Why Libertarians Reject Government Building Codes and Licensing
Commentary From Your Libertarian Opinionizer
“Licensing: when the government takes away your right to do something and sells it back to you.”—Internet meme
Since 1998 the country of Haiti has been hit by ten hurricanes and other tropical storms and in 2010 it was devastated by a massive 7.0 earthquake, followed by some 52 aftershocks. Haiti is the poorest country in the Western Hemisphere and one of the poorest in the world. Since most of its homes are ramshackle dwellings and its infrastructure is inadequately built the result has been widespread destruction and thousands of lives lost.
These natural disasters have prompted some observers to wonder how a libertarian society would handle building codes and whether individual builders would be free to use the same materials and foundational designs as buildings in Haiti, with the same results.
To begin with, no piece of paper such as a building code can stop earthquakes, hurricanes, tornadoes, volcanoes, widespread forest fires or other natural disasters that destroy buildings and infrastructure and kill people. All licensing does in these cases is limit the legal liability of the owners and investors of the construction companies.
All that government does is to enforce the standards that the providers and their insurers have already come up with. While government agencies may demand certain standards it’s still always the professions and the industries who ultimately write those standards, and they write them in a way that best benefits themselves. The politicians simply rubber stamp the results.
Book Break: Your Libertarian Opinionizer’s Pick
Written by the legal minds at the libertarian Institute for Justice (IJ) this book documents the many cases in which entrenched interest groups manipulate the monopoly powers of government to block small companies and entrepreneurial newcomers from competing with them.
“Bottleneckers” are the politically connected professionals and industry leaders who collude with politicians to create the occupational licensing specifically designed to destroy jobs and business opportunities in the name of “protecting” consumers.
They make earning an honest living nearly illegal. IJ was created to fight them.
Get Government Monopoly out of Licensing
Yet most people are apparently convinced that if government doesn’t license everything everyone does buildings will fall down, restaurants will poison people, doctors will kill people, lawyers will lose all their cases, haircutters will scalp us and everyone will drive drunk, drugged and distracted on the wrong side of the roads.
“Matt and Eric canvased neighborhoods and shoveled snow for money, until they were stopped by police” because they didn’t have a license.—Bottleneckers
There are three kinds of people who have a deeply vested interest in preventing these things from happening to the fullest extent possible: Customers and consumers of products and services, people who create and sell products and deliver services, and the insurance companies who insure the providers of those products and services.
What government licensing actually does is to socialize enforcement so providers can privatize their profits. Without taxpayers covering the costs of enforcement insurance companies would have to do their own inspecting and enforcing, meaning that providers would have to pay higher premiums to cover the extra expense and consumers would have to pick up the extra expense passed down to them.
The offsetting reality here is that in a free society consumers would be paying for the extra expenses instead of taxes.
The premise here, as ever, is that if government doesn't control everything there will be chaos. The alternative, of course, is neither government nor chaos but freedom.
Freedom Protects You Best
In a libertarian society contractors will create standardized construction codes just as Underwriter's Laboratories standardized electrical codes and the Institute of Electrical and Electronic Engineers (IEEE) established digital protocols and the Society of Automotive Engineers codified oil viscosity (those SAE numbers on oil cans).
Just as in the commercial sector today the Good Housekeeping Seal of Approval vets household products and the American Automobile Association inspects and recommends hotels and motels and Consumer Reports and Edmunds Used Car Pricing guide and many others have developed many standards in many different fields.
Just as in the voluntary sector groups today like Charity Navigator, CharityWatch and GuideStar review and rate non-government organizations and charities and religious societies and nonprofit providers concerning their openness, honesty, financial efficiency, accountability, governance, and fundraising to ensure that they keep their promises and reputations clean or lose donations, contributions, offerings, gifts, bequests and sponsorships.
Eleven-year-old Madison Root “sought to sell Christmas mistletoe in a local park to pay for her braces. She was told that while she could not sell her wares without a license, she was free to beg for money.—Bottleneckers
If professional business people in all areas of the private sector fail to develop a positive reputation, or worse, gain a negative status in the eyes of their customers, employees and suppliers they will rightfully lose those relationships to competing businesses that deserve to be recognized and patronized.
If private vetting organizations screw up they quickly lose their credibility and their funding and get replaced by more trustworthy sources. If government agencies fail in their mission to protect the public, congress passes even more meddlesome controls, their administrators get promotions and praise ("Brownie, you're doing a heck of a job."—Bush to FEMA director Michael Brown following the government Katrina debacle) and their budgets get doubled.
Self-Interest Protects Everyone
But the real question isn't about standards; it's about enforcement.
In a libertarian society everyone connected with construction, including people who buy, sell and live in buildings, will enforce the standards in their own self-interests.
Contractors who knowingly build shoddy structures that fall down and kill people will be sued into bankruptcy and, since there will be no shield law treating a corporation as a "fictional person" for contractors to hide behind they'll face the prospect of personal bankruptcy and prison time.
