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Real estate licensing laws are a criminal conspiracy against the consumer created by and for the benefit of a cartel.

This is me writing in June of 2007. Someone linked to it from Twitter yesterday, and I read it for the first time in years. The argument holds up — there has never been any attempt at rigorous refutation — but it’s even more interesting now that America has discovered what Sarah Palin and others are calling “crony capitalism” — the pandemic affliction I call Rotarian Socialism or simply rent-seeking.

When I wrote this, I was sure that the real estate licensing laws had nothing to fear. Things have changed. For a first thing, when state governments have to choose between marginal departments and continuing to provide a food dole to reliable voters, the state department of real estate could see huge budget cuts. But even better, sooner or later it will dawn on people that the only way to push “businesspeople” like the NAR off the taxpayer’s tit is to repeal all commercial regulation.

That’s a game-changer. If you’re good at actually delivering value to your clients, so much the better for you. The free market rewards virtue. And if you’ve been depending on the NAR and all those huge stacks of rent-seeking legislation for your income — good luck at your next job… –GSS

 
Real estate licensing laws are a criminal conspiracy against the consumer created by and for the benefit of a cartel

When I walk into a supermarket, the first thing I look at are the floors. If they aren’t buffed to a blinding glow, I walk right back out. Why? Because if the manager isn’t staying on top of the floor maintenance, he isn’t staying on top of anything else, either. Without doubt, I am “protected” by vast armies of federal, state and local food cops, but it turns out that they are not willing to get food poisoning in my place. If I fail to guard my own self-interest, the courts might make me (or my heirs) whole — after-the-fact. But nothing can protect me if I won’t protect myself.

Surely you effect many similar sorts of “consumer protection” in your own behalf, possibly believing in your heart that the laws can protect you, yet exercising caution to protect yourself even so. But consider this: If, when selecting electrical equipment, you had to choose between oversight by government functionaries or the Underwriters Laboratories — but not both — which one would you choose?

If you said government, you can stop reading now. You’re hopeless. For those still with us, what we’re doing is exploring the implications of doing away with real estate licensing laws. And if that idea makes you shiver, you can settle down: No matter what I say, the real estate laws are not going to be repealed any time soon.

But imagine for a moment that your neighbor’s mother introduced an old friend to the FSBO seller up the street. This is brokerage, introducing buyer to seller. The principals are unrepresented, but they can do everything they need to do — in Arizona, at least — at the offices of a title company. Nothing unlawful has occurred — until grandma takes a finder’s fee from either the seller or the buyer.

At that point she is in violation of real estate licensing laws. She can connect buyers with sellers all day, every day — provided she does not get paid for doing so. The purpose of the real estate licensing laws is not to protect buyers and sellers from chatty grandmas, who may or may not know anything about real estate. Instead, those laws exist to limit artificially who can be compensated for introducing buyers and sellers.

Before the advent of licensing laws, chatty grandmas and underemployed barbers, among other people, brokered real estate on the side. In the name of “protecting” consumers, the NAR got state legislatures to pass laws putting those innocent souls out of the real estate business. These are the actions of a cartel. Even now, the NAR is trying to pass federal legislation forbidding banks from brokering real estate.

This is important. We’ve already established that laws and regulations will not protect you in the marketplace if you are unwilling to protect yourself. Moreover, we’ve agreed that — as with the Underwriters Laboratories — where free-market oversight systems are in place, they are preferable in your own opinion to government laws and regulations. Finally, with respect to real estate licensing laws, we have demonstrated that the purpose of the laws is not to protect the consumer, but, rather, to protect licensees from the brokerage efforts of chatty grandmas and underemployed barbers — and banks — and anyone else who might introduce buyers and sellers for less money than licensed brokers want for them to have been charged.

From where I sit, there is no cogent rationale left to defenders of real estate licensing. We know from first-hand experience that self-protection buttressed by free-market oversight actually works at achieving true consumer protection. We also know that government laws and regulations do not work at achieving consumer protection. And we know that the real estate licensing laws are the result of a conspiracy against alternative vendors, with the far greater population of secondary victims being buyers and sellers of real estate. If you wish to defend these laws, I say you have nothing left to defend.

I am in league with the Greeks. I believe in questioning absolutely everything, and I am not afraid to risk being wrong on the path to discovering what is right. It is far beyond pellucid to me that real estate licensing laws are an abomination. If I could effect only one of my desired real estate reforms, I would divorce the commissions, but it remains that the real estate licensing laws — and occupational licensing laws in general — are by far the greater crime.

