What's in Your Interest?

The New York Times smells self interest in industries' recent support for federal regulations. A variety of factors are in play, but one quoted source for the story voices the overall gut reaction of public advocates:

"I am worried about industry lobbyists bearing gifts," said Edmund Mierzwinski, consumer program director at the U.S. Public Interest Research Group in Washington. "I don't trust them. Their ultimate goal is regulation that protects them, not the public."

That strategy isn't a new contrivance, as illustrated by an historical note from Milton and Rose Friedman's Free to Choose:

As the campaign against the railroads mounted, some farsighted railroad men recognized that they could turn it to their advantage, that they could use the federal government to enforce their price-fixing and market-sharing agreements and to protect themselves from state and local governments. They joined the reformers in supporting government regulation. The outcome was the establishment of the Interstate Commerce Commission in 1887.

It took about a decade to get the commission in full operation. By that time the reformers had moved on to their next crusade. The railroads were only one of their concerns. They had achieved their objective, and they had no overpowering interest to lead them to do more than cast an occasional glance at what the ICC was doing. For the railroad men the situation was entirely different. The railroads were their business, their overriding concern. They were prepared to spend twenty-four hours a day on it. And who else had the expertise to staff and run the ICC? They soon learned how to use the commission to their own advantage.

These examples come to mind because David Palmisciano, a member of the Special House Commission to Examine the Issue of Licensing Builders and Contractors and president of Carpenters Local Union 94 today insisted, in a letter to the Providence Journal responding to my piece on increased regulation of building contractors in Rhode Island, that the public must be protected from "unscrupulous contractors." Why unscrupulous practices can't simply carry civil or criminal penalties as an after-the-fact disincentive, Palmisciano doesn't explain. Instead, he writes:

Requiring contractors to have some basic qualifications and training is certainly no hurdle — a good contractor should be interested in furthering their knowledge of the trade. As this is no more than is required of the nurses and doctors who work to ensure the public health in our hospitals, it is certainly not an unreasonable requirement for those building the hospitals.

Personally, I'm very interested in expanding my knowledge of my trade of carpentry. (That is, after all, my main route toward increased pay.) I'm just not persuaded that my limited time and resources are better spent on official "continuing education" than on, oh I don't know, plying my trade. And as far as I can see, no educational regime is required before becoming a contractor. No doubt the unions and other established players would salivate over the possibility of forcing all potential competition to go through a certain number of years of training, but those who currently look to construction as a reasonably well-paying alternative to poverty might find the investment impossible, or the narrowed entryway to the career impassible. Moreover, the housing market would surely suffer — and consumers would surely balk — if all carpenters were as well remunerated for their investment in training as nurses and doctors.

I've a feeling, however, that, rhetoric notwithstanding, the consumer is not top of mind for the regulators. Writes Mr. Palmisciano:

... the commission sought to create a level playing field for legitimate contractors to compete. Currently, both union and reputable non-union contractors are facing a dilemma. Unscrupulous contractors who skimp on basics such as carrying workers’ compensation insurance or illegally misclassifying employees as independent contractors gain an incredibly unfair advantage over contractors who follow the rules.

My op-ed called the sponsor of the relevant legislation, Charlene Lima, "the champion of the established player," and apparently Mr. Palmisciano agrees. "Leveling the playing field" means increasing the cost of construction to working Rhode Islanders and raising barriers against competition to the benefit of just those players.

There are all sorts of ways to be unscrupulous Mr. Union President, and some of them involve selling protection to the public for work that will gradually become too expensive for more and more families performed by workers who are more and more smug in their incumbency.