[inaudible conversations] good morning. Im president of the policy foundation and i would like to welcome everyone to our february leadership breakfast. Most importantly, i would like to welcome our local officials that are here today and we appreciate your service. We have got a great event lined up for you today on an issue that is near and dear to our hearts and it is a key part of something we feel strongly about aand economic opportunity. To introduce the speaker i want to bring up the Vice President anita. [applause] good morning. Im a little shorter and closer to the microphone so i hope you can hear me a little better. I would like to welcome today but i want to tell you how much we have worked over the years for the institute of justice. I think the motto is leased or government. He is the coauthor come and dont miss your opportunity to get a copy of this. It is excellent and shocking. Its gaining the government for power and private profit. Hes also the director of Strategic Research for the institute of justice where he worked for the staff and attorneys to define, implement and manage the social Science Research related to the institute mission. Hes an experienced researcher and has presented and published on a variety of topics ranging from education policy for the president ial elections so catch him later to talk about that. His work has appeared in academic journals including the Economic Development quarterly and economic affairs, before him the urban law journal, International Journal of ethics, education and urban society, urban studies, regulation and government governance and magazines including regulations. The results of the research has been quoted in newspapers such as the new york times, Washington Post and the wall street journal. The research for the institute of justice include the reports such as the unintended reform and licensed to work, private choice and public programs, how the private institutions secure social services, defining cartels will be insiders cut out competition. The Eminent Domain abuse if you know the institute for justice is done work has resulted in some of the toughest Eminent Domain legislation so we thank you for that. Before working with the institute for justice doctor carpenter was a schoolteacher and principal and faculty member at the university of Colorado Springs where he is currently a professor and has a phd from university of colorado he has spare time in his life he tells me that he is a classically trained musician and percussionist and a pilot and promises he doesnt do them at the same time. [laughter] so we would like to welcome doctor carpenter. [applause] good morning. Its a pleasure to be with you to talk about the book and chip sends his regards as well. He is in retirement in utah so that would have been quite a trip for him to come. This morning i want to begin by introducing you to somebody from our buck and that is ken tower bridges, who owns and operates bridges funeral home and tennessee, but shes not from tennessee, shes actually from oklahoma. She started her Business Bear but had to leave oklahoma when she ran afoul of the wall. It turned out that kim was engaged in a dangerous practice of selling caskets without a funeral license. Before that come in the early 1980s, tim was kim learned thof the relationship between hd work and success and enjoyed a lot of success as a member from different businesses and eventually ended up at one of the nations largest funeral companies and their she sold Funeral Services and saw this as a way to combine her driving business with the desire to help people with her work and asked before she was very successful in this business. She noticed the need for a classic entrepreneur and that was she saw in the funeral industry the merchandise that was sold was marked up a significant amount, caskets for instance would be marked up from 250 to 600 so she began to think how can i put together a Business Model that would enable me to sell the same merchandise. They were the Concepts Online and i as the name implies the Business Plan is to sell all of their mulch merchandise and they would take advice from them so they would have inventory on hand and that enabled them to keep their costs low and then they pass the savings on to consumers. The problem was the Oklahoma State law says if you want to sell a caskets to consumers in oklahoma and you are in oklahomabased company, you must be licensed as a funeral director and kim was not. She could have gone back to earn this license but it would have required her to go to school for two years and she would have to complete an internship at which time she would involve 25 bodies and then have a brick and mortar business in which she would have a selection room, preparation room, viewing room and would have to have inventory on hand, none of which they were interested in. As if it were not irrational enough to require them to sell a box because thats the casket is is an empty box. It creates a circumstance where the oklahomabased company had to be licensed to sell to consumers in oklahoma but the companies outside of the state who sold it to the consumers in oklahoma didnt have to have a Funeral Directors license. So she could have taken her business which is essentially the computer servers. She wanted to raise her own family in her hometown. And she thought the law was wrong. It enabled Funeral Directors to bark up the merchandise and tickets advantage of those that were of the vulnerable time in their life, so she stayed in oklahoma and she thought the law. She wasnt the only one who thought that it was wrong. Some legislators did as well to beginning in 1999, they began introducing a series of bills every year to remove the licensing for the casket sales. Ken testified on behalf of the bills and every year they lost. They lost for one reason and for one reason alone and that was a licensed Funeral Directors, the industry because of the legislature and they would lobby aggressively to protect their license. Saturday every year if you want to sell a casket and you were in oklahomabased company, you must have a Funeral Directors license. What kim and the legislators ran into is what we call in our book is someone that advocates for the creation or the preparation of government regulation particularly in occupational license to restrict the free flow of workers into an occupation to enjoy an economic benefit as a result. The bottle makers are evident throughout the economy. We know that the doctors and attorneys have licenses and we generally know that barbers have a license or cosmetologist of a license but the research that we published indicates that the occupations that now require a license might surprise you. 