Friday, October 15, 2010

Regulation statism

Push to End Job Barriers Rattles Greece and Economy - NYTimes.com

The Times articles how licensing  and other regulations constrains job creation and increases prices:

Antonios Avgerinos, 59, a retired army pharmacist, always wanted his own pharmacy here. And why not? Greek law ensures that pharmacists get a 35 percent profit on all drugs sold, even over-the-counter medications.

 But Greek law also limits just about everything else about pharmacies. They must be at least 820 feet apart and have a likely market of no fewer than 1,500 residents. To break into the business, an aspiring pharmacist generally has to buy a license from a retiring one. That often costs upward of $400,000.

For selling a cancer drug for $4,200, Mr. Stournaras said, a pharmacist makes a profit of around $1,400. “That’s a movement of the elbow that is more expensive than one of Roger Federer’s.

Imagine you are out of work, but you have a talent for driving a car, or cutting hair.  Unfortunately, you have no legal way to to do so, if you do not have the thousands of dollars required to obtain a license, or the 6 months or more to earn one.

Experts say there are about 70 closed professions here, including those of lawyers, engineers, taxi drivers, speech therapists, welders, notaries, street market vendors, newsstand operators and architects. Each is protected from competition by a byzantine tangle of regulations and licensing requirements that result in high prices for consumers and a reliable living for insiders.

No use shopping around for a less expensive lawyer or notary, for instance. They all charge fixed fees, as do many other professions. There are numerous restrictions on licenses, too. Some are not even available to some classes of citizens. For instance, newsstand licenses are reserved for war veterans, the disabled and those with large families to support. Others are limited, like the number of long-haul trucking licenses, which has been frozen for 25 years.

The article goes on to describe how regulation makes trucking more expensive 45 miles within the country, than 600 miles to a destination outside it.  It gives foreign manufacturers a huge advantage in logistical costs.

But then the question is why the Times chose Greece as their example.  For the USA suffers from the same calamity, and in many cases, entire industries are off limits.

Fossil fuel development is ailing in his country despite representing 80% of our energy sources.  Transition time alone ensures this percentage remains relatively constant for 50 years.  The seafood industry is virtually non-existent because of EPA and other regulations.

We do not need to recount the licensing requirements or regulations which form barriers to entry for specific professions to give examples of the manner in which governments strangle their own economies and force imports.

Strategic removal of even the most outlandish of these regulations would result in 500,000+ jobs a month in the USA.  Is anyone listening?

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