel this myth. we also wrote the book because we wanted to coin a new term. we wanted to greater word that would be descriptive and useful and accessible and perhaps more some portly jordan of. we wanted to have a word that could be used to name and shame those who engage in this activity or enable this activity, so with the word bottleneckers we drew on out well-known metaphor that restricts free movement and we wanted totake advantage of the negative traits associated with the word. we are familiar with the bottleneck in traffic that we see even this morning and we are familiar with the affect of that , the two-hour morning commute as a result of a bottleneck, so we wanted to take
advantage of that to the full extent possible. beach industry in our book, cosmetologist to dietitians and nutritionists have exhibited classic special interest behavior, what we call bottlenecking behavior on behalf of their license and those of you who have been active in the legislature or elected officials recognize this behavior instantly. things like coordinated letter writing campaign to legislators work crowding out legislative committee hearings or industry data capital, special award to legislators, campaign contributions are going to a committee hearing and spilling-- billing testimony of unsubstantiated facts here for example, your neighbors to the south several years ago on whether to repeal a licensing bill on it interior designer.
that they received enormous attention. interior designers from outside the state-- interior designers talked about the importance of their licenses. one said that, if you repeal the slotit will result in the death of 88000 people. [laughter] >> per year. [laughter] >> our book is somewhat backward looking in that we examine the creation protection of licenses throughout different industries, but the bottlenecking we describe in the book is not historical artifact. this is something that continues today. there's no better example than the american these at therapy association and a certification board for music therapy. these two organizations have
mounted a nationwide campaign to license music therapy. when they make the request to the state legislators, their language is always the same and it's the same as bottleneck verse have used for decades. we need to protect the health and safety from unlicensed practice of music therapy. every bottleneck are going back decades has said the same thing. through the advocacy efforts of a regulatory and state -based task force they go state-by-state asking for license or music therapy. today, more than a half dozen states have adopted such a license and the fact that these states have adopted these licenses is not in the consequence of some demonstrable need, instead it's because the music therapist have mounted this campaign and there's no better example than here in georgia.
georgia in recent years adopted its own music therapy license bill. the bill adoption was classic bottlenecking. upon introduction georgia bill set for 14 went to a committee, had a hearing at which time the only people to testify on behalf of the bill it supports were music therapist, both from the national and state organization. legislators received a packet of information in which they had letters of support from other music therapist, letters of support from consumers, professor from georgia college 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 significant threat to public health and safety and got no time did a single legislator 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 do the following: you will earn a bachelor's degree or higher from an approved program. the program has to be approved by the music therapy association , same people that lobbied for the bill. you will pass a national examination offered only by the music therapist. you'll pay more than $300 for that privilege. you will complete 100 hours of clinical internship. you will have to be 18 years of age or older paying fees to the state and you will pass a criminal background check. research on occupational licensing that we and others have done indicate as a result consumers and georgia will now pay as much as 15% more for their music therapy services, but not necessarily enjoy greater quality of service.
if at some later date the legislator were try to reform 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. now, often those of us who advocate for the reform occupational licensing we do so by making economic arguments. chip and i do that in the book, but this is more than an issue of economic growth. this is also an issue of creating a just society. a society that is built in parts of preserving the rights to earn an honest living, free from unnecessary government regulation. friends, there is nothing just about telling someone he may not work in the occupation of his choice or for which he is best suited since it because it introduces too much competition
for someone else who is more politically savvy. in 1787 james madison wrote that the protection of property rights is the first object of government. for madison, property rights extended to more than just real estate or to personal property as we think. for madison, property rights covered quote everything to which a man may attach a value have a right including opinions in the free communication of them in the free use of faculty and free choice of the object on which to employ them. madison's disdain for the co-optation of government for one group of citizens at the accents of another was unequivocal. as was his inclusion of economic liberty under the rubric of property rights. here's what madison said, quote that's not a just government nor is property secure entry. where the property which a man