So, while you’re here, let’s consider some other ideas in the neighborhood. This is email I had from a Phoenix-area Realtor:

I read your article in the Arizona Republic about licensing laws. I totally agree.

I also wanted to ask you what your feelings are regarding part-time agents. I feel that there should be a disclosure requirement for agents with other employment. We all know that it can hurt our clients if we are not able to assist them in a timely manor.

It needs to be disclosed that employment with someone else could delay an agent’s ability to service the client properly.

Ethics and fiduciary is talked about all of the time but isn’t it unethical not disclosing an agents status?

I think this is a fine idea, except by now we’re talking about torts — civil court cases — not statute law or regulations.

If the real estate licensing laws were repealed, I think buyers and sellers would — as they should now — exercise much greater care in choosing whom to employ. Without the shield of the state-issued license to cover their asses, I would expect managers of real estate brokerages to exercise much greater care in choosing whom to hire. And I would expect the Errors and Omissions underwriters to step up their oversight in a big way.

There’s more: The NAR — or a more-honest competitor — would have a far greater incentive to vet the ethics of its membership, as would the MLS system or whatever might replace it. As with the Underwriters Laboratories, these “professional” organizations might become something more than dues-devouring paper tigers at setting and enforcing standards of care.

It might turn out that you could not employ a chatty grandma or underemployed barber even if you wanted to. The state license does nothing to prevent the lowest common denominators — intellectually and ethically — from becoming real estate “professionals.” But the free-market entities that arise to replace — and actually undertake — the oversight function could prove to be far more exacting than anything we can imagine in the current context.

In a comment to my column from Friday’s Arizona Republic, Athol Kay asks three questions:

If the laws’ purpose is to limit entry, why are brokerages packed wall to wall?

Because the barrier to entry is still very low. The real estate licensing laws put the barbers — particularly — out of business, and they forbade people with a casual or isolated interest in real estate brokerage from collecting compensation for their efforts. But, unlike other occupational licenses, almost anyone who wants a license can get one.

Wouldn’t that excess supply of agents drive prices down?

It tends to keep the median income for licensees very, very low.

Why didn’t NAR require/suggest licensing being a high hurdle instead of a low one?

For the reasons discussed in the article commented on: Because the broker-level license is a license to steal. A steady supply of gross incompetents with stars in their eyes is the main profit center in many brokerages. The real estate licensing laws were hugely unpopular when they were first passed, so their scope was very limited. But where salespeople may or may not have clients, a broker’s clients are salespeople — and there is plenty of money to be had out of them before all but the smallest few of them fail. The NAR and the MLS are in on this game, too.

Athol continues in a post at his own weblog:

If you’re complaining about haphazard training, wouldn’t the more obvious solution be higher standards for licensure?

No, for all of the above reasons: The license cannot substitute either for due diligence on the part of consumers or for free-market oversight entities. Moreover, further limiting the supply of providers of a function any reasonably intelligent barber can do is simply a more egregious form of the current conspiracy. If market forces demand greater training — as our own E&O underwriter does — that is the right way to effect it.

There’s more: The license, no matter what training it requires, is fundamentally anti-intelligence, anti-experience, anti-due diligence. The license not only deludes consumers into thinking that all agents are the same, it permits newly-minted licensees plausibly to make that very stupid claim. Where vendors compete for reputation, experience matters. Moreover, in a market where reputation and long-standing successful practice matter, new entrants would have to align themselves with established firms to get the traction necessary to go out on their own. This allows for the training that mostly doesn’t happen now, along with a weeding-out that doesn’t happen at all. You can hang your new real estate license practically anywhere, since you’re all profit to your broker. If licensing laws were repealed, managers of successful brokerages would be very careful not to hire — and to terminate with dispatch — people who might destroy their reputations.

More:

No licensing means there would be no more agents. The legal construct of “a real estate agent” would vanish. With that change the entire category of Agency Law would be null and void.

Not to be mean, but this is dumb. The law of agency is ancient, at least as old as the Greeks. If anything, the trend in statute law is to weaken the duties imposed by the common law of agency. To be frank, I would happily bid farewell to the entire category of laws designated as malum prohibitum — wrong because forbidden by statute law, with the civil courts handling the tortious claims now designated as malum in se — wrong in itself. In any case, where a party is injured in a real estate transaction, the case is handled in civil court, and this would not change if the real estate licensing laws were to be repealed.

