Engineering Regulation: The Return to Medievalism
NOVEMBER 01, 1975 by LARRY W. SARNER
Reprinted from the Spring 1975 BENT of Tau Beta Pi, National Engineering Honor Society. Larry W. Sarner received the B.A. degree in political science from Colorado State University in 1970 and is studying for the B.S. degree in applied math. In addition, he is a general partner in Hydra, a consulting firm specializing in data processing, survey and political analysis, and investment research.
There are those who hail, in effect, the advent of state regulation of the several professions as "the bright, shining day" of public protection and professional responsibility, and they have held sway over the public consciousness for many years. Nevertheless, there are storm clouds building nearby, within the professions and without, and they threaten to eclipse, at least temporarily, regulation’s source of power. There are those, again within and without, who are urging the clouds on. I am one.
While professional regulation by government is an accomplished fact in many fields, including engineering, it need not remain so. Unlike physical laws, government statutes do not necessarily mold reality; and also unlike physical laws, they can be repealed. Regulation is very much like the engine with positive feedback throttle–a built-in tendency to get out of control that is not so much an error in design which can be engineered away as it is a blunder in conception which must be discarded. And it will not be so much a turning back of the clock merely to abandon the scheme as it appears on its face; for regulation itself is a throwback to bleaker, more desperate times. Consider:
(1) An organization is formed to protect the working conditions of the profession, though its primary justification is the protection of the public.
(2) All services are to be performed for a just price, with competition on price alone condemned as unprofessional.
(3) Regulations governing the standard of quality are set up for each profession by its practitioners, since only these experts can determine what is the correct quality in the profession involved.
(4) Advertising of all kinds is prohibited.
(5) An "apprenticeship" is allowed for, permitting the training of young professionals.
(6) After a journeyman’s experience, an individual may become a licensed professional, provided he passes an examination before other professionals, demonstrating his proficiency, his good character, and his financial standing.
(7) Unfair competition, especially price-cutting, is frowned upon. In fact, cooperation is the ideal, enforced if necessary by strict regulation on the part of the authorities.
(8) The enforcement of penalties against offenders is made possible through exclusion from the license, which means that the professional loses his right to do business.¹
I believe the advocate of regulation will find the foregoing to be a fair representation of the basic elements necessary to control a profession, though motivations for them are conspicuously absent. The particular rationales were omitted because the elements are not a blueprint for regulation, at least as explicitly as that form is known today, though I contend the model fits very well. Instead, it is a faithful account of the essential characteristics of the medieval practice of guilds, which most historians will say passed from the Western scene nearly 500 years ago.
Guilds were a fascinating economic organization, viewed from afar. They provided stability, quality, and social cohesiveness for whole classes of people. But they were also tyrannical, corrupt, and economically unviable in a society where change, technological progress, freedom, and capital investment were the norms. Thus the institution faded in influence and power, and its final vestiges were abolished by freedom-minded reformers centuries ago.
Their passing was not lamented; the cause of human progress was immeasurably advanced by their disappearance. As economist Milton Friedman has stated, "The overthrow of the medieval guild system was an indispensable early step in the rise of freedom in the Western world. It was a sign of the triumph of liberal ideas, and widely recognized as such, that by the mid-nineteenth century, in Britain, the United States, and to a lesser extent on the continent of Europe, men could pursue whatever trade or occupation they wished without the by-your-leave authority of any governmental or quasi-governmenmental authority."²
But there are those in the twentieth century who are effectively urging a return to feudal practice. They are insisting that the state resume its interference with the right of the individual to engage in a commercial or professional activity of his or her own choosing. Despite the historical evidence of 1,000 years of what was appropriately labeled the "Dark Ages," and the insurmountable arguments pointing toward present-day economic untenability akin to the waning days of the guilds, the tendency toward state regulation has successfully grasped the engineering profession.
The foremost palliation given for dusting off this ancient despotism is not particularly original. John D. Constance, in the pages of THE BENT, for example, used the old saw of public protection: "Practically every design" he contends, "every operation, and every process developed by engineers has public implications… It should be evident that engineering, because of these implications, must be regulated by the state — and must come under the police powers of the various states — to provide this protection to the public."3 [The emphasis was his.] But as the public record of such regulation, from the Dark Ages to the present day, is increasingly exposed to objective scrutiny, the claim increasingly shows tarnish and wear. Friedman, again, shows: "The pressure on the legislature to license an occupation rarely comes from the members of the public who have been mulcted or in other ways abused by members of the occupation. On the contrary, the pressure invariably comes from members of the occupation itself. Of course, they are more aware than others how much they exploit the customer and so perhaps they can lay claim to expert knowledge."4
Citizens’ groups and public interest lobbies are now pressuring legislatures to review the occupational licensure provisions in their states. And what some of these investigations are uncovering is a record of public abuse rather than protection. If the "public protection" argument is to hold water, it must show three things: first, that there is an abuse that needs to be corrected; second, that professional review is an effective means of correcting such abuses; and third, that the police powers will not be turned against the public itself. Yet, as to the first, rarely if ever has any trustworthy evidence been produced to show that abuses exist outside the purview of criminal statutes which can be more effectively treated with regulatory procedures; those that ostensibly exist are usually straw men the regulators can conveniently pick apart or carefully screened single instances gleaned from decades of searching. Thus, on the first count, the cause celebre of public protection wanes.