has an personal safety personal liberty is a violator by seizure of one class of citizens for the service-- service of the rest. arbitrary restriction exemption and monopolies denied to citizens for use of their faculties and the free choice of their occupation, which not only constitutes their property in the general sense of the word, but the means of acquiring property. in condemning quote arbitrary seizures of one class of citizens for the service of the rest or arbitrary restrictions exemption seminar please madison could haven't talked about about occupational licensing today and bottleneckers today. so, to fulfillthe call for just government, to execute the first object of government elected officials today should work to protect property rights including the right of free occupational practice and those
of us who love liberty should pride legislators to reforming occupational licensing and support the work of those who seek to break open bottlenecks and expand economic liberty. our book talks about bottlenecking in various occupations, but we also 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 425 years we have had the privilege of doing that to represent such individuals along the way. with that i will stop and we want to open it up for questions and discussions as well and remember, we have a microphone that needs to be used. >> georgia secretary of state. i was going to ask you what you have seen around the country as a result of the supreme court
decision with ftc and the north carolina dental board. i know we have taken measures here that i certainly supported that i think will be helpful, but what do you see in other states doing as a result of that case? >> it's a bit early to say yet. the case is fairly recent and so i think a lot of states are still in a position where they are figuring out what they need to do. my colleague lena graff at the institute for justice has spent a lot of time going to different states and helping them understand what the case is about, what are the implications and what might you do as a result. in general, i think states are looking to create systems that create more oversight over licensing boards. this is that these occupational licensing boards for decades have been operating without any oversight and so consequently as we describe in the book the behavior is essentially monopoly
behavior and anticompetitive behavior. they have been able to do so because no one has paid much attention to what they do, so now in general states are looking at how can we create systems of more oversight of these activities, but it's too early to say exactly what form they are taking. >> that alcohol wholesale business in georgia seems to have a local but everything. is that common across the country and are there any successful initiatives to break that stranglehold that the wholesalers have? >> chapter one in our book. in fact, that's where in part with the name of the book come from. the word bottleneck draws on not only the general metaphor, but also the context of alcohol distributorship.
its, cross-country in the wholesalers are very powerful special-interest. so, efforts to break open that particular bottleneck probably the best example is one of our cases on direct shipping of wine where we were able to open up the market for direct shipping of wine. before that it was basically illegal in most states. that is probably the most pronounced when we have had other efforts, i think, have been in the area of around michael-- microbreweries that have operated under pretty strict restrictions on these years and so the popularity of the microbrews has started to open up the market to allow more access and more shipping and more direct consumer access, essentially cutting the distributor row between the producer and the consumer. microbrews is where we start to seemost of the movement in
there, but it's very small wins on the way, so far. >> you are part of higher education and it appears to me a lot of this licensing requires you to go to college or so, which may well be just a total waste of money. in my opinion we have two many people in college. >> i will address the first one first and that is the issue of the role of education, higher education and licensing. there is no question that higher education makes enormous amount of money off licensing. is huge. in cosmetology alone, you look at cosmetology programs are on the country and we are talking about women, young women, some men, but mostly young women who go to school and pay tens of thousands of dollars to bernie
license and the schools are earning enormous amount of money off those requirementsand they know it, so license bills created will often have testifying on their behalf professors from universities or students from universities, students are sometimes busted down to legislative committee hearings in order to testify on behalf of a bill or against a reform effort, so higher education does make an enormous amount of money. here's a quick anecdote. we had a steady come out called license to work. it came out in 2012, and we examined the requirements of 102 low to moderate income occupations across the country. of the report came out and i received an invitation to go to a policy consortium of higher education leaders and to talk about the study. they invited me to go, so i said
of course. they asked me to prepare 15 minutes and i prepared 15 minutes to the second. i went to the policy consortium with several hundred people there i was on panel. it was my turn and i started to give my presentation and you will not be surprised to learn that my presentation expressed skepticism about licensing. about halfway through my presentation the person who invited me came down to the front and a student front of me wanting me to stop. i thought, you son of a gun, you invited me. [laughter] >> and you asked me for 15 minutes and you are going to get 15 minutes, so i kept going and afterwards the question-- there was a panel of questions and they were all to me and they were incredibly hostile because they recognize the threat of
that message that we ought to reform occupational licensing. yes, higher education does make an enormous amount money off of it. unfortunately research on the topic has yet to be done, i think, in a helpful way. so, hopefully we in the near future will do some research on that to quantify the extent of their involvement. >> david martin, georgia council on economic education. ..