One more:

Why would NAR seek to limit the number of Realtors anyway?

It doesn’t. The NAR’s interest is in limiting the number of non-Realtors.

Put a fork in this one. It’s done. The real estate licensing laws are not going to be repealed, more’s the pity, but I don’t think there is any rational defense to be made for them. They are a conspiracy arrayed directly against alternative vendors, and indirectly against all consumers, created by and for the benefit of a cartel. They do not protect consumers. They serve instead to induce consumers to be careless about their own interests, even as they encourage licensees to misrepresent their knowledge and experience. Moreover, they prevent the spontaneous creation of truly-viable free-market alternatives to licensing. They not only do not protect consumers, they effectively prohibit the means by which the interests of consumers could be protected.

If you can dispute any of this, make your case in cold, clear reason. And if you cannot dispute this argument, a gracious concession would be an unexpected delight.

Related posts:
  • Consumer is the loser with real estate licensing, broker argues
  • So there’s this huge interent scandal at the NAR, except there are no details about why it’s a scandal, and the “researchers” behind the claims are keeping their names secret. Want to know more? All you have to do is cough up twenty bucks a month.
  • Real estate licensing laws are a criminal conspiracy against the consumer created by and for the benefit of a cartel

  • 23 comments

    23 Comments so far

    1. sfvrealestate October 26th, 2011 7:38 am

      Wow, Greg! Incendiary, and I can’t wait to read other comments. My two cents: I think local real estate boards do FAR more damage to consumers in their non-policing of members than NAR or state agencies do.

    2. Carl Pruitt October 26th, 2011 10:59 am

      I guess it was me that linked to it from Twitter. @carlpruitt

      These arguments definitely do still hold up, and they definitely apply to every type of commercial licensing, including loan officer licensing that has taken effect since you originally published the article.

      Government never takes on this duty to “protect the consumer” without causing at least as much damage as they set out to prevent. The free market is always expected to be perfect while government intervention is never held to the same standard.

    3. Russ October 26th, 2011 11:51 am

      I guess I have to disagree. I agree with Greg that licensing can be taken too far and in many cases is just a revenue grab by governments or a way for a collective group to inflate salaries and incomes.

      However, I do believe that some licensing/regulation is needed to ensure consistency of competency in many professional fields. A license cannot guarantee competency, however, it does serve as some bare minimum of assurance for consumers. Yes, consumers need to complete their own due diligence, but expecting them to do so is unrealistic.

      I agree with the commenter that the crime with Real Estate licensing (both LOs and Realtors) is that the barriers to entry are too low in their current form.

      It is all about striking a balance which is easier said than done. Should someone have to go to law school for three years to be an attorney who primarily does RE closings and writes wills? Probably not. However, I think defense attorneys and prosecutors should certainly be held to higher standards.

    4. Jim Klein October 26th, 2011 5:26 pm

      The question, Russ, is how those standards are to come about. The simple fact is that consumers driven by their own self-interest will do a much better job of this than government bureaucrats. Besides an intelligence advantage of about 10-1 (okay, it’s a joke), there’s also the problem that the bureaucrats are operating under incentives quite different than the ostensive goal. And that’s no joke.

      Even if you want to stipulate that consumers simply aren’t able to do this–a ridiculous assumption IMO–even still the challenge can be better handled through free market operations. Someone will fill the void by adding value, in this case by doing the judging for the consumer.

      This is a very important topic and it applies across all industries without exception. Humans are creatures of the mind and there’s simply no way to beneficially replace rationality with a whip.

    5. Greg Swann October 26th, 2011 10:58 pm

      > I guess it was me that linked to it from Twitter. @carlpruitt

      You’re my hero, Carl Pruitt.

      I’m a hit and run for now, but I wanted to extend my regards to everyone who has spoken up. I’ll have more to say in the morning.

      Meanwhile, I had what I think might be a killer idea tonight, a vampire-slayer. That could be very fun.

    6. Greg Swann October 27th, 2011 7:00 am

      > However, I do believe that some licensing/regulation is needed to ensure consistency of competency in many professional fields.

      Except this does not work.

      > A license cannot guarantee competency, however, it does serve as some bare minimum of assurance for consumers.

      But this is a false assurance.

