And Song of Fire, Ice, and Occupational Licensing

A blog about business and economics.
Aug. 21 2012 2:44 PM

What Daenerys Targaryen Needs To Know About Occupational Licensing

I've been reading George R.R. Martin's Song of Fire and Ice books so naturally I was glad to learn that book five contains a bit about occupational licensing. I don't think there's anything too spoilery here. Suffice it to say that Daenerys Targaryen ends up in a position of political authority and needs to tackle a petition from a guild organized under the previous regime:

Her sleepless night soon made itself felt. Before long she was fighting off a yawn as Reznak prattled about the craftsmen’s guilds. The stonemasons were wroth with her, it seemed. The bricklayers as well. Certain former slaves were carving stone and laying bricks, stealing work from guild journeymen and masters alike.
“The freedmen work too cheaply, Magnificence,” Reznak said. “Some call themselves journeymen, or even masters, titles that belong by rights only to the craftsmen of the guilds. The masons and the bricklayers do respectfully petition Your Worship to uphold their ancient rights and customs.”
“The freedmen work cheaply because they are hungry,” Dany pointed out. “If I forbid them to carve stone or lay bricks, the chandlers, the weavers, and the goldsmiths will soon be at my gates asking that they be excluded from those trades as well.”
She considered a moment. “Let it be written that henceforth only guild members shall be permitted to name themselves journeymen or masters provided the guilds open their rolls to any freedman who can demonstrate the requisite skills.”
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Obviously this compromise position is superior to the Guild's effort at pure cartelization and rent-seeking. But it still has two problems.

One is a political economy issue. Over time, incumbents are going to pay a lot more attention to the licensing scheme than is the general public. And the incumbents will have an interest in systematically inflating the definition of "requisite skills." In the United States one thing you often see is opportunistic efforts to bar felons or teenagers or some other arbitrarily chosen socially marginal group of people from practice. Meanwhile you tend to degenerate from "requisite skills" to "requisite training" creating a new set of rent-seekers in the form of beauty schools and the like.

But the deeper problem relates to innovation. One of the major ways progress happens is that new technology allows for things to be done without mastering the requisite skills. These days you don't need to master typesetting to pick out an attractive font, you don't need to master photo development chemicals to make a print, and you don't need to know how to write HTML to create a blog post. One of the major points of the invention of assembly lines and interchangeable parts was to make it possible for unskilled workers to do work that formerly requires skilled craftsmen. These days even very high-skilled advanced manufacturing is still organized such that nobody working in the airplane factory needs to actually know how to build an entire airplane from scratch, which probably nobody could do. But you'd never have been able to build airplanes had guilds of artisans been able to block early mass production with rules about "requisite skills."

Daenerys' solution, in other words, may be an adequate short-term solution to her political problem but it'll condemn her jurisdiction to long-term stagnation of living standards.

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