people don't realize this. this is something my colleague lee mcgraff, come to realize. a colleague of mine in the university of michigan. we coauthored a article in regulation magazine looking at many regulatory options. so the way we describe it, think of an inverted pyramid. at top of pyramid is market regulation, there is another myth, without licensing there is no regulation. in fact there is regulation. the market regulates. what does that mean? i'm regulated by my reputation and consumers behavior. today, consumers have the ability unlike at anytime in history to influence what happens within good, the markets
for goods and services. on your phone you now have more information about goods and services providers that the at anytime in history and has more information than any licensing scheme will ever introduce. there is regulation. it is regulation through the market. as you go down through the pyramid, there are layers of other type of regulation. the bottom is licensing, full licensing. in between those are various different types of regulation that do not necessarily impose upon the free practice of an occupation. so voluntary certification for instance, from a third party organization. bonding and insurance. registration. certification through the government or another organization. these are different forms of regulation that can be introduced short of full licensing. the advantage is, they can create the same the same
benefits of licensing without imposing upon free practice. we say first, figure out what is the need to be addressed through regulation. is the need to overcome asymmetrical information, for instance? is the need to make sure you know where somebody is so you can access them to bring some litigation against them? what is the need for regulation? then match up the regulation to the need in answer to the your question we would say there are examples in between licensing and no licensing or market regulation where there may be demonstrable need. here is one example. florida obviously deals with hurricanes on a fairly regular basis so they have an interest in protecting consumers against fly-by-night contractors who will come into the state and they may do shoddy or dangerous
work. so the state has an interest in helping consumers be able to contact or be able to know where these people are. who are these people? where can i access them? registration accomplishes that need. it meets that need without full licensing. there may be examples of a he need that he needs to be met and we can match up regulation with that short of occupational licensing. sir? >> i look at this in a very general way. most of us need to have a license to drive, drive an automobile. now the real public benefit comes from requiring us to have insurance, liability insurance,
or some sort of ability, if we do damage, to be compensated. now so my general question is, why don't we simply require that there be insurance in providing a service and forget about the regulation, allowing the insurance company to decide whether that person is qualified? >> that is one of the options in our menu of regulatory options. so what's the need to be met, right? going back to what i just said, what's the need to be met. think of the tree trimming business. what we care about is protecting consumers from some damage. i have a tree that needs to be trimmed. i hire a company. they come in. they saw off it limb and falls on your car, the externality problem. so, how can we fix that? we don't need a full license to
protect against that. we need to be sure the company has a way to make you whole because of your damage. so bonding or insurance can meet that need. you don't need to restrict entry into the occupation. we need to make sure that we're going to protect you against your loss. so in our menu, that is in fact one of the options. we in fact advocate for that rather than full licensing when the need is the externality problem. >> one last question. we unfortunately run out of time. one of the argument we hear, not just public health and safety but is reimbursement, quickly like a medical issue, physical therapy. we need the license or we can't get reimbursed from insurance companies or medicaid. what do you say to that? >> there is a way to address that without a full license. this has come up on a number of occasions we heard from practitioners in various difficult states.
actually, check that premise. don't take it on face value. so as an example in indiana, there were certain group of therapists had gone to the state that we need a license for the reason you just described. we looked into it, and they said, by the way the affordable care act create this is regulation. the regulations unthe aca say that we have to have a license to be reimbursed, we thought this is crazy. we have to find out if this is true. we went and looked. what we discovered, it doesn't actually say that, if you're going to be reimbursed into 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 have to have a license. but if your state disyou don't need any regulation or the regulation is something less than a license, that is all you need. so the first thing is to check the premise. but then after that, if it is in fact true, then what we say is, there's a way to create a form
of special recognition that does not restrict the free flow of workers into an occupation. so if you want to be reimbursed, you want to enter into contracts with the government or reimbursed with cms as an example, we'll create a special recognition, a specialty license just for those people so that if you're the type of person that wants to do that contract or be reimbursed you would have to earn this special recognition but, only if you want to be engaged this that type of circumstance. everyone else can still freely enter the occupation. only those that want to be reimbursed or enter into special contracts. so a special recognition can be created just for them without restricting free flow. all right. thank you. [applause] >> thank you, very much, dick
carpenter, institute for justice all the great work you do. we admire your work. we use it here in georgia. hopefully we get successful getting policies example in the future. keep an eye on policy website. we'll see you next month. we're adjournedded. [inaudible conversations]. >> so one of the things doctors do, we interrupt patients very quickly, something like eight to 10 seconds. you say i'm having this kind of pain? when did it start? what makes it worse? we can't help ourselves. i wond h