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Obama's inequality speech lacked new ideas, failed to promote economic progress

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In a speech Wednesday in Anacostia, one of Washington's poorest neighborhoods, President Obama “declared that addressing income inequality would be the focus of ‘all’ of the White House’s efforts ‘for the rest of my presidency.’” But he offered nothing new to advance that goal. Instead, he just peddled stale proposals from the past, such as increased government handouts, that do nothing to expand the opportunity to earn a good living. For example, he “called for an extension of emergency unemployment benefits,” even though “House Republicans have signaled they likely will not support an extension,” noted The Hill newspaper.

There are many things he could have done instead, that would have expanded economic opportunity, and reduced social inequality. For example, he could have taken aim at costly and unnecessary occupational licensing rules – by speaking out against them, and reforming federal accreditation regulations that reinforce them. But he failed to do so. If he had done so, that would have disproportionately helped the poor, American military families, and members of minority groups.

In 1950, 4 percent of all jobs required a government-conferred license. Now, 29 percent do, many of them jobs that anyone could quickly learn how to do on the job. These licensing requirements are in many cases designed not to protect the public, but rather to prevent aspiring young people from competing with established businesses. In Florida, you need a state license to be an interior designer – and it takes two years of often useless college study, plus years of training, just to get such a license.

Poor kids can’t afford this kind of wasteful and unnecessary “training” as the prerequisite for entering a well-paying trade. But rich kids can. The net effect of these occupational licensing requirements is to reinforce and magnify social inequality and reduce social mobility. Aspiring working-class young people deserve better than being excluded from well-paying fields just because they and their families can’t afford pointless licensing requirements.

Michelle Obama once discussed how occupational licensing rules can harm the spouses of our soldiers and sailors, who frequently move from state to state, and thus have to go through a new set of occupational licensing processes each time they move. She advocated that they be able to keep working when they move to a new state, without “paying new fees, filling out a pile of paperwork, and . . . taking entry-level classes” all over again, “no matter how many years of experience they have.” But her husband and his administration never did anything about it.

Why haven’t she and her husband done anything about federal accreditation rules that reinforce such harmful licensing rules – accreditation rules that the President has left intact even after he effectively admitted they were excessive? For example, government-backed accreditors continue to require people to attend law school for three years, even though the President himself has recognized that a shorter period of two years of law school is sufficient academic training to be a good lawyer.

(Alas, many of Obama’s policies have made America more rather than less unequal.)

Occupational licensing regulations have come under attack even from progressives who have bothered to study their real-world consequences. They discovered that occupational licensing rules allow trade schools in some states to force students to attend them, enabling the schools to charge students lots of tuition for training that is not worth remotely what it costs. For example, at Slate, the progressive columnist Matthew Yglesias wrote that “beauty schools are ripping off their students. Terrible licensing rules deserve some of the blame.” He cited an article

in the New York Times about beauty schools that leave their students drowning in debt rather than opening up the doors of opportunity to them. . .what doesn’t get mentioned in the article is what I see as the underlying evil here: occupational licensing.

To cut hair in New York state, you need to graduate from barber school. The number of hours of barber schooling you need is “determined by the approved NYS barber schools.” . . . if you’ve been cutting hair in New Jersey and want to move your practice to the other side of the Hudson, that license is no good. Do New Yorkers whose kids go off to college in other states warn them about the dangers of Connecticut or California or Massachusetts barbers? Not in my experience, but the state of the New York takes the official view that the regulatory requirements in 46 states (and the District of Columbia) are not up to snuff.

As Yglesias noted, mandatory-school-attendance requirements for barbers and hair-stylists make no sense. Indeed, such attendance requirements make no sense even for occupations where public safety is at issue and some form of licensing may thus be justified (comically, defenders of beauty-school attendance mandates depict hair-styling as being a dangerous occupation where licensing is needed due to the presence of chemicals in hair treatments). As he notes, it makes more sense to require competency to be shown

purely through certification. In other words: You need to be able to pass the test. In that world, a beauty school can stay in business if and only if it offers a cost-effective training regime. Beauty schools would need to compete with efforts at self-instruction or with apprenticeship arrangements of various kinds. Instead, by requiring the 1,000 hours of training, the state licensing board creates a cozy business for the beauty schools. They become for-profit gatekeepers to economic opportunity. And their incentive structure isn’t to focus on effective education—the quality of the teaching is irrelevant to the business model. It’s to focus on maximizing the amount of money extracted from the students.

Earlier, President Obama, a lawyer who once lectured at the University of Chicago, recently urged law schools to reduce the length of study from three years to two:

President Obama urged law schools on Friday to consider cutting a year of classroom instruction, wading into a hotly debated issue inside the beleaguered legal academy. “This is probably controversial to say, but what the heck. I am in my second term, so I can say it,” Mr. Obama said at a town hall-style meeting at Binghamton University in New York. “I believe that law schools would probably be wise to think about being two years instead of three years.”

We earlier discussed (and agreed with) Obama’s suggestion. Unfortunately, Obama has done nothing to make this suggested change possible, even though he could order Education Department accreditation regulators to open the door to two-year law school programs, which would make it easier for people of modest means to enter the legal profession (many law students now graduate with well over $100,000 in debt, partly due to perversely designed federal financial-aid rules that encourage colleges and especially law schools to raise tuition. The Obama administration has made these rules even worse and more counterproductive in providing colleges with perverse incentives to ratchet up tuition.).

At Above the Law, Harvard Law School graduate Elie Mystal urged Obama to turn his words into meaningful actions, by having Education Department accreditation regulators open the door to two-year law-school programs, which are currently impeded by federally-approved law-school accreditors like the ABA that have been sanctioned and given privileged status by the Education Department. Through its regulations, the Education Department effectively lets self-serving accreditation entities like the ABA control whether law schools and their students are eligible for federal financial aid and student loans, through arbitrary standards imposed by the ABA. (“The accreditation standards of the American Bar Association’s section on legal education require law schools to have an academic program that typically lasts three years. The ABA has resisted changing those standards.”) But Obama has done no such thing and has not proposed any reforms at all.

Such law school accreditors currently use their accreditation requirements to require law schools to operate more expensively, such as offering unnecessary library collections, and teacher tenure for faculty who are no longer productive. A cheaper legal education is possible, if accreditors would only permit it, or if the government would only strip them of the special privileges that give them the power to inflict these gold-plated requirements on schools and students. Professor Stephen Bainbridge, one of America’s frequently cited law professors, has urged that law be made an undergraduate degree. Professor Eugene Volokh, a prominent constitutional lawyer, has suggested allowing people to go to law school after studying at an undergraduate school for just two years, rather than the current four years needed to get a bachelor’s degree.

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