Engineering Regulation; L. Sarner

While professional regulation by government is an accomplished fact in many fields, including en gineering, it need not remain so. 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 Univer sity 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 analy sis, and investment research. 688 Unlike physical laws, government statutes do not ne'cessarily mold reality; and a.lso unlike physical laws, they can be repealed. Regula tion 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 engi neered away as it is a blunder in conception which must be dis carded. And it will not be so much a turning back of the clock merely to abandon the scheme as it ap pears on its face; for regulation itself is a throwhack to bleaker, more desperate times. Consider: (1) An organization is formed to protect the working conditions of the profession, though its pri mary justification is the protection of the public.

(2) All services are to be per formed for a just price, with com petition on price alone condemned as unprofessional.

1975 ENGINEERING REGULATION: THE RETURN TO MEDIEVALISM 689 (3) Regulations governing the standard of quality are set up for each profession by its practition ers, since only these· experts can determine what is the correct qual ity in the profession involved. (4) Advertising of all kinds is prohibited. (5) An "apprenticeship" is al lowed for, permitting the training of young professionals. (6) After a journeyman's ex perience, an individual may be come a licensed professional, pro vided he passes 'an examination before other professionals, demon strating his proficiency, his good character, and his financial standing. (7) Unfair competition, espe cially 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 penal ties against offenders is made pos sible through exclusion from the license, which means that the pro fessional loses his right to do business.!

I believe the advocate of regula tion 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 his torians will say passed from the Western scene nearly 500 years ago. Guilds were a, fascinating eco nomic organization, viewed from afar. They provided stability, qual ity, and social cohesiveness for whole classes of people. But they were also tyrannical, corrupt, and economically unviable in a society where change, technological prog ress, freedom, and capital invest ment were the norms. Thus the institution faded in influence and power, and its final vestiges were abolished by freedom-minded re formers centuries ago. Their pass ing was not lamented; the cause of human progress was immeasur ably advanced by their disappear ance. As economist Milton Fried man 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 recog nized as such, that by the mid nineteenth century, in Britain, the United states, and to a lesser ex tent on the continent of Eurolle, 690 THE FREEMAN November men could pursue whatever trade or occupation they wished without the by-your-Ieave authority of any governmental or quasi-governmen mental authority."2 But there are those in the twen tieth 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 choos ing. Despite the historical evidence of 1,000 years of what was appro priately labeled the "Dark Ages," and the insurmountable arguments pointing toward present-day eco nomic untenability akin to the waning days of the guilds, the tendency toward state regulation has successfully grasped the engi neering profession.

IIpublic Protection II The foremost palliation given for dusting off this ancient despo tism 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 con tends, "every operation, and every process developed by engineers has public implications .... It should be evident that engineering,be cause 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 regula tion, from the Dark Ages to the present day, is increasingly ex posed 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 be'en 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 per haps they can l,ay claim to expert knowledge."4 Citizens' groups and public in terest lobbies are now pressuring legislatures to review the occupa tional licensure provisions in their states. And what some of these in vestigations are uncovering is a record of public abuse rather than protection. If the "public· protec tion" argument is to hold water, it must show three things: first, that there is an abuse that needs to be corrected; second, that .profes sional 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 1975 ENGINEERING REGULATION: THE RETURN TO MEDIEVALISM 691 ever' has any trustworthy evidence been produced to show that abuses exist outside the purview of crim inal 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 protec tion 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 con trary performance to the, public interest. For instance, in Colorado, the head of the Department .of Regulatory Agencies revealed re cently that, "In 1971, not one doc tor - not one dentist - had ever had a license suspended or re voked" in Colorado.5 This' is, a re markable testimony to the com petence of Colorado's medical practitioners - if anyone, genuinely believes that not a single reproach able' .' medical practice was under taken in a state of two million peo ple:l,dur~ng :365 or more days. It contrasts, sharply with the appar" enMy "",' rampant incompetence in Florida~s ,'/construction industry, where', 2,149, candidates.took the general contractor's examination in 1973 and' everyone of them flunked. 6 Concomitantly, the state's official sanction to an in competent, when it is given, causes even greater damage than if noth ing is given at all. Says Earl John son, 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 incompe tent, is a dentist, a pharmacist·· or aplumber."7 A negative performance in the third area makes the failure com plete. In 'addition to the blatant restrictions of membership' as evi denced 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 effi ciency. Furors have been raised in Colorado· over a regulatory prohi bition of charitable hairdressing of elderly women by "untrained"