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 locksmith or foresflorist the list goes on a. They were not license but now they are because of the work. For 25 years, we at the institute of justice have thought to reform the occupational licensing and we have represented individuals who want nothing more than to exercise their right to earn an honest living. The law firm as you heard describedescribed week i preseno people for 25 to 26 years was on the issue of occupational licensing and economic liberty, and we have continued to litigate on behalf of these individuals throughout this time. What we have discovered in all of this is there is a nice myth about occupational licensing. The licensing is far created 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 in their business but the answer to the question like so many is to follow the money. Those in the industry come to recognize that a license excludes competitors and enables them as a result for their own benefit. The push for licensure is more of an economic advantage. When you hear them ask for a license, the language will often be Something Like we need this license to come for a certain amount of recognition. We want to be like the other occupations or professions that are already licensed. A recognition that comes only with licensure. As a result, when a reform bill is introduced in the legislation or a license is challenged in court, they will have a Ferocious Campaign in order to protect their license and the industry is just one example. In 25 years we have yet to find a single example of a license that is created by any means or protected by any means other than the bottle makers. If this persists. The licenses exist for some demonstrable reason when in fact it isnt true. We wrote the book to dispel this myth but also because we wanted to claim a new term. We wanted to create a new bird with the descriptive and useful and accessible and perhaps most importantly, pejorative. We wanted a word that could be used to name and shame those that engage in this activity or enable it, so we drew on the wellknown metaphor bottleneck something that restricts free Flow Movement and we wanted to take advantage of the word so we are familiar with the traffic that we see even this morning and we are familiar with the effect of that. That is the twohour morning commute as a result so we wanted to take advantage. Each industry in the buck from cosmetologist to the dietitians and nutritionists have exhibited special behavior. They write campaigns to the legislators are crowdin are crop legislative carries for the Industry Data capital, special awards to legislators, Campaign Contributions are going through a Committee Hearing and filling the testimony full of unsubstantiated facts and scary sounding anecdotes. For example, your neighbor to the south several years ago considered whether to repeal the licensing bill for interior designers. That bill received enormous attention even from outside of the state. Hours of testimony during which interior designers talk about the importance of the license. One has been said that if you repeal this law it will result in the deaths of 88,000 people. [laughter] our book is somewhat backward looking. The bottle knecking we describe something that continues today and there is no better example than the American MusicTherapy Association and the board for therapists. These organizations have mounted a nationwide campaign. The language is always the same. We need to protect Public Health and safety from the unlicensed practice of therapy. Every one going back says the same thing. Through the advocacy efforts of the Regulatory Affairs team and a statebased task forces, they go state by state asking for a license for Music Therapy. To date more than half a dozen have already adopted such a license. The fact that the states have adopted the license is a consequence of some demonstrable need. Instead, it is because they have mounted this campaign and there is no better example than in georgia. Senate bill 414 went before the committee. They had a hearing and the only people that could testify in support for music therapists both from the national and the state organization. They received a packet of information. Those that support from consumers or Georgia College or those that are a faculty member in Music Therapy at no time did anyone testify against the bill. At no tim time was any and all evidence of her introduced demonstrating a significant threat to Public Health and safety and at no time did a single legislator or anyone else ask a challenging question or express any skepticism about the bill. And now if you want to work as a music therapist in georgia, you will do the following. You will earn a bachelors degree or higher from an approved program and the program has to be approved by the music therapist association. The same people that lobbied for the bill. He will pass a National Examination that is offered only by the music therapist. Youll pay more than 300 for the privilege and complete 1200 hours of internship. You will have to be 18 years of age or older and pay fees to the state of course and pass a criminal background check. Research on occupational licensing that we and others