      > Yes, consumers need to complete their own due diligence, but expecting them to do so is unrealistic.

      But this is the only actual consumer protection they can effect. Which do you trust more, the “Walk” sign at the street corner or your own lying eyes?

      How do we know that all these things are true? If licensing effected the consumer protection that is claimed for it, there would be no tort cases involving licensed occupations.

      Licensing makes a false claim of consumer protection, but, much worse, it makes that claim to hide its true purpose: to create an anti-consumer cartel.

      The argument you are making is one we hear a lot in the news: We have to reform these laws, keeping only the ones that truly protect the consumer. The problem is that ocuppational licensing laws exist only to outlaw human intelligence — for the benefit of “businesspeople” who know their businesses would not hold up to intelligent scrutiny. Consumer protection was never their intent, and, as Jim points out, it is not possible to protect anyone’s interests with brutality.

      How does this error come ip in public discourse again and again? People assert idealized ends without any cognizance of how those ends might be achieved — or even if they can be achieved. We want for imaginary, hypothetical innocents to be protected from crooks — people who don’t obey laws — by passing more and more draconian laws. How is that strategy working out in real life?

      When we talked about this in 2007, I wrote some questions to clarify the issue:

      I think I can make understanding this issue easier. Give a look to these questions. If you answer them honestly, you will understand why the real estate licensing laws should be repealed — even though they won’t be.

      In the absence of real estate licensing laws, are consumers more likely or less likely to investigate the education, qualifications and experience of prospective agents?

      In the presence of real estate licensing laws, are new licensees more likely or less likely to equate their status as licensed real estate agents with better-educated, more-qualified, more-experienced agents?

      Taking account that they make profits when they perform their functions well and suffer liabilities when they fail, do free-market oversight entities seem more likely or less likely to assure consumer protection than government bureaucracies?

      The same question on a more practical level: When buying electrical equipment, if you could have either government regulation or oversight by the Underwriters Laboratories, but not both, which would you choose?

      In the presence of real estate licensing laws, are free-market oversight entities focusing on real estate transactions more likely or less likely to come into existence?

      In the presence of real estate licensing laws, are alternative business models — radically different from traditional real estate brokerages but offering consumers more choice and possibly substantial cash savings — more likely or less likely to come into existence?

      In the presence of real estate licensing laws, are traditional real estate brokers more likely or less likely to try to outlaw alternative business models offering real estate brokerage services to consumers for reduced or even no compensation?

      Is there any consumer interest that would not be better served by repealing the real estate licensing laws? Even if you wish to assert that the laws offer some benefits to consumers, can you argue that those benefits outweigh the damage done to consumers by those very same laws?

    7. Russ October 27th, 2011 7:55 am

      Greg, while I agree that the free market has a way of clearing things up when left alone, the problem with it is someone has to be the lab rat.

      For example, when consumers fly on an airplane, they expect certain minimum requirements to be met by pilots, mechanics, etc to ensure safety. No consumer can or will be able to know if an airplane and its operators meet bare minimum standards. If there were no regulation or FAA, some company is going to push the envelope and eventually crash. Consumers would then obviously avoid that company putting them out of business. That is how the free market works. That is all well and good, however, do you want your wife and kids to be the lab rats to find out which airline is slacking on maintenance, not requiring their pilots to be licensed, etc to cut costs to the bone? Probably not.

      Under your premise, you are saying that no licensing would allow the market to sort itself out. However, as in my example above, who wants to be the test subject? I certainly don’t.

      While I think of myself as educated and street smart, there is only so much I can know about every business that I patronize. I can’t inspect the kitchens of all the restaurants I eat in. I can’t double check to make sure the airplane mechanic tightened all the bolts on the wing. I can’t ensure my surgeon really knows WTH he is doing. I also don’t want to be the first person to find out which businesses aren’t competent either.

      There are certainly steps that every consumer should take, but there is only so much that can be foisted back on to the consumer. Your free market utopia simply does not and cannot exist unless you are willing to risk or accept that there will be collateral damage. I would wager that the general public is not willing to risk the damage.

    8. Carl Pruitt October 27th, 2011 8:24 am

      I think it is more the case that your government protected utopia doesn’t exist. ;) You’re a test subject every day whether you know it or not. You hold the free market to some imaginary standard you believe the government is hitting when it isn’t.

      No system will be perfect. People will make mistakes and people will be crooks either way. The fact is the protection you think you are getting from the government now is imaginary.