A Stream of Failures
The cause fails on the second count as well, however. The record, at least in Colorado, Florida, Iowa, and probably in the remainder of the states, shows an entirely contrary performance to the public interest. For instance, in Colorado, the head of the Department of Regulatory Agencies revealed recently that, "In 1971, not one doctor — not one dentist — had ever had a license suspended or revoked" in Colorado.’ This is a remarkable testimony to the competence of Colorado ‘s medical practitioners — if anyone genuinely believes that not a single reproachable medical practice was undertaken in a state of two million people during 365 or more days. It contrasts sharply with the apparently rampant incompetence in Florida’s construction industry, where 2,149 candidates took the general contractor’s examination in 1973 and every one of them flunked.’ Concomitantly, the state’s official sanction to an incompetent, when it is given, causes even greater damage than if nothing is given at all. Says Earl Johnson, the Colorado regulator: "The greatest harm is done by the hack with a license. The state says he’s qualified and he’s not. That hurts the public whether the incompetent is a dentist, a pharmacist or a plumber."7
A negative performance in the third area makes the failure complete. In addition to the blatant restrictions of membership as evidenced in the Florida case, there is mounting concern on the part of many groups over the guild-type regulations which limit the public’s choices and hinder efficiency. Furors have been raised in Colorado over a regulatory prohibition of charitable hair-dressing of elderly women by "untrained" (i.e., unlicensed) beauticians, over the ban of competitive advertisement of pharmaceutical prices (successfully challenged by a large supermarket chain), and the enforcement of drug-abuse laws by the Board of Barber Examiners in Florida similar storms have been howling over the regulations governing the professions of optometry, real estate, and medicine. And talk is circulating in Washington of applying federal antitrust statutes to the more "unreasonable" practices of regulatory commissions.
Of course, it can be argued by the pro-regulators, in an attempt to salvage something of what they’ve built, that these failures are more simply "abuses" needing only a little corrective salve. But it is my contention that there is much more to it than that. As before, the engine is a run-away not because of faulty design, but because of fundamental misconceptions. I hope to show herein that systemically regulation (1) fosters monopolistic growth of power, stagnating the profession; (2) fails to achieve its purported goals; and (3) is an unsupportable violation of human rights and freedom. Of course, it should be said up front that my basic predilection is that the opposite of each of these effects is desirable and that the affects themselves are to be avoided if alternatives can be found.
Beware of Coercion
First, as to the monopolistic growth of power, my concern rests thus: the introduction of government into any area of legitimate endeavor is never an improvement over any state of affairs. The growing mountain of evidence, from the recent localized studies of Bernard Siegan (Land Use Without Zoning) to the current series of articles of The Wall Street Journal concerning the effects and operations of federal regulatory agencies, is giving a strong presumption against government regulation of all types and at all levels. Slowly, citizens are becoming aware that regulation in their name has not been consistently in their interest, and more often than not against it. Pretty much, regulation is instead a concession by men of mediocre abilities in the professions involved (or men with greater competence, but less psychological security) that they are unable to cope with the world and want others to do it for them. Licensure is an introduction of politics into an arena where politics is not only irrelevant, but destructive. The possession of competence in a given field is an objective fact, not the product of a political decision. Yet, where you have government intervention, you have political decisions, not objective ones.
The prime power in the licensure process is the ability to restrict entry to the profession. Every regulated profession, at one time or another (or continuously) has used the licensing structure to restrict its numbers. They can, and do, adopt guild-like requirements for admission. Colorado, for example, insists that its engineering applicants provide five character references, at least three of whom must be professional (licensed) engineers. The board which passes on applicants is composed exclusively of engineers who have been licensed for at least ten years.8 An immediate concern for Colorado’s engineers is how long it will be before the inherent inbreeding of such a process creates a form of professional hemophilia.
