Adventures in Occupational Licensing: Marco Rubio Edition


RTX20WCL_rubio-e1451922832963So Marco Rubio helped his brother-in-law, who had been convicted for drug trafficking, get a real estate license. Call it another episode in “Adventures in Occupational Licensing.” From Vox:

As part of that close relationship, it seems that Rubio helped out Cicilia with a letter to the Florida Real Estate Commission when Cicilia was applying for a license in 2002. You see, in Florida a convicted felon who wants to sell real estate needs to get his application approved by the state’s seven-member Real Estate Commission. They are appointed by the governor, with a budget controlled by the state legislature, and they decide on a “case-by-case basis” with no particular objective standard in mind which ex-cons can and cannot sell real estate. Under the circumstances, the recommendation from a powerful state legislator likely carried a lot of weight, and Cicilia got his license.

When recommending Cicilia to the board, Rubio neglected to mention that the applicant in question is married to his sister, a decision Rubio spokesperson Todd Harris defended to the Post on the curious grounds that Rubio “believed Orlando should be judged on his own merits and felt it would be highly inappropriate, and could be perceived as exerting undue pressure, if his letter stated that Orlando was a relative.”

While using your political office to do favors for your cocaine trafficker brother-in-law is not a great look for any politician, the good news for Rubio is there does not appear to have been any actual problem with Cicilia becoming a licensed real estate broker. As far as anyone can tell, since getting out of jail Cicilia hasn’t had any trouble with the law and has just been doing his job.

The larger question here is why Florida makes it so difficult for a person who doesn’t have well-connected patrons to sell real estate. The specific case of Florida’s realtor licensing requirements hasn’t been studied in detail, but in general academic studies of state-level licensing rules reveal a landscape that is more about blocking competition than helping consumers. When Benjamin Powell and Evgeny Vorotnikov studied real estate licensing in Massachusetts, they found that a legislative move to make the licensing project more stringent “fails to find any improvement in the quality of service” but “reduced the number of licensed active agents by 39 to 58 percent” which “increased the income of those who remained by 11 to 17 percent.”

The piece goes on to note that President Obama’s economic team recently concluded that “most empirical evidence does not find that stricter licensing requirements improve quality, public safety, or health.” Likewise, Florida is particularly egregious offender.

So what to do about it? This from Morris Kleiner, via the Minneapolis Fed, who has documented the large increase in occupation subject to licensing:

First, state and local governments should develop and execute a plan for evaluating existing occupational licensing requirements. The evaluations should be based on existing studies or new analyses. When the costs of regulation are shown to exceed the benefits, the requirements should be modified or dropped.

Second, the federal government can take a lead role in establishing a set of best practices through an evaluation of policies that have been shown to work and that may provide greater employment growth and lower prices while maintaining service quality. The federal government can also encourage states to reevaluate occupational regulation by providing grants similar to those in the Race to the Top education program; these grants would be paid for by the economic gains to the economy of greater deregulation.

Third, licensing standards should allow individuals to move across state lines with minimal retraining or residency requirements. When licensing is deemed to be in the interest of the public, weighed against the economic costs, states and localities should accept, as much as possible, licenses granted in other states. This proposal would facilitate mobility across states and would make it more difficult for special interests to tighten regulations in order to increase their monopoly status in a given state. For example, adopting this proposal among the 10 pairs of states with the most mobility between them would go a long way toward addressing the harmful impacts of licensing on an individual’s migration decisions.

Fourth, where politically feasible, state governments should reclassify certain occupations that are licensed to a system of certification or no regulation. This could be accomplished either by deregulating licensed occupations and turning them into certified ones or by creating competition from individuals who are certified by private organizations. These individuals would be able to work with licensed individuals if they have appropriate bonding to protect consumers against shoddy service.

Published in Culture, Economics
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There are 9 comments.

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  1. Sash Member

    No canidate is perfect.  Compared to Hillary, every Republican look squeaky clean, even Donald Trump, who has dealt with Organized Crime to get his real estate stuff done.  Are we pretending that he never did any influence peddling?  Even when Trump admits he bought off politicians regularly?

    I like Marco best.  But I don’t believe it is a year where logic will make any difference at all.

    • #1
  2. Vice-Potentate Inactive

    Reform of mandated cartels is probably the most hopeless and useless task a politician can engage in. I appreciate the recommendations, but politically no task is more difficult than breaking up a donor class, which provides vital support both pre and re election time. Maybe a game of mutual draw down where both parties bilaterally disarm their professional fiefdoms would work, but I’m more than sceptical, I’m despairing.

    • #2
  3. Duane Oyen Member
    Duane Oyen

    More licensees for everything sounds fine to me; viva la competition.

    It is also clear that the left is scared silly of Rubio as a candidate, because every story gets less substantive and more shrill.

    • #3
  4. Matt Upton Inactive
    Matt Upton

    What Florida Man hasn’t trafficked in a little cocaine?

    That said, while I am in favor of licensing reform, it definitely is a state by state issue. If California wants to make it impossible to braid hair without a license, let there be a less restrictive state which will take all the overburdened stylists.

    • #4
  5. Hoyacon Member

    There are a number of ridiculous licensing requirements all over the country, but I’m not sure that I’d draw the line here.  There’s a lot of potential for unscrupulous conduct in home sales, and I suspect most would like to know whether someone conducting an open house has “character issues. ”

    As far as the Rubio portion, it sure is good to see Matt Yglesias has found gainful employment at a pretend non-partisan site. I assume that he and the Washington Post opposition research team would prefer if Rubio’s sister had married Tony Montana, but that didn’t happen, so now they’re stuck with a 13 year old story about a letter of support for a family member that didn’t even play the “he’s related to me” card.

    • #5
  6. Paul Dougherty Member
    Paul Dougherty

    If I were in the habit of exerting undo influence, I am not sure I would do so in the form of a traceable paper trail. I might make a phone call, or if really serious, a off-the-record lunch conversation. Kudos to the WaPo for ferreting out this subterfuge carried out in plain sight and on the record. (sheesh)

    • #6
  7. Amy Schley Moderator
    Amy Schley

    If anyone is curious, this is how Florida thinks of their licenses:

    FL License

    Florida: keeping Floridians safe from unlicensed boxers!

    • #7
  8. JRez Inactive

    Slippery slope, you see.

    Starts out as a seemingly innocuous letter of recco for a betterment-aspiring relative and the next thing you know it’s Top Secret emails flying around on your unauthorized, “private” server…..oh wait, sorry…..wrong candidate.

    • #8
  9. Stephen Dawson Inactive
    Stephen Dawson

    When the costs of regulation are shown to exceed the benefits, the requirements should be modified or dropped.

    Wrong onus. Regulations should be dropped unless the benefits can be clearly shown to outweigh the costs by a significant margin.

    • #9
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