Mortgage, homeowner, commercial, life, accidental death and dismemberment insurance companies will suffer losses from payouts and lawsuits over personal and property damages, so they will have a powerful incentive to enforce meaningful standards.
Structural and electrical and plumbing and every other kind of inspector will be held accountable since they will be required by the building and insurance and lending industries to certify that standards have been met.
Even real estate agents will face lawsuits if they misrepresent the safety of the homes and businesses they're selling.
Freedom and responsibility are inseparable concepts. Everyone, having a vested interest in one's own success becomes, ipso facto, responsible for everyone else.
Will there still be quick-buck fly-by-night builders? Inspectors looking for bribes? Insurance agents indemnifying bad buildings just to make a monthly bonus?
Sure. But that already happens today under our government-enforced licensing, inspecting and enforcement system.
So you can either be protected by professionals with everything to lose or by career government bureaucrats protected by their politically connected public employee union bosses.
Government Doesn’t Care About You
Remember that career politicians care about votes and campaign donations. Career bureaucrats care about their power, incomes, benefits, privileges and guaranteed retirements. They will forever claim to “care” about you only to the point that it benefits them to do so. If their jobs and positions are protected by laws or unions they won’t “care” so much about you even while they’re saying they care about you.
Yes you can find individuals who care. You can walk into a post office and encounter a cheerful, friendly, helpful employee behind the counter. You can always find caring individuals who work within an uncaring bureaucracy.
But you can never find a “caring” bureaucracy. “Caring,” after all, is a human quality while “bureaucracy” is a conceptual entity, not an individual person. A bureaucrat can care, a bureaucracy cannot.
This holds true in all other forms of government licensing from manicurists to brain surgeons.
Why would you trust career politicians and bureaucrats in your state or federal capitals who may be hundreds or thousands of miles away instead of trusting the people you know and deal with on a regular basis?
Do you really think your favorite restaurant wants to drive you away by serving you food that might make you sick? Don’t trust big corporate nationwide chains? Remember that nearly all are owned and managed by small local business people who will lose their franchises if they can’t please their customers. Still don’t trust them? Then support your local mom-and-pop stores and family-owned restaurants.
Ultimately, you, the customer are the licensor. You decide who you trust and who you don’t and then act accordingly.
Government Licensing Protects Cronies
Building codes are just a form of occupational licensing. What’s true for building codes is also true for all other forms of occupational licensing.
The real reason for licensing is to control entry into a profession or industry. The stiffer the licensing requirements, typically controlled by high fees, training and testing, the fewer people there will be who can get into an occupation, which restricts competition, which keeps profits high for the people already in those occupations.
“In 1776, the economist Adam Smith observed that trades conspire to reduce the availability of skilled craftspeople in order to raise wages.”—Bottleneckers
Licensing is also a way of hiding corporate wrongdoing. When something goes seriously wrong, people are grievously injured or killed, how many times have we heard company mouthpieces whine “We have met and exceeded all minimum government requirements.” It’s always assumed, in people’s minds and in courts of law, that complying with a government license, rule, regulation or policy, lets the wrongdoer off the hook.
If a company gets sued in today’s government-corporate world it’s the company, not the owners or investors that gets sued. They’re protected by law.
In a free society there is no “corporate person,” no “limited liability,” no government-created "Corporate Shield" law. The actual human owners are subject to lawsuits for their actual actions and it’s up to them to carry their own lawsuit insurance instead of being protected by a taxpayer-paid piece of political paper.
And remember most of all: In a free society whatever extra expenses for all of this gets passed down to consumers in the form of increased prices comes to everyone instead of taxes. Everyone pays for what they actually use, not for what everyone else uses.
Remember too that government licensing can only punish wrongdoers with fines and threats of jail terms while a voluntary libertarian post-statist society can both punish and reward providers by raising or lowering insurance premiums, by granting or taking away approvals and recommendations, by always spontaneously generating emerging and motivating existing competitors to move in and offer better alternatives to failing providers.
A little serious thinking about the true differences between politically-driven governmental licensing schemes and fully privatized, transparent, free market private sector driven competitive licensing, certifying, verifying, guaranteeing, warranting, accrediting, endorsing of all goods and services under the spirit of the libertarian non-aggression principle will reveal that it’s all gain and no loss for free individuals everywhere.
References and Links
Last Home Standing That Mexico Beach house in Florida withstood Category 4 Hurricane Michael because it was built to personal standards that went beyond government codes that the owner said “weren't very expensive” and "totally worth it."
How Good are Government Building Codes? This recent article that cites a University of Georgia study found that houses built prior to the federally mandated codes were more resilient in hurricanes than houses built under the codes. Ouch!
Government Occupational Licensing Kills jobs, destroys competition, keeps wages artificially high, raises prices and hurts poor and low-skilled workers the most because they are the least able to pay the high costs of licensing, testing and training.
Libertarian Licensing Voluntary associations, ratings and review services, noncompulsory, competing accreditors are more than capable of furnishing the information that consumers want and need to make safe, smart decisions, especially in the Information Age.