have done indicate that as a result. Consumers in georgia will pay as much as 15 more for their Music Therapy services, but they will not necessarily enjoy the greater protection for the public. And if at some later date the legislature were to try to reform the Music Therapy license, they would be overrun by the therapists but now joined by members on the Music Therapy boarboard are also seeking to protect their licensing. Often those of us that advocate for the reform we do so by making the argument that this is more than just an issue of economic growth. This is also an issue of creating a just society. Society that is built on preserving the right to earn an honest living free from unnecessary government regulation. There is nothing just about telling someone he may not work in the occupation of his choice of which he is best suited simply because it introduces too much competition for someone of his more politically savvy. In 1787, james is the first object of government and for Madison Property rights extended to more than Just Real Estate or personal property as we think of it. It covers everything to which they may attach to value or have a right including the opinions in the pre communications of them and the objects on which to employ them. Madisons disdain. There is property security under it and where the property that a man has his personal safety and liberty. The monopolies deny the use of the faculties and the choice of their occupations which not only constitute their properties the general sense of the word that means that they acquire in property. In condemning the arbitrary seizures of one class of citizens with the service of the rest or arbitrary extensions to monopolies madison could be talking about the licensing today and bottle neckers today. So to the elected officials today should work to protect property rights. They expande expand economic li. Our book talks about bottle necking in various occupations. He also told the story of courageous men and women. We have a microphone that needs to be used. I was going to ask you what youve seen around the country as a result of the supreme courts decision with the ftc and the North Carolina board and i know we have taken measures i certainly supported. The state of figuring out what they need to do. So my colleague at the institute of justice has been spending a lot of time going through the different states helping them understand what is the case about and what are the implications and what might you do as a result. But in general, the states are looking to create systems with much more oversight. The occupational licensing boards for decades have been operating without any oversight and so as we describe in the book, the behavior is essentially the monopoly behavior and anticompetitive behavior. Theyve been able to do so because no one has paid attention to what they have been doing so in general, the states are looking at how can we create systems of more oversight in these activities. The alcohol wholesale business, is that common across the country, and are there any successful initiatives to break the stranglehold that they have . That is in part where the name of the book comes from. The word bottle necking comes from the alcohol distributorships. They are a very powerful special interests, so efforts to break open the best example is one of our cases on direct shipping of wine where we were able to open up the market for the direct shipping of wine and before that it was basically illegal in most states. Others have been around the area of microbreweries that have obligated under pretty strict restrictions, so the popularity of the microbrews have started to allow more access and shipping and direct consumer access essentially cutting out distributor between the produc producer. So thats where we started to see most of the movement. But its very small wings along the way so far. You are part of the Higher Education. And it appears to me a lot of the licensing requires you to go to college and it may be a total waste of money. In my opinion, we have too many people in college. [laughter] i will address the first one first. That is the issue of the role of education and licensing there is no question it makes an enormous amount of money off of licensing. Its huge. In cosmetology alone when you look at the programs around the country, we are talking about young women, some men who will go to school and they will pay tens of thousands of dollars to earn a license and the schools are earning an enormous amount of money off the requirements and they know it so they will have professors from universities that bus down to the legislative Committee Hearings to testify on behalf of a bill or against a reform effort. Higher education does make an enormous amount of money so heres a quick anecdote on that. We had a study coming out called license to work that came out in 2012 if we examine a licensing requirement of 100 to blow to moderate income occupations across the country. 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 and they asked me to prepare 15 minutes. Of course i prepare to 15 minutes to the second. I went to the policy consortium with several hundred people on a panel. I started to get my presentation and you will not be surprised to learn that expressed skepticism about licensing. So about halfway through the presentation, the person that invited me came down to the front and stood in front of me and wanted me to stop and i thought you son of a gun you invited me and asked me for 15 minutes and youre going to get 15 minutes. So i kept going. And afterwards, the questions were all to be and they were incredibly hostile because they recognized the threat of this message that we ought to reform the licensing. So it does make an enormous amount of money off of it. Unfortunately, the research on the topic is yet to be done in a very helpful way. Hopefully in the near future we will do some research to quantify the extent of their