government permission to work for pay in a particular occupation. Securing a license may require education, experience, exams, fees, and more, which means licensing can pose a major barrier to entry for aspiring workers.Some of the commenters at Marginal Revolution highlighted the fact it is easier to emphasize licensing issues for low or medium skill workers, than for high skill workers. While not all occupational licensing includes the logic of quality product, it's difficult to escape such an argument in many circumstance. Perhaps one could even imagine licensing of lower skill levels as a "logical" form of follow through for quality product requirements which occurred in terms of high skill work, especially requirements which transpired early in the 20th century.
Nevertheless, rules and work patterns for time centric product have had plenty of time to evolve. Indeed, the rationale of limited supply side access, exists in part due to the limited output potential of individual providers, as contrast with tradable sector output. These individuals uphold quality product values which are expected to reinburse traditional forms of expensive building maintenance and infrastructure, not to mention prime locations. They have understandably resorted to extensive knowledge protection since they lack the deep pools of output which provide revenue for tradable sector activity to function in areas of prime real estate. Yet this approach has now created real limits for knowledge use and dispersal, as a result.
Before much of today's high skill services framework became standardized, professions which weren't necessarily perceived as contributing to new wealth, felt the need to go to great lengths to prove their worth. Insofar as potentially reversing what has become a well rationalized status quo, the initial groups which gained both respect and protected status, are positioned for a good defense. Even a rollback of licensing requirements in low to medium skill ranges would mostly be nibbling around the edges of the problem. Where to begin?
Quality product models are becoming problematic in part, because many near future employment opportunities can't compensate at a level that generates access to present day housing or high skill services. Our quality product conundrum can be attributed to the Baumol effect as well - particularly in prosperous regions which limit access not only to preserve existing housing wealth, but also the time value of local service providers who are already established.
One reason it is increasingly difficult to add to the wealth aggregates of present day service sectors, is that today's time based service product (with its general equilibrium dependent position) has mostly offset the equilibrium potential of a tradable sector derived wealth base. Even though service sector activity accounts for approximately 80% of GDP in the U.S., production norm limits will likely come to define both monetary policy and general equilibrium structure in the near future. If present day knowledge provision seems demand driven, much of it was crafted for what was perceived as potential demand scenarios which could readily meet costs, rather than optimal supply for entire populations.
Even as some attempt to reduce costs of economic access for lower skill workers, we see that economic access costs associated with today's higher skill levels are deeply embedded, particularly in the knowledge production requirements associated with formal education and real estate overhead. Much of today's wealth creation framework, includes high skill endeavour which could be imagined as the support walls of a building, while lower skill positions contribute additional scaffolding. All of which makes it difficult to rationally establish a first mover position, for supply side economic access within prevailing general equilibrium conditions. For that matter: Should the process begin, where would it stop?
Occupational licensing issues are yet another reason I've suggested alternative or defined equilibrium settings, for greater economic access in terms of both supply and demand. Time based services and flexible housing/infrastructure in particular, need a viable context in which they contribute to - rather than threaten - the established framework of asymmetric high skill services generation, and its supporting physical infrastructure.
Plus it's possible to pinpoint at least two factors which make it difficult to dislodge the Baumol effect that contributes to the present rationale of quality service product. For one: As tradable sector wealth grew, non tradable sector activity and quality expectations followed in its footsteps. All wages (with some breaks of course) have risen for centuries due to tradable sector dominance and its associated output gains. It's not easy to accept the fact wage increases aren't as reliable during periods of non tradable sector dominance.
The other factor? Attempts to reduce the Baumol effect via lower economic access requirements, may come across as increased personal risk - whether on the part of consumer or worker - via lower product standards. Hence arguments for less regulation so as to promote well being and economic access in some settings, may backfire in others. What's more, in some circumstance, lower product standards do become a problem. But there's a difference between low quality standards which might result in a cheap, essentially worthless coffee pot for instance, versus the product or service "lower standards" which clearly contribute to irreversible problems, which of course include death. It's those irreversible problems that make it all too easy to defend higher product standards across the board, whether or not they're needed.
Hence the need to move the focus away from what appears as a lowering of quality standards, to a different approach where quality standards are part of an internal approach. Not only could such an approach be capable of providing greater transparency, it would internally coordinate what otherwise consists of multiple services platforms which tend to be at odds with one another. Again, organizational capacity could ultimately create good deflation in non tradable sector activity. But instead of saying "less educational requirement is necessary in order to achieve X", go about the process differently, so as to better align the relevant resource capacity at the outset. Internalizing knowledge production as an "in house" process, means achieving output gains that are also quality gains. And it could be accomplished without "less education is necessary" arguments, which in some minds suggests a willingness to settle for inferior services.
Perhaps the best first mover position in this instance, is to establish exploratory settings for new forms of services generation. After all, no one should have to argue against "unnecessary" quality, in a world where quality is increasingly appreciated! It's misleading to assume that "lower" quality standards are the way to good deflation and additional economic access in non tradable sector activity. That said, more effective human capital alignment can create more precise applications for knowledge use and experiential gain. Fortunately, tradable sector innovation has already paved a prosperous path of reciprocal resource utilization, in recent centuries. With a little luck, our non tradable sectors might eventually be able to accomplish the same.
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