Licensed to exclude
Licensing laws limit competition and increase prices
- Tuesday, July 14, 2009
Earlier this month a federal judge struck down a provision of Connecticut law that forbid the use of "interior designer" as a job title by those not licensed by the state. The judge ruled correctly that the law unduly restricted commercial speech.
But more importantly, the law's chief intent was to restrict the supply of interior designers in the state — mainly to protect an interior-decorating cartel.
The Institute for Justice, a libertarian-minded law firm that litigated the Connecticut case, had already defeated an interior-design cartel in Texas and is currently litigating cases in Oklahoma and Florida.
As comical as this may sound, the cartelization of the interior-design-and-decorating industry is a nationwide phenomenon — and it has already captured Nevada. That's right: Nevada has a statute, NRS 623.180, that governs residential and interior decorating. It states, in part:
No person may practice ... As a registered interior designer or use the title of registered interior designer, in this State without having a certificate of registration issued to him pursuant to the provisions of this chapter.
One can imagine the reaction of the other inmates upon learning they've got a rogue interior designer among their ranks.
"So, what are you in for?"
"I recommend a fuchsia-lilies-with-chocolate-cream-leaves throw pillow to match a silk Tabriz rug ... without a license."
The Nevada statute claims that regulating interior designers is necessary to "safeguard life, health and property, and to promote the public welfare by improving the quality of human environmental design." Did unregulated decorators really amount to a serious problem before this law was passed?
Yes, maybe a licensed interior designer would know that the Neo-Plasticism of a Piet Mondrian composition would not go well with pre-Columbian pots. But who cares?
These ridiculous regulations serve a single purpose, and it has nothing to do with protecting citizens from valances that don't match the drapes.
According to an Institute for Justice study titled "Designed to Exclude," conducted by David Harrington and Jaret Teber, the licensing of interior designers and decorators was implemented specifically to reduce competition and to increase prices for consumers.
The end result for a city of a million or more people, say Harrington and Teber, is an additional $7.2 million in profit for licensed designers. In some cases, the regulation reduced the number of blacks, Hispanics and individuals without college degrees who work as interior designers.
As Southern Nevada's hepatitis outbreak should have taught us all, even when government regulations and regulatory bodies exist, they're often completely useless, anyway.
So Nevadans, beware: When the government says it is regulating for your health and safety, usually the law is instead simply restricting competition and protecting some special-interest cartel. In this case, Nevada's government regulation exists to increase the profits of the existing, privileged interior designers, under the guise of ensuring our safety. What nonsense.
Until a designer seriously injures a client with a tufted leather ottoman, the government should stay out of the living room.
Patrick R. Gibbons is an education policy analyst at the Nevada Policy Research Institute.