      Most airlines today make sure those bolts are tightened and their pilots know what they are doing because one single plane crash that happened because they didn’t could end their business even now. Topping that off, the only reason there isn’t some highly respected private business that offers certifications and ratings about all these things is that the government has now co-opted that role and made it less feasible to make a profit doing it. The airlines wouldn’t be anywhere near as able to control the certifications of a private company as they are the actions of politicians and bureaucrats. Industries ALWAYS co-opt their regulators.

      This makes me think of Donald Boudreaux’s afterword to a publication of the classic essay by Leonard Read “I, Pencil”:
      “There are two kinds of thinking: simplistic and subtle. Simplistic thinkers cannot understand how complex and useful social orders arise from any source other than conscious planning by a purposeful mind. Subtle thinkers, in contrast, understand that individual actions often occur within settings that encourage individuals to coordinate their actions with one another independent of any overarching plan. F. A. Hayek called such unplanned but harmonious coordination “spontaneous order.”

    9. Greg Swann October 27th, 2011 9:05 am

      > there will be collateral damage.

      Are you arguing that people are not already being hurt by incompetent or predatory vendors? If your strategy works, how can this be so?

      > I would wager that the general public is not willing to risk the damage.

      They already are taking those risks, they just insist, contrary to all evidence, that they are safe when they don’t guard their own interests. “Look only at the ‘Walk’ sign, since running red lights is against the law.” Does that sound like a good plan?

      What protects you on an airplane? The pilot’s fear of death, not some regulator’s fear of not getting a bonus this year.

      Moreover, this comes back to the seen and the unseen: Even supposing that a regulator actually manages to prevent an injury, rather than yelling and screaming about it afterward. What is the marginal value of that benefit? Looked at your paycheck stub lately? At what level of taxation will you feel yourself fully protected? Government regulation of commerce does not work — it serves only the predator, at the expense of the prey — but the real costs far exceed any imaginary benefits anyway.

      One more, just for fun: Buying seafood in Boston? The Boston Globe does the due diligence the government’s vast armies of regulators won’t do. Quis custodiet ipsos custodes?

    10. Jim Klein October 27th, 2011 9:22 am

      Russ, I’m sympathetic with your goals, but you’re not looking at the actualities. Greg and Carl have already pointed out the practical manifestations, but I’d ask you to just think about the general principles.

      Basically, WHO has the best incentive that you don’t die when flying on an airplane, or doing anything else? Besides the obvious that Greg brings up–the pilot himself doesn’t want to die–there’s the more general question of whether the business itself or some bureaucrat is more motivated that you don’t die.

      Just think about it for a moment–WHO is doing the controlling and WHY are they doing it–and you’ll readily see that the business owner has a far greater motivation that you fly safely than does the bureaucrat.

      Think a little more deeply about it and you’ll discover that the bureaucrat actually has a POSITIVE incentive that you die for lack of safety, while the business owner has none at all. Take a gander at this, and you’ll see the principle in action—the Challenger explosion versus problems with the Citicorp building in New York. While the general point is about philosophy, the two examples are directly related to this topic…

      http://smallthoughts.com/blog/permalink/0168.html

    11. Greg Swann October 27th, 2011 2:06 pm

      > the bureaucrat actually has a POSITIVE incentive that you die for lack of safety, while the business owner has none at all

      Not surprisingly, The Boston Globe’s solution for the failure of regulation is… wait for it… more regulation. Presumably the health inspectors were already pocketing huge bribes, so taking note of their failures should prove to be a windfall for them. Meanwhile, anyone who cares about getting value for his money already knows to trust Yelp and not the state.

    12. sfvrealestate October 27th, 2011 5:22 pm

      Sorry, I’m on Russ’s side here. As far as putting a profit motive in ensuring consumer safety, it’s already there in the form of insurance companies and the products they sell. And we’re not any safer or healthier thanks to insurance companies, now are we? Personally, I’d like to know that an entity without a profit motive (ie, gubmint) is ensuring my safety rather than one with a profit motive.

    13. Greg Swann October 27th, 2011 6:58 pm

      > I’d like to know that an entity without a profit motive (ie, gubmint) is ensuring my safety rather than one with a profit motive.