involvement. Georgia council on the economic education. Like most studies i can see it continue on here for the appropriate and inappropriate. We have some examples where it is appropriate to have strong licensure plaques to the for too many years we have lived in a binary world of occupational licensing. It is either no licensing or full licensing. But that is actually not correct. We do not live in a binary world of occupations. In fact, there is a menu with regulatory options that can be used. People dont realize this, this is again something that my colleague is hoping more people will come to realize. There is regulation. The market regulates. What does that mean . It seems as somebody that provides goods and services, iem being regulated by my reputation innocence and so today consumers have the ability unlike any other time in history to influence what happens within the markets for goods and services. On your phone, you now have more information about the goods and services and more information than any licensing scheme will ever introduced, so there is regulation in the market has to gas yougo down the pyramid there other types of regulations. The bottom is full licensing. In between they are various types of regulations that do not necessarily impose upon the free practice of the occupation. So the voluntary certification per instance in a thirdparty organization. Registration, certification for the government or another organization. These are different forms of regulation that can be introduced short of licensing and the advantage is they can create the same without imposing upon the free practice so what we say is the first is the need to be addressed through the regulation. Is it a need to overcome the asymmetrical information per instance or is it a need to make sure you know where somebody is so you can access them to bring them some litigation against them or what is the need for the regulation and then match up the regulation to the need. So we would say there are examples between the licensing or the Market Regulation where there may be some demonstrable need and here is one example. Automobiles with hurricanes on a regular basis and so they have an interest in protecting consumers against flybynight contractors who will come into the state and have dangerous work. So they will be able to contact or know where these people are how can i access them. So the registration accomplishes that feed and meet meets that nd without full licensing. So there may be examples of the need to be met and we can match up regulation short of occupational licensing. I look at this in a general way most of us need a license to drive an automobile. It comes from requiring us to have insurance, Liability Insurance or some other kind of an ability if we do damage to be compensated so my general question is why dont we simply require that there be insurance in providing insurance and forget about the regulation allowing the Insurance Company to decide whether that person is qualified . That is one of our options. What is the need to be met, going back to what i just said. Think of the tree trimming business. What we care about is protecting consumers from some damage. This limb falls on your car, the externality problem. So how can we fix that . We dont need a full license to protect. We need to make sure the company has a way to make you hold because of your damage. So insurance can meet that need. We dont need to be strict and treats the occupation. We need to make sure we are going to protect you against your loss. In our menu that is in fact one of the options, so we advocate for that rather than for licensing and the need is the externality problem. One last question. We have unfortunately run out of time. One of the arguments we hear not just in Public Health and safety that reimbursement on the medical issue and therapy. We heard this, we need a license or we cant get reimbursed. What do you say to that . Theres a way to address that without a full licensing this has come upon a number of occasions we heard from in different states. The first thing we say is actually to check the premise. Dont take it at face value. So for example, in indiana there were a Certain Group of therapists that had gone to the state and said we need a license for the reason you just described. We looked into it and they said by the way, the Affordable Care act creates this regulation that says we need a license to be reimbursed so we thought this is crazy we must now we have to find out if this is true so we looked into what we discovered was that it doesnt actually say that. It says if you are going to be reimbursed, you have to be recognized by your state with whatever the state requires so if your state says you must have a license then you have to have a license but if your state says you dont need any regulation or the regulation is something less than a license, that is all you need so the first thin is the fo check the premise. After that if it is in fact true, then we say there is a way to create a form of special recognition that doesnt restrict the free flow of workers into the occupation so if you want to be reimbursed and enter into a contract with the government for instance they will create a special recognition just for those people so that if youre the type of person that wants to do that contract and be reimbursed, you would have to earn this special recognition but only if you want to be engaged in that type of circumstance. Everyone else can still enter the occupation. Its only those that want to be reimbursed or enter into the special contracts, so it can be created just for them without restricting the free flow. Thank you. [applause] thank you very much for all the great work that you do. We admire your work and we use it here in georgia and hopefully we can be successful in getting these approved in the near future. Keep an eye on the announcement for next months event and we will see you next month. We are adjourned. [applause]