How Intervention Grows
Already the symptoms are beginning to show. It is possible, for example, for a group of professional arbiters, with immense credentials in the advocacy of regulation, to spell out terms to the profession and to the public. Engineers can see this particular tendency in the drive of certain regulators to achieve a forced unnatural union of the engineering profession. Mr. Constance, a leading spokesman, would have the regulators oppose the fragmentation of the profession (a process which would have the — laudable — effect of making regulation more difficult, and power that much more difficult to exercise). "To counteract this tendency [toward specialization]," he says, "those who have been concerned with licensing have superimposed an effort to get unity."9 This is a fortuitous example, for it demonstrates vividly the contention that regulation will, in the normal course of events, expand beyond its nominal scope of public protection and engage in superfluous matters.
On the public side, as I have mentioned before, many consumer groups of late have shown an increasing alarm at the inbred nature of the professions and their regulators. The medical profession, for example, is now under heavy attack for the oppressive nature of its regulatory procedures. The ability of the medical societies to utilize the state’s power to circumcise health care to suit the cliquish desires of their leaders has proven too much for the general public to bear. The severe limitations on the much-needed paramedics, the jurisdictional dispute between nurses and operating-room personnel, and of course the omnipresent thorns of chiropractic and acupuncture, have made the public acutely aware that regulation is not serving them any too well in one of the world’s oldest, and probably most heavily regulated, professions. As an absolute minimum solution, the public pressure has been for the placement of consumer representatives on regulatory boards. The professions will naturally resist, mostly on the claim that professional competence is prime, but politics is politics and eventually the "public" will have its way and some just deserts will be forthcoming.
For the engineer, an additional problem will be posed by a public thirsting for new ideas and processes in an age of energy "crises" and famine. If the profession begins to make excuses instead of "delivering the goods," it will find itself facing a skeptical, increasingly hostile electorate. It will matter little that the profession’s inadequacies are justifiable rationally; once having accepted a political method of approaching competence, there is an inexorable tendency to accept political methods in approaching all professional matters. This will subject the profession to the pressures of an American belief nearly as old as the nation, that a problem can be solved primarily by an exercise of will. As de Tocqueville noted about the national character over 140 years ago: "No natural boundary seems to beset the effort of man [in the American view]; and what is not yet done is only what he has not yet attempted to do."¹º
Yet standing against the tide are the regulators, or the would-be regulators, the ones who contend that professional engagement is a grab-bag of governmental favors and that if the engineers don’t get in there and fight someone else will come along and pick off first what is justly theirs. Lawyers, they claim, will steal away their ability to write contracts; accountants will run off with their right to keep books; and architects will usurp their ability to look over blueprints. As an alternative to the undignified rush to the lawbooks, a more promising solution might be for engineers to give a loud "No!" to the usurpations of the others. Engineers’ rights will not be assured by guild legislation; they will only be preserved by a consistent, vigorous defense made by honest engineers. The choice should not be made to "legalize" engineering at the expense of "criminalizing" honest craftsmanship.
As to the second point, the failure of regulation to achieve its purported aims: there are picayune methods of attacking the problem of "protecting" the public, and there are substantive ones. The picayune, for example, is the bloated concern over the use of titles. For a country little concerned with titles, noble and otherwise, since its founding, it is remarkable the concern which many regulators will attach to a designation such as "engineer," "doctor," "architect," or any one of a multitude of others. Somehow, it is thought, the unscrupulous will be thwarted if they cannot use the proper titles. But human ingenuity is boundless, and the small matter of a word presents but a tiny obstacle to either con man or journeyman. To the predictable consternation of every regulator, there is at least one best-selling author who baldly asserts that "licenses and regulations can be avoided by using a little imagination. There are plenty of psychologists who are unlicensed because they don’t call themselves psychologists. And there are plenty of people who do the same things that teachers, doctors, architects, lawyers, beauticians, engineers, bankers, investment counselors, and psychiatrists do, but avoid the legal requirements by not using the legal titles."¹¹ Right or wrong, such views reflect how the "other side" views the subject of sacred titles. Fortunately for the regulators, the laws themselves are more substantive (in theory, at least) than the mere banning of a word. The law requires definitions to be operative, and Colorado law, for instance, defines the practice of engineering thusly:
the performance for others of any professional service or creative work requiring engineering education, training, and experience and the application of special knowledge of the mathematical, physical, and engineering sciences to such professional services or creative work, including consultation, investigation, evaluation, planning, design, surveying and mapping, and supervision of construction for the purpose of assuring compliance with specification and design, in connection with the utilizing of the forces, energies, and materials of nature in the development, production and functioning of engineering processes, apparatus, machines, equipment, facilities, structures, buildings, works, or utilities, or any combination or aggregations thereof, employed in or devoted to public or private enterprise or uses.¹²
Clearly such a definition could conceivably be construed to include just about anything anyone did that employed the "forces, energies, and materials of nature" for someone else, from the inventor to the neighborhood mechanic to the office-building janitor (or "sanitation engineer"). What is fortunate, of course, for the continued smooth functioning of our society, is that no one, not even the dedicated regulator, seriously proposes that the letter of such laws be strictly enforced. But then what does this say of the legalistic process, if the only reasonable application of the laws is not an objective, but a subjective application of their provisions? The fault surely lies not with the definition; can anyone think of a better definition that will not encounter the same difficulties?