      Can you name a single instance where that works the way you want it to? All banks suck, we know that, but would you rather wait on line at your bank — or at the DMV? Everything non-profit becomes the DMV sooner or later…

    14. Jim Klein October 27th, 2011 7:53 pm

      The greasy spoon and the fine chophouse have the same “protections” offered by your gubmint…it’s called the lowest common denominator. So do you believe you’re just as protected at either? Why or why not?

      If the private school offers lousy education, they go out of business. If the public school does, nothing happens, or maybe they get more money. Which makes more sense?

      Are you aware of the standard of living in the old USSR? Why was that?

      All bureaucracies are driven to continue their existence. In business, that can only be done through profits, which can only be gained via satisfied customers. In the government, it’s done by confiscating more money, which means leaving less money in the hands of consumers. Again, which makes more sense?

      Or, just answer Greg’s question and offer us an instance where a non-profit did something better than a for-profit would do. One solid example will suffice.

      Did you read the link I posted? How’d the theory work out for the Challenger astronauts, compared to the Citicorp workers?

      That’s six solid arguments in favor of free markets. How many you got for Govco?

    15. Carl Pruitt October 28th, 2011 8:16 am

      I’ll trust someone with a profit motive over someone with a power motive every time. Does anyone really believe politicians and bureaucrats are altruistic public servants who have no interests of their own but are just out to protect ours?

      (On a side note: Why is that someone who uses a $100,000 of their money to start a business which then employs many other people, probably for many years, thus providing support for their families on an ongoing basis regarded as less beneficial to society than someone who might give the same $100,000 to a soup kitchen where it is spent once and gone?)

    16. Russ October 28th, 2011 10:16 am

      Personally, I don’t want live in some third world bazaar where everything goes which is basically what is being advocated. Laissez-faire? Who cares if you didn’t go to Med School? Just go ahead and hang your shingle.

      I am not disagreeing that free markets work best. My disagreement is that you can have a 100% totally free market with no licensing and no regulation. There has to be some ground rules and expectations. Whether those rules are set by government bureaucrats or private entities, I really don’t care as long as they are effective at minimizing bad actors and at least offering some basic protection for consumers.

      I think it is pipe dream if you believe the average consumer is going to conduct some thorough due diligence on every single transaction they engage.

      I do agree that many regulatory and licensing entities are money grabs and focused more on appearances than anything. However, that does not mean that we toss them all out versus correcting the issues and other motives.

      In the mortgage business we saw how the wild west mentality took over. The vast majority of consumers weren’t too adept at choosing between good LOs and the boiler room telemonkeys. Most consumers had no clue of what to look for other than asking “what’s your rate?”

      Here in Chicago, the barriers to entry to be a LO were so low that street gangs got out of dealing drugs to engage in mortgage fraud basically destroying huge swaths of the city in their wake. While licensing doesn’t prevent ALL fraud, it certainly stops the lowest common denominator.

    17. Jim Klein October 28th, 2011 11:56 am

      Russ, you wrote…

      “Personally, I don’t want live in some third world bazaar where everything goes which is basically what is being advocated. Laissez-faire? Who cares if you didn’t go to Med School? Just go ahead and hang your shingle.”

      And you also wrote…

      “I am not disagreeing that free markets work best.”

      Sorry, but it’s impossible to hold both of those beliefs at the same time, at least sanely. Either free markets work best or free markets don’t work best. That’s an either-or. If you declare which it is, then maybe I can comment, sanely.

      Either way, there’s also the question of why what you want should be some claim on me. Does it work the other way around too?

    18. Tim Riggins October 28th, 2011 1:12 pm

      Maybe some revision of the laws that govern the real estate market are needed.

    19. Russ October 28th, 2011 2:34 pm

      Jim, there are no absolutes. My position is no more insane than yours. Life is not black and white.

      There is not one totally free market that is not governed by some form of regulation and licensing. We can argue to the cows come how about how much too much, but there will always be some form of regulation and licensing.

      Stating there should be no rules or licensing across the board is just as looney as the left wing losers yelling tax the rich.

      It is entirely plausible to think that free markets work best and also take a perfectly rationale position that some licensing and regulation is reasonable.

    20. Jim Klein October 28th, 2011 5:41 pm

      “Jim, there are no absolutes.”

      This is a bad place for softballs. Is this declaration an absolute?

      Or, step in front of a speeding Mack truck and get back to us on the claim.

      “It is entirely plausible to think that free markets work best and also take a perfectly rationale position that some licensing and regulation is reasonable.”

