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Licenses and Certifications: Enemies of Innovation?

One of my peeves has always been government-mandated licenses and certifications. Doctors, lawyers, accountants, and interior designers all require these kinds of certifications. In my opinion, such certification requirements have the following kinds of negative effects:
  1. Stifling innovation. Getting certified typically requires immersing yourself, sometimes for years, in established ways of doing things and thus discourages people who thrive on innovation.
  2. Shortages. Certifications result in exclusive "clubs" that prosper by keeping competition low. The "clubs" typically help define the certification requirements, and the members of the club have a vested interest in making the requirements stringent.
  3. Expense. With shortages come expense. When you restrict the supply of people providing a service, the cost of the service stays artificially high.
A friend of mine who grew up in Mumbai (formerly known as Bombay), India told me that quality medical care is much cheaper, and much more plentiful, there than in the U.S. Apparently, you can walk down a typical block in Mumbai and pass several doctor's offices. If you have strep throat, you can spontaneously pop in for a $5 or $10 visit and come out with antibiotics.

India requires certain training for doctors, but the number of years of training are significantly fewer than in the U.S.


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