Opinion

FTC Stands Up for the Little Guy

“In America, you have to get licenses for everything! And they don’t even transfer from one province to the next — even for Uber!”

That wasn’t some libertarian campaign speech. That was my Uber driver in Cairo. He’d been to visit his cousin, and couldn’t believe just how bureaucratic the “Land of the Free” really was.

He’s right: Nearly 1 in 3 Americans needs an occupational license — not just doctors and lawyers, but travel guides, florists, and even hair braiders, too.

Finally, the federal government is speaking out against occupational licensing requirements that serve more to block competition than protect consumers. In some of the most egregious cases, the Federal Trade Commission will sue.

The FTC’s Acting Chair, Maureen Ohlhausen, announced a new Economic Liberty Task Force in a speech in February, noting that governors and state legislators have begun rolling back occupational regulations helping local officials “integrate competition considerations into their decision-making process.” With the FTC’s uniquely talented Bureau of Economics, the FTC can help state and local policymakers weigh the costs and benefits of regulation, and find less restrictive alternatives that can protect public safety without blocking competition.

The task force will also bring antitrust suits against market incumbents who use state licensing boards to impose competitive roadblocks. The FTC won a major victory in 2015: North Carolina’s dental licensing board had, absurdly, barred hygienists from performing teeth whitening. The FTC sued and the Supreme Court held that the board was not sufficiently supervised by the state government to qualify for “state action” immunity from the antitrust laws. In other words, if the state is truly in cahoots with the private cartel, you can’t sue them, but if the cartel is only loosely affiliated with the state, you can.

The FTC has a long and distinguished history of such competition advocacy, but since its heyday in the late 1980s, the program has withered. In 1987, the FTC reached a peak of 91 fillings in a single year. In 1991, the program collapsed, and the number of annual filings has since hovered in the mid-teens.

The last effort comparable to Ohlhausen’s was the E-Commerce Task Force run by a young Ted Cruz back in 2001 to 2003. The FTC played a key role in persuading states to legalize internet commerce, empowering consumers to purchase everything from contact lenses to funeral caskets online. Digital competition in long-static markets saved consumers money, improved customer service and enabled new features like easier comparison shopping.

Ohlhausen is the first FTC chair since then to prioritize competition advocacy, and she deserves enormous credit. It’s hard to imagine a better use of federal taxpayer dollars than standing up for those who bear the cost of silly government licensing — both the entrepreneurs and their customers. As Ohlhausen quipped: “I challenge anyone to explain why the state has a legitimate interest in protecting the public from rogue interior designers carpet-bombing living rooms with ugly throw pillows.”

But it’s only a start of what should be a larger, sustained investment in making competition advocacy the third leg in the FTC’s stool — alongside competition and consumer protection enforcement.

The FTC has a tradition of making filings only when invited to do so, which has held the agency back. It dates back to the early 1990s, when the FTC’s unsolicited comments on regulation ruffled some feathers. Such resistance may be awkward, but it’s a risk worth taking. It’s precisely when no one wants to hear from the FTC that advocacy can do the most good — by exposing anti-competitive shenanigans. It’s a middle ground between friendly partnership and lawsuits.

Litigation does have its limits. The FTC can only sue in limited and unusual circumstances: when licensing boards are too far removed from government to qualify as “state actors.” Even when the FTC wins, state or local governments can simply reassert their immunity.

Litigation isn’t a silver bullet — which makes unsolicited filings all the more important. Congress should make clear that the FTC doesn’t need to wait for a personalized invitation to file comments on legislation or regulations.

Ohlhausen’s announcement raises some bigger questions: Will the FTC start investing some of its discretionary budget into the competition advocacy program? Would Congress fund more advocacy? Besides more reasonable occupational licensing, what else will the FTC advocate for?

Consider Austin. Despite being home to SXSW, the world’s second-largest tech gathering, Uber and Lyft left town after the city passed fingerprinting requirements for ride-sharing drivers. These restrictions have nothing to do with public safety and everything to do with thwarting competition — just like occupational licensing. The FTC didn’t say a word, nor did the agency comment on a New York law banning short-term rentals in Manhattan.

This isn’t just a battle between businesses — it’s stagnation versus dynamism. Newcomers across the country face attacks from well-funded incumbents like hotels and taxis. If new platforms lose, we all lose — whether it’s the family trying to rent out a spare room to make ends meet, or the traveler who can’t afford hotel or taxi prices.

If the FTC’s going to “stand up for the little guy,” focusing on the sharing economy makes as much sense as occupational licensing. The commission’s made a handful of advocacy filings, and held a workshop on the sharing economy in mid-2015 — but needs to do much more. Defending permissionless innovation, the sharing economy and protecting all its participants would be a fine legacy for any FTC chair.

 

Berin Szóka is president of TechFreedom, and co-founder of the FTC: Technology & Reform Project.

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