(i.e~, unlicensed) beauticians, over the ban of competitive advertise ment of pharmaceuti~al prices (successfully challenged by a large supermarket chain), and the en forcement of drug-abuse laws by the Board of Barber Examiners. in Florida similar storms have' been howling over' the regulationsgov erning' ,the' ,. professions'" of opto metry,rea], ,estate, ,·and medicine. ':And;talk is \circulating i in '·.Wash~ 692 THE FREEMAN November ington of applying federal anti trust statutes to the more "unrea sonable" 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 be fore, the engine is a runaway not because of faulty design, but be cause of fundamental misconcep tions. I hope to show herein that systemicaUy regulation (1) fos ters monopolistic growth of power, stagnating the profession; (2) fails to achieve its purported goals; and (3) is an unsupport able violation of human rights and freedom. Of course, it should be said up front that my basic predi lection is that the opposite of each of these effects is de'sirable 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 govern ment 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 Sie'gan (Land Use With out 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 pre sumption against government reg ulation of all typ,esand at all levels. Slowly, citizens are becom ing aware that regulation in their name has not been consistently in their interest, and more often than not against it. Pretty much, regu lation is instead a concession by men of mediocre abilities in the professions involved (or men with greater competence, but less psy chological 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 poli tics is not only irrelevant, but de structive. The possession of com petence 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 ob jective ones. The prime power in the licen sure process is the ability to re strict 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 require ments for admission. Colorado, for 1975 ENGINE.ERING REGULATION: THE RETURN TO MEDIEVALISM 693 example, insists that its engineer ing applicants provide five charac ter references, at least three of whom must be professional (li censed) engineers. The board which passes on 'applicants is com posed 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 in breeding of such a process creates a form of professional hemophilia.

How Intervention Grows Already the symptoms are begin ning to show. It is possible, for ex ample, for a group of profe~ssional 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 dri ve of certain regula tors to achieve a forced unnatural union of the engineering profession. Mr. Constance, a leading spokesman, would have the regulators oppose the fragmentation of the profes sion (a process which would· have the - laudable - effect of making regulation more difficult, and power that much more difficult to exercise) . uTo counteract this tendency [toward specialization]," he says, "those who have been concerned with licensing have su perimposed 'an effort to get unity."9 This is a fortuitous exampIe, for it demonstrates vividly the contention that regulation will, in the normal course of events, ex pand 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 in creasing alarm at the inbred na ture of the professions and their regulators. The medical profes sion, for example, is now under heavy attack for the oppressive nature of its regulatory proce dures. 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 j urisdic tional 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 old est, and probably most heavily reg ulated, profe'ssions. As an absolute minimum solution, the public pres sure has been for the placement of consumer representatives on regu latory boards. The professions will naturally resist, mostly on the claim that professional competence is prime, but politics is politics and 694 THE FREEMAN November 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 proc esses in an age of energy "crises" and famine ... If the profession be gins to make excuses instead of "delivering the goods," it will find itself facing a .skeptical, increas ingly hostile electorate. It will matter little that the profession's inadequacies are justifiable ration ally; once having accepted a politi cal method of approaching com petence, there is an inexorable tendency to accept political meth ods in approaching all professional matters. This will subject the pro fession 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 natura.! 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."10 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, the,y claim, will steal away their ability to write contracts; accountants will run off with their right to ke,ep books; and architects will usurp their ability to look over blue prints. As an alternative to the un dignified 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 as sured by guild legislation; they will only be preserved by a con sistent, vigorous defense made by honest engineers. The choice should not be made to "legalize" engineering at the expense of "criminalizing" honest craftsman ship. As to the second point, the fail ure of regulation to achieve its purported aims: there are picay une methods of attacking the prob lem of "protecting" the public, and there are substantive ones. The picayune, for example, is the bloated concern over the us,eof titles. For a country· little con cerned with titles, noble and other wