Robin Hanson observes the following about labor market protections for low-status workers:
While economists donโt see a plausible efficiency rationale for work hour limits that exclude high status work, we do see a quite plausible non-efficiency rationale: people like both to show their concern about the โdowntrodden,โ and their dislike and defiance of big corporations. And they can signal both these things by blaming the plight of the low status on their employers, and then claiming to help by regulating employer choices about work details, such as work hours and safety.
Note that this can function as a signal of caring about low status workers even if it actually hurts them โ signal observers need only think that these signalers believe that it helps. And the plausibility of this story is increased by the fact that we commonly regulate low status folks more than high status folks, supposedly to help them. For example, we and our regulations show more concern about recreational drugs (e.g., crack) favored by the low status, about alcohol availability to the low status, and about teen mothers more than 40+ moms.
Given the lack of a plausible efficiency rationale and a quite plausible non-efficiency rationale, I tentatively conclude that we mainly limit low status worker hours as a way to signal care and defiance, rather than to address a labor market inefficiency.
Labor market protections for high-status workers tend to take a very different form: they tend to facilitate the creation of competition-dampening cartels. Consider the evolution of the American Medical Association and the medical profession, as recounted by Robert Whitaker in Anatomy of an Epidemic, which is seriously one of the best books Iโve ever read (I will revisit it soon):
At the turn of the century, the AMA set itself up as the organization that would help the American public distinguish the good from the bad. At that time, there were fifty thousand or so medicinal products sold in the United States, and they were of two basic types. There were thousands of small companies that sold syrups, elixirs, and herbal remedies directly to the public (or as packaged goods in stores), with these โpatentโ medicines typically made from โsecretโ ingredients. Meanwhile, Merck and other โdrug housesโ sold their chemical preparations, which were known as โethicalโ drugs, to pharmacists, who then acted as the retail vendors of these products. Neither group needed to prove to a government regulatory agency that its products were safe or effective, and the AMA, eager to establish a place for doctors in this freewheeling marketplace, set itself up as the organization that would do this assessment. โฆ The AMA published the results of these tests in its journals and provided the best ethical drugs with its โseal of approval.โ โฆ
With this work, the AMA turned itself into a watchdog of the pharmaceutical industry and its products. By doing so, the organization was both providing a valuable service to the public and furthering its membersโ financial interests, for its drug evaluations provided patients with a good reason to visit a doctor. A physician, armed with his book of useful drugs, could prescribe an appropriate one. And it was this knowledge, as opposed to any government-authorized prescribing power, that provided physicians with their value in the marketplace (in terms of providing access to medicines).
The selling of drugs in the United States began to change with the passage of the 1938 Food and Drug Cosmetics Act. The law required drug firms to prove to the Food and Drug Administration that their products were safe (they still did not have to prove that their drugs were helpful), and in its wake the FDA began decreeing that certain medicines could be purchased only with a doctorโs prescription. In 1951, Congress passed the Durham-Humphrey Amendment to the act, which decreed that most new drugs would be available by prescription only, and that prescriptions would be needed for refills, too.
Physicians now enjoyed a very privileged place in American society. They controlled the publicโs access to antibiotics and other new medicines. In essence, they had become the retail vendors of these products, with pharmacists simply fulfilling their orders, and as vendors, they now had financial reason to tout the wonders of their products. The better the new drugs were perceived to be, the more inclined the public would be to come to their offices to obtain a prescription. โIt would appear that a physicianโs own market position is strongly influenced by his reputation for using the latest drug,โ explained Fortune magazine.
The financial interests of the drug industry and physicians were lined up in a way they had never been before, and the AMA quickly adapted to this new reality. In 1952, it stopped publishing its yearly book on โuseful drugs.โ [Emphasis added]
Briefly, the poor get work hour limits and the rich (those who can afford to make the high up-front investment medical training, and who have the cognitive skills and social networks needed to take advantage of educational opportunities) get lucrative monopolies.
One โsolutionโ is to provide the poor with lucrative monopolies of their own, e.g., through tight restrictions on labor market entry. This approach creates a class of excluded persons, but one can see why many on the left gravitate towards this approach: it is a coherent reply to the unfairness of labor market cartels for the rich. A perhaps more attractive approach would be to break the cartels for the rich, to encourage exploratory innovation rather than investment in the perfection of rent-seeking.






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