Over at Carpe Diem, Mark Perry quotes Milton Friedman on government licenses for medicine. Milton makes good points (the case is much broader in his book than the snipped quoted), but I want to talk on another issue regarding licenses: they’re barriers to entry.
Licenses are sold to the public as consumer protection measures. In theory, they prevent people from bad doctors, hairdressers, casket manufacturers, taxi drivers, etc. But licenses also have a flip side where they can actually result in the entrenchment of the very bad people they are supposed to protect from.
Markets work most efficiently when there is competition. Competition forces firms to check their processes to ensure their methods are the most efficient and that they can best induce buyers to purchase from them. However, when there are barriers to entry, it effectively reduces competition, which in turn reduces the need for a firm to operate efficiently. There will always be some kind of barrier, but government licenses act as an artificial barrier. By requiring would-be operators to pass certain classes (funded by the would-be operator, of course), spend time filling out applications, and/or other onerous regulations, the government is effectively reducing competition faced by the current operators. In short, government protects the entrenched (which may or may not be operating inefficiently or poorly) from any kind of competition that would force them to change.
In essence, regulation acts to help create monopolies (which the government then deems itself competent enough to dismantle through anti-trust legislation). Given the thought process outlined above, I’d argue that government could greatly reduce/eliminate the need for anti-trust if it simply reduced unneeded regulation.