George Will has an interesting column today about rent seeking as it applies to teeth whitening.
Rent seeking is an economics term used when someone attempts to achieve additional profits without creating actual value. It often is used to describe situations when someone uses the government to implement policies that reduce competition to allow this incremental profit to occur.
The situation described in George Will’s column discusses the North Carolina State Board of Dental Examiners. The NC Board has said that only licensed dentists can perform teeth whitening and, in fact, has also asked the North Carolina Board of Cosmetic Art Examiners (I wonder if Maryland has such a thing) to forbid licensed cosmetologists from performing teeth whitening also.
The reason why this has become before the US Supreme Court is a bit more complicated than that. It turns out that the Federal Trade Commission came out against the action of the NC Dental Board. However there was a 1940’s court case that ended up allowing state boards to ignore Federal jurisdiction in this kind of situation (I am sure I am over-simplifying this). It is THIS issue that the Supreme Court I believe is interested in (I think). The result however if the Supreme Court rules against the restriction of incremental teeth whitenings would increase competition, which is of interest to George Will.
Ellen and I were talking about this exact thing on the way to and back to a wine tasting in the Virginia countryside yesterday. And who knew that the Virginia countryside could be so far away AND that Route 66 on a Saturday afternoon going west could be so crowded and slow moving. From my perspective there is a tradeoff, at least nominally, between some kind of social good achieved by government regulation such as safety or health, and competition which brings value to consumers by offering them more options and often lower prices. The cynical among us, including George Will, would say that in reality the reason for such regulations is far more often protection of a specific economic class, in this case dentists (and thus the usage of the term rent seeking).
Two final thoughts. It occurs to me that in a different, albeit related way, some of the restrictions that anti-abortion proponents want to place on abortion clinics (having to meet some level of medical standard such as an out-patient clinic) in effect work the same way (and I want to make it clear I am not implying any position regarding the value or lack thereof of doing so). There is an attempt to achieve greater health and safety standards (at least in theory) but also has the impact potentially of reducing the supply. Where one stands on this issue (pro- or anti-abortion) often impacts on one’s judgment as to what actually is going on.
Finally, the original 1940’s case, resulting in what is called Parker immunity, was brought because there was a California law which regulated how many raisins can be produced and what prices could be charged for those raisins. Remarkably that law is STILL in effect. There was an article in the Post last year about a farmer who is fighting against those restrictions. For people whose first inclination is to look to government for solutions, I would remind them that well-meaning is not always the equivalent of well-doing and that government is often an inefficient and imprecise mechanism to achieve social good.