David Young

The Rule of Experts

Public policy is heavily influenced by the political activity of competing interest groups. Lack of expertise among legislators and the fact that state legislative staffs are small and poorly funded mean that much of the information and analysis provided by interest groups would otherwise be unavailable to policymakers. Interest groups provide regulators with information and analysis that can when properly used, serve the interests of the public. Naturally however, each group takes positions and makes arguments that it regards as beneficial to itself. The policymaker's job is to sift through arguments based on self-interest and discover the valid arguments affecting the interests of consumers.

In the public-interest theory of licensing, regulation is introduced for the benefit of the public at the urging of consumers or their agents. Government is viewed as a benevolent, if sometimes misguided, body that seeks to maximize social welfare. Regulations are imposed at the urging of consumer interest groups because regulators believe, rightly or wrongly, that efficiency or fairness or both will thereby be enhanced.

Critics of this hypothesis believe to the contrary, however, that regulators' and professional groups' self-interest has been and still is the primary motivator of regulatory legislation. And indeed the evidence shows that consumers rarely engage in campaigns to license occupations. If the purpose of licensing were to improve the quality of service, one would expect consumers, who might be the prime beneficiaries, to promote licensure, but licensing is systematically promoted by practitioners. The reasonable conclusion is that the interests of practitioners are advanced by licensing laws. Of course, public and private interests may mutually benefit from special-interest lobbying, but the fact that the impetus for licensure invariably comes from professionals at least casts suspicion on the alleged public-interest nature of these laws.

In contrast to the public-interest theory is the economic model introduced by George Stigler, which suggests that government behavior in democracies is determined by legislators who are seeking to maximize their chances of re-election by responding to political pressure from voters, who, in turn, are seeking to use their votes to maximize their economic welfare. Whether a given regulation is enacted depends on the amount and type of political pressure different groups bring to bear on legislators, not on any objective criterion for social welfare.