More Regulation to Make Less Regulation

A quick post today before a seminar. Apologies for lack of links. I will add later today.

Judith Sloan gets it right on regulatory overload for businesses – and on the tokenism of de-regulation and anti-red tape talk from our elected officials. Sadly, that seems to be true on both sides of politics.

What is concerning about the moves that exist to lighten regulation is that they involve national programs to, well, do something. Sloan mentions COAG initiatives, but the tendency goes beyond that.

But a national program on improving occupational licensing? Great not to have to re-register in every state, with slightly different requirements. But anything national starts to ring alarm bells. There is a real danger of more regulation to give us less regulation.

How about removing occupational licensing requirements for occupations that don’t need them? Or better, it’d be a huge reduction in wasteful spending – and time sinks – to eliminate pointless courses and credentialism for occupations that don’t need them. Or to get off the increasing qualifications = better service treadmill that adds huge costs to ordinary people with little significant different in quality.

The only problem is that in the bureaucratic world of supervision and quality monitoring, they need evidence. A box to tick. Credentials do that. An actual measure of performance is too hard. And mandating a course is  action.  Whether the credential makes any difference is ultimately irrelevant.

Human capital arguments are routinely trotted out for every mandated course or credential – more education increases lifetime income, it is claimed, contributes to society etc etc. Which is historically true. But as Tyler Cowen points out, that was before we had widespread education and all talented members of society had a chance. As a society it is doubtful we will benefit much from expanding university education rates merely for the sake of it. It is the type, quality and focus of our educated people that counts, not whether they go to university.

Do we really buy the nonsense that the more tertiary-educated people there are, the more will earn above average wages, no matter how many already have degrees? In the US the explosion in visual and performing arts degrees over the past 30 years has seen large growth in the number of degree-qualified low income earners in jobs unrelated to their degrees. And not just in that discipline.

Across the board regulatory agencies pull the trigger on credentials and licensing because they’ve implicitly given up on making any other real difference. And because they operate under systemic incentives that drive them to ignore how their actions make daily life more expensive, more difficult and less dynamic for ordinary people.

Too often mandated courses simply create a profit centre for training organisations. Take Responsible Service of Alcohol training, which I have done, for all bar workers in NSW. In short, it’s a compliance-driven joke. Guaranteed to pass, 90% irrelevant information, a pure tick box barrier to employment.

One of the unspoken issues is that most policy-makers in advocacy organisations and in the public sector tend to be middle-class, academically-focused rule followers. Credentials mean something to them; their identity is tied up in their own credentials. In the eyes of this type of person, credential equals status and worth; credential drives what you should earn; credential determines the quality of your argument.

Any move to reduce pointless credentialism has to address the fact that the culture and identity of the regulating class is so tied up in credentials that they don’t see the problem.

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