Additionally there is a total lack of evidence to show that any fewer incidents of fraud, deceit, or misrepresentation have followed the adoption of regulatory procedures. Indeed a case can be made that the lot of the incompetent or the bunko artist has been made much easier by the passage of such laws. In Colorado, the worst that a violator of the regulations can expect is to be restrained from further activity by an injunction and a fine of from $100 to $500; if he were guilty of (and taken to court for) fraud, however, he could receive one to five years in the penitentiary and upwards of $15,000 in fines. Insofar as the predisposition of the government is in favor of its regulatory over its criminal procedures, the difference in penalties represents a net gain for the dishonest; at the very least, it represents the opportunity to plea-bargain. Alternatively, however, the honest practitioner who would not normally be subject to fraud penalties because he has committed no crime could be held to an injunction depriving him of his chosen livelihood. The upshot of all this is that the honest live in fear of the government and the dishonest are granted reprieves from it. The disparity of such results does not instill confidence in the process.
Further if a person is truly unethical and wants the title, how does the regulatory procedure designed to test his "ethics" conceivably prevent him from exercising his lack of them by lying to the authorities and consequently deceptively receiving his license? And if a person is incompetent, how does the procedure prevent him from knowing just barely enough to pass the examinations (or even cheating somehow), and forgetting most of it afterwards? For that matter, how is this last result prevented on the part of the once-competent, after their hands are on the license?
Of them all, however, the most impressive argument to me against state intervention is on the third point, that regulation violates human rights and freedom. Mr. Constance makes the point that a minimum legal standard "assures that the practicing engineer is qualified in the eyes of the law, giving him legal status and providing him with the right to make available his services to the public."¹³ I could not differ more strongly. No such law can ever give any man such a right. It is his from the day he is born. Man’s fundamental nature requires a full application of liberty in every pursuit; the only legitimate restraint is that he not initiate force against another human being, or threaten to initiate force. His liberty includes the right to engage in mental and physical labor for his own benefit and the benefit of those around him, if he freely chooses. Inherent in this right is the ability to offer this labor to anyone who may voluntarily choose to purchase it. It is my contention, as a point of personal and professional need, that no statute, no regulation, no legal provision can ever give (or take) this right. For the ability to give is also the ability to deny, and for the government to have this power would be the severest abrogation of human freedom. It must be resisted at every turn. As philosopher John Hospers recently wrote in relation to this subject, "What gives the government any special right or any special ability, to separate the wheat from the chaff in such matters?”¹4 I certainly see none, and to give the slightest sanction to the state in this regard is a betrayal of principle. Consequently I, for one, will never, under any circumstances, submit to licensure or examination of my professional qualifications by the state.
The alternatives to regulation can be attractive, provided people do not lock themselves into thinking only in terms of government solution. The most promising of them is the deliberate use of professional reputation and an attitude of professionalism. Along with a vigorous enforcement of criminal statutes against abuses such as fraud, malicious injury, and malpractice, the best assurance that any member of the public has against professional abuse is reputation. If an engineer’s reputation is a bad one, he should be avoided; if it is good, he should be patronized. This principle can extend beyond this point even if he is personally unknown to the prospective client; the client can consider his schooling: does his school have a reputation for turning out good, bad, or mediocre engineers; or is he an honorable or distinguished graduate of the celebrated school of hard knocks? Has he worked previously with men or women who have good reputations or bad? If his reputation is still uncertain, the questions could then revolve around his performance with other clients, the breadth of his experience, vitality, and imagination. A system based on character and professionalism must work, or no system can.
Parenthetically it should be recognized that it is possible, indeed even probable, for private bonding agencies to certify technical competence and for customers to expect bonding. Unlike government agencies, bondsmen would have a financial stake in making correct decisions on competence (deny it, they lose a premium; grant it, they could lose the bond), and further, unlike government agencies, they do not have life or death powers over the profession. It would not be criminal to be unbonded; at present, it is criminal to be unlicensed.
