Regulation is Anti-Competitive

I have frequently quote this Milton Friedman quote about regulation ostensibly being about the consumer, but in reality existing to protect one set of competitors from another:

The justification offered is always the same: to protect the consumer. However, the reason
is demonstrated by observing who lobbies at the state legislature for
the imposition or strengthening of licensure. The lobbyists are
invariably representatives of the occupation in question rather than of
the customers. True enough, plumbers presumably know better than anyone
else what their customers need to be protected against. However, it is
hard to regard altruistic concern for their customers as the primary
motive behind their determined efforts to get legal power to decide who
may be a plumber.

Here is further proof, via Scott Gustafson, right here in Arizona:

Valley tattoo-parlor owners, eager to protect and burnish the reputation of their industry, are calling for state regulation of the tattoo trade. 

Shop owners have teamed up to form the Arizona Tattoo and Piercing Association, and one of the organization's first steps was to meet this week with state legislators who say they now intend to introduce legislation to regulate the tattoo industry... 

"What we heard from the tattoo industry is that they want to be more respected, and unless there is some sort of regulation, shops can exist which will give a bad name to the whole industry," Schapira said. 

He said he intends to introduce legislation to bring regulation to the tattoo industry at the upcoming session of the Legislature. 

Burton-Cahill said she considers the matter "an issue of public health."... 

"This is becoming an increasing trend with the reputable operators," said Will Humble, assistant director of the department. "The majority of the shop owners are doing things in a sanitary way but a handful is not doing everything they can. The bigger members of the industry are trying to make sure those disreputable kinds of places don't give tattooing a bad name."

Here you see it all - ostensibly aimed at the consumer, but in reality aimed at sitting on a few competitors they want out.


  1. Silentclaw:

    If by "sitting on a few competitors they want out" you mean "establishing safety regulations all tattoo shops need to follow".

    This is one of the few areas where regulations are not a bad idea. Unless you like the idea of people getting Hepatitis C because they went for the cheapest tattoo shop they could find, and that shop doesn't sterilize their equipment properly.

    I'd regard this as the same category as regulations which say that employees have to wear gloves or wash their hands when preparing food. Or mandatory vaccination requirements if kids are attending public schools.

  2. Bob Smith:

    "Regulation", as used here, is almost certainly a euphimism for "licensing". It's implicit in the phrase "want to be more respected". Setting standards for anti-disease measures (which I'm sure they already have) would likely have no effect on competition, but licensing will.

  3. Jon Nichols:

    Silentclaw, if the aim is health and safety, there is no reason that the 'Arizona Tattoo and Piercing Association' can't be it's own licensing board. Tattoo shops could then choose whether to join (and pay the fees). These shops would then be able to display a nice big plaque indicating that they've passed the ATPA health and safety inspection. As a consumer, I can decide to go to a ATPA shop or a non-ATPA shop (and I would likely choose the ATPA shop).

    But if the ATPA gets the government to regulate the industry, then I would also suppose that the people (i.e. a lot of people who don't have any tattoos or piercings) will be paying for the licensing and inspection requirements. So by going to the government, shops get the benefit of the licensing, the blocking of competition, and there is no cost to them.

  4. Streaker:

    Jon, you nailed the rebuttal to Silentclaw's comment perfectly.

  5. JRoss:

    Actually, I'm not sure licensing schemes are much of a burden on taxpayers. I haven't seen the proposed legislation but as in other industries, the state board that would probably be set up would get much of its funding from licensing fees from the artists they regulate. Maybe $200,000 a year from the state would provide for a small staff.

    The people that lose out the most are the artists who do not meet the trade association's standards, which, as in other industries, will be arbitrary and only loosely connected to safety. The state board will consist of established tattoo artists who have a clear interest in limiting the number of other tattoo artists. This same story has played out time and again in state after state, industry after industry.

    There's plenty of research showing that fierce competition leads to better safety outcomes than handing out licenses. If it's counter-intuitive why that would be one would be best advised to check out Chapter 9 of Milton Friedman's 'Capitalism and Freedom.'

  6. markm:

    Licensing is not necessary to establish health standards. Restaurants can foul up in many more ways than a tattoo artist, but I don't know of any jurisdiction that invited restauranters to get together and write licensing rules - a few clear sanitation rules and an occasional visit from the health department seems to be sufficient, without giving existing restaurants a means to choke off new competition.

  7. Jon Nichols:

    That's a good point markm. There's a big difference between laws and licensing. Having laws that say you have to clean needles is one thing. It doesn't restrict competition, it just establishes reasonable public health standards. Of course, governments have tended to go way too far in that regard as well, so I don't want to cheerlead too much, but it certainly seems more reasonable.