      Uh, no. You’d have to change it to “free markets sometimes work best,” or maybe, “free markets are often okay, but not always,” or something like that. It is not “plausible to think that free markets work best” and also that free markets don’t work best. At least not simultaneously, it isn’t. Sorry. Either adjust the claim or confess to insanity. I’ll be happy to take up the new claim with you, as soon as I see it.

    21. Sean Purcell October 29th, 2011 8:16 am

      I am surprised that everyone falls for this stuff each time Greg writes it. Follow the money! Listen, if Greg’s crazy ideas about licensing laws came to fruition, do you know the most likely outcome? Greg himself makes more money. Kind of tells you everything you need to know about his “ideas” doesn’t it?

      This is true in many ways, but let’s look at one simple example: Greg himself points out that under current licensing laws, “new licensees (are) more likely … to equate their status … with better-educated, more-qualified, more-experienced agents.” If the licensing laws disappeared, as Greg wants, potential clients would more than likely feel compelled to do what they do when they’re shopping for a cell phone: they would spend days researching quality, reliability, customer service, and history of problems. They’d talk to their friends and family, they’d go online and read trusted review sources like Consumer Reports, the list goes on and on.

      Ask yourself: Do you think a new agent is going to stand up well next to someone like Greg in that review? Neither do I. Do you think a new agent has a better or worse chance of earning business than Greg in that review? Worse, I agree. Do you think it’s fair to the new agent that he or she must play on such an unlevel playing field? Of course not!

      The bottom line is this: next time you read one of these crazy ideas from Greg, follow the money… que bene? Seriously, do we really want clients putting in the same time choosing a real estate agent for their $400,000 investment, as they do their $400 cell phone? That’s crazy…

    22. Greg Swann October 29th, 2011 10:31 am

      Russ, I want to commend your for hanging in here. Your fortitude is admirable.

      > There is not one totally free market that is not governed by some form of regulation and licensing.

      This is false, historically, of course. Real estate was unregulated until the NAR figured out that buying legislation is profitable — at least in the short run.

      Did people get hoodwinked in the bad old days? Without doubt. Did the NAR destroy the national economy, wiping out trillions of dollars of wealth? This was not possible before regulation.

      On our side, we are fools to argue the better and worse of regulation. Most fundamentally, all legislation malum prohibitum is an expression of putative ownership by some people over the lives of others — slavery.

      If the courts respond after-the-fact to an injury you have caused — a tort case in the civil courts — this can be justified as righting a past wrong, with an eye to making the victim whole by restoring his previous condition.

      By contrast, regulation asserts that you are guilty of a crime and are subject to fees and restrictions prior to the commission of any injurious act. Once this principle is granted, there is no part of your liberty that cannot be regulated away.

      This is a bright-line moral evil, as you would certainly agree if I came by your house and “regulated” you directly. No matter what argument you make to me or Jim, and possibly others here, this is the ultimate fall-back position: You cannot righteously regulate any human behavior because to do so implies that the regulators own the parties to be regulated as their property.

      This is false to ontological fact. It cannot actually happen no matter how much someone might want it to. All you can do, in reality, is measure how much punishment slaves will endure before they rebel. The Tea Party is a leading indicator that time is running out on this particular set of regulators.

      Meanwhile, while you may hope to prevent future injuries with regulation — a false hope, as your story about the Chicago gangster lenders illustrates — you can be absolutely assured that regulations on commerce will delay or even prevent innovations that could save you time and money or even your life.

      This again is the seen and the unseen. If we ever meet in person, I will share with you the compound interest value of all the restraints on human genius occasioned by the 1789 coup de etat.

      The only mind you have the right to rule is your own. In attempting to rule other peoples’ minds, you not only make injury by criminals more likely and more consequential, you injure your own life, now and in the future, by making innovation more difficult or even completely impossible.

      These are hard ideas to get your mind around, but there is no alternative, in reality, to human sovereignty.

    23. Jim Klein October 29th, 2011 6:23 pm

      Generally I don’t like trivializing wide principles with concrete examples, but I think Russ might do well to consider what’s held off the Endarkenment for the last 30-40 years…the development of the Computer Age, which was about as unregulated as you can get. Indeed, look at the farce that remains…bringing in the dial tone to the house or office.

      Regulators can only regulate yesterday’s technology; innovators and capitalists bring us tomorrow’s. It’s always been that way; it will always be that way.