And there are also the other alternatives: professionally developed and voluntarily subscribed codes of ethics, membership in professional and honor societies, and publications of the Consumer Reports variety, all of which can be used by the concerned public.
If the consumer chooses correctly and gets what he wanted or paid for, perhaps more, does it matter if the professional was "unlicensed"? And ultimately if the consumer selects unwisely and is criminally injured, he has recourse to the law for recovery and punishment. Of course, if he takes a chance on an unknown, and it works out wrong, then the fault lies entirely with him. It is not the type of system that permits the consumer to be lax in his judgment and allow the faceless mass of the body politic to assure him that his decision will always be correct; it is instead the type of system that demands the most from both professional and client. And that is what makes for progress.
The aims set forth in Tau Beta Pi are to establish an appreciation of standards of character and to free technical people from the fetters of their narrow technology, to make them aware of man’s history and potential in all areas.¹5 Regulation undermines this, as I have attempted to show, by relying on the power and mechanical processes of the state’s attempts to assure that a judgment on character and breadth of understanding is unnecessary.
Our purpose, as set forth in the Eligibility Code, is the promotion of true integrity, sine qua non.15 But regulation destroys the importance of integrity by presuming an inherent tendency to defraud and destroy. It attacks those with integrity by requiring them to submit their standards of professionalism to review by committee. How can "high standards of truth and justice" be determined by a majority vote?
And regulation is attacking the root of the profession, the engineer himself. As Milton Friedman asserted in his essay, "There are many routes to knowledge and learning and the effect of restricting the practice [of a profession]… and defining it as we tend to do to a particular group, who in the main have to conform to the prevailing orthodoxy, is certain to reduce the amount of experimentation that goes on and hence to reduce the rate of growth of knowledge in the area."¹7
It is a natural extension of all that I have said here that it is not enough to merely oppose such laws, or to speak out against their advocacy. If this matter is as important as I believe it to be, it is imperative that efforts be made to repeal this legislation and return from the Dark Ages. Should I personally ever be in a position to do so, I will gladly introduce the legislation. To leave such laws on the books is to pose a very real danger to the profession, to the public, and to the world. Guild laws are a false sun in the firmament of a free people; and the "bright, shining day" they create is an illusion. In the words of John Stuart Mill in his classic essay On Liberty:
The worth of a State, in the long run, is the worth of the individuals composing it; and a State which postpones the interest of their mental expansion and elevation, to a little more of administrative skill, or of that semblance of it which practice gives, in the details of business; a State which dwarfs its men in order that they may be more docile instruments in its hands even for beneficial purposes — will find that with small men no great thing can really be accomplished; and that the perfection of machinery to which it has sacrificed everything, will in the end avail it nothing, for want of the vital power which, in order that the machine might work more smoothly, it has preferred to banish.18
¹ Stewart C. Easton, The Western Heritage (New York: Holt, Rinehart and Winston, 1961), pp. 214-15.
² Milton Friedman, Capitalism and Freedom (Chicago: Univ. of Chicago Press, 1963), p. 137.
³ John D. Constance, "The Meaning of Engineers’ Registration," THE BENT of Tau Beta Pi, Fall 1974 (65:4), pp. 23-25.
4 Friedman, p. 140.
5 Bob Ewegen, "Regulatory Panels ‘Less Than Good,’" The Denver Post, 10 Jan. 1975 (83:162), pp. 1, 16.
6 Jim Montgomery, "Far-Reaching Reform of Licensing Boards Urged in Many States," The Wall Street Journal, 8 Jan. 1975 (92:5), pp. 1, 14.
7 Ewegen, pp. 1, 16.
8 Colorado Revised Statutes 1973, Sections 12-25-107 and 12-25-109.
9 Constance, p. 23.
¹º Alexis de Tocqueville, Democracy in America, Book I (New York: Schocken Books, 1961), I, p. 510.
¹¹ Harry Browne, How I Found Freedom in an Unfree World (New York: Macmillan, 1973), p. 181 [paperback ed.].
¹² C.R.S. 1973, Section 12-25-102 (13).
¹³ Constance, p. 24.
¹4 John Hospers, Libertarianism (Los Angeles: Nash Publishing, 1971), p. 363.
¹5 Pamphlet, Tau Beta Pi, dated April 1972.
¹6 The Eligibility Code of The Tau Beta Pi Association, adopted by the 1926 convention.
¹7 Friedman, p. 157.
¹8 John Stuart Mill, On Liberty (New York: Appleton-Century Crofts, 1947), pp. 117-18.