Economy & Business

Toothy Tyranny

(Eva Vargyasi/Dreamstime)
A cartel falls in North Carolina.

In the annals of petty tyranny, the dental cartel of North Carolina merits at least a footnote, having taken its case all the way to the Supreme Court to argue that it should be empowered to use the levers of state government to exclude its competitors from the marketplace.

The black market in tooth brightening just got a little whiter.

The issue was not so much whether non-dentists should have the right to practice what North Carolina insists, ridiculously, is dentistry — offering tooth-whitening services and products — but whether the question should be decided by dentists. The North Carolina state board regulating the activity is composed of dentists — “active market participants,” as Justice Kennedy put it — an arrangement that is distressingly common. The Pacific Legal Foundation has taken the lead in a case involving moving companies in Kentucky, a state that requires any new moving company to prove that there is a “public need” for a new firm and obtain a “certificate of public convenience and necessity” before going into business, and giving effective veto power over the issuance of such certificates to the state’s existing moving companies, which thereby prevent new competitors from entering the market. This is made easier by the fact that Kentucky law does not define “public need,” so that it can mean whatever the relevant interest group wants it to mean at any given moment. PLF has successfully defeated similar cartel arrangements in the moving business in Oregon and Missouri.

The Court’s conservatives took a liberal view of the North Carolina dental cartel, with Justices Alito, Scalia, and Thomas arguing in dissent that the dental board was simply administering the state’s licensing requirements under the law. The legal question is whether state agencies are immune from the antitrust laws under which the North Carolina arrangement was challenged, and the answer is, as it long has been, “Yes, generally, but . . . ”

A legal opinion shared by Justices Alito, Scalia, and Thomas deserves to be given the benefit of the doubt, and the ancient observation that “unconstitutional” and “stupid” are not synonyms applies. Perhaps it would have been better if the reform had come from North Carolina’s legislature rather than from the Supreme Court, as a strictly legal matter. But as a matter of economics and public policy, North Carolina’s arrangement is indefensible, as are the scores of other cartel arrangements in the several states that are structurally identical to it.

Licensing rules deserve categorical scrutiny. What is arguably prudent and necessary when it comes to pediatricians and nuclear power plants is not necessarily needed when it comes to moving companies, interior designers, flower arrangers, and hair colorists. In Virginia, yoga instructors must be licensed by the state. As Veronique de Rugy points out in National Review Online, the share of American workers subject to occupational licensing has grown from one in 20 in 1950 to one in three today. Many of those licenses require degrees of questionable merit, the purpose of which is to provide employment opportunities for Justice Kennedy’s “active market participants” — the people who impose requirements for formal coursework in flower arranging are generally the flower arrangers who supplement their incomes teaching those courses. Those progressives who are bothered about for-profit institutions that charge exorbitant tuition, often funded by student loans, for career-oriented degree and certificate programs ought to be asking whether the completion of such programs ought to be a legal requirement for, say, nurse’s assistants who mainly perform administrative work or simple labor such as the transportation of patients.

These requirements are part of a vast middleman economy in which opportunists in both the public and the private sectors profit by standing between people and their goals. This very often comes at the expense of people at the lower end of the job market, those with the least in the way of skills and formal education. There are a great many intelligent, energetic, entrepreneurial people without the inclination to pursue four-year college degrees or other postsecondary education, but who might thrive, both economically and personally, as operators of moving companies or hair salons. For that matter, there are highly educated and academically oriented people who thrive in those industries, too: You may know Karol Markowicz’s work from the New York Post, but she also operates Fix Beauty Bar in New York City, where the byzantine laws and regulations governing residents from head to toe — literally; no one may work as hair colorist or provide a pedicure without a state license — make it much more difficult for people without substantial resources and connections to work in many occupations, much less to start a business.

That’s a comfortable situation if you already own a successful moving company or nail salon. If you are a young person looking to make your way in a hostile job market, or a mother looking for earning opportunities after some time out of the work force, or disinclined to invest four years and $100,000 in a college program related only remotely to your real interests and life plans, you might find yourself wondering why those who are a bit higher than you on the economic ladder have the legal right to cut off the bottom rungs just as you are reaching for them.

And if you were a member of a political party looking to improve its standing among Americans suffering from economic anxiety, you might see this as an occasion upon which doctrinaire economic libertarianism and the self-interest of what we sometimes call the working class converge in potentially fruitful ways.


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