Why Do We Need Licenses?

You need a license to operate a motor vehicle on a public roadway. You need a license to enter into a marriage that the government will recognize. You need a license to enter into some professions or occupations. Why, even your dog needs a license to be allowed to live in some jurisdictions. But what is the real reason that the government requires everyone to get a license?

The government always likes to tell us that it is for our own good and it just wants to protect us from all those dangerous people out there who would endanger us all by engaging in licensed activities without a license. Interesting then that for a lot of licenses one must obtain from the government the main qualification is the ability to pay a fee.

When we hire an unlicensed person to perform a service for us (a plumber, for instance) if he causes us harm or loss while he does the job then we can file criminal charges if his actions were intentional or file a lawsuit if his actions were the result of negligence or indifference. If the person is licensed, we are usually restricted to filing a complaint with the licensing agency who will judge our complaint based on the ratio of dissatisfied customers to satisfied customers and the licensee is the party responsible for supplying the information on how many customers were satisfied (meaning basically that the other customers didn't file a complaint).

The quickest way to understand that no one is protected by government licensing is to try to sue the government for the behavior of a person it has licensed. The government will argue that it is only responsible for making sure the licensee is qualified for the license at the moment the license is issued/renewed and it will take no responsibility for his behavior afterwards. Therefore if the government will admit that a license does not insure that a person is competent for that activity he has received a license to engage in, then who really benefits from licensing?

The quick answer is the licensee, particularly in reference to professions and occupations. Licensed professionals are always the first to complain to the government about unlicensed persons engaging in their line of work. Due to licensing requirements, the number of persons who can enter the work force of a particular industry or service are restricted and when something is restricted the price of that object rises. Licensees can charge more for their labor because the amount of competition is reduced which is the real reason they are so quick to report unlicensed persons to the government.

In Colorado Springs, Colorado, an enterprising mother of school-age children tried to turn her "Mom's Taxi" into a money-making machine by offering a service where she would pick up students at their schools and then transport them to their after-school activities for a fee. One of the local cab companies complained to the city's cab and taxi licensing board that she was operating a taxi service without a license and the board agreed. She had to stop her business and was then allowed to apply for a license but one of the requirements was that she had to prove the city's economy could support another taxi service. Since she had already been running a business without the license, I believe that part was self-evident and if she kept running her business while one of the others went belly up, I believe she would have proved she was more competent at satisfying her customers...