Occupational freedom is one of the most pressing issues of our time. The ever greater power of machine intelligence will disrupt more and more industries. For instance, self-driving vehicles will cause many people in the transportation industry to lose their jobs. People in those industries will then look for new positions. But the barriers of occupational licensing have been increasing in the last decades, making it harder to move to new jobs.
The judiciary could be an important force against such irrational restraints on occupational freedom. That is the social background of North Carolina Board of Dental Examiners v. FTC, a case that was argued before the Supreme Court yesterday. As I have noted previously, the case concerns the ability to people without a degree in dentistry to offer teeth whitening services. A state board has told them to desist. What makes the case interesting under antitrust law is that the substantial majority of the board is elected by dentists and dental hygienists—precisely the groups that stand to lose from this competition.
Supreme Court antitrust doctrine permits private actors to engage in such anticompetitive behavior only if they are actively supervised by the state. Here the attorney for the Dental Board argued that requirement was met because part-time Board members took an oath to follow the law. At the oral argument most Justices were skeptical that an oath could change the fact that dentists elected by dentists would look after the interests of their colleagues rather than the public. The consensus view seemed to be that this board did not resemble a state agency so much as trade association that was given state power without any substantial supervision. I expect a narrow opinion that holds that representatives of an industry chosen by the industry will not be treated as state agency that is immune from the antitrust laws.
But the dentists are then likely to lobby to create a dental board to which the Governor is required to appoint only dentists as members. Even if the Governor is given a freer hand in appointments, well-organized dentists may capture the agency and it may still fence out non-dentists fully capable of making teeth look brighter. Ultimately, promoting occupational freedom will require the judiciary to invalidate such protectionist schemes without any plausible public health or safety justification, regardless of the agency structure that establishes them.
Lower courts have already been moving toward this result. Last year the Fifth Circuit held that that a Louisiana regulation that required sellers of caskets to obtain a funeral home license violated the equal protection and due process clauses. According to that court, the state had shown no need for the regulation to protect consumers and the court held that economic protectionism was not by itself a rational basis.. The monks of St. Joseph were therefore able to ply a trade common to their calling since the middle ages.
I believe it is likely that other circuits will join the party and strike down egregious occupational protectionism. Public choice has made judges more aware of the danger of government capture by narrow interest groups. And it is becoming clearer that one of the causes of unemployment and underemployment in the nation is excessively restrictive licensing regimes. Let’s just hope that the courts move quickly, because the disruption to employment from computational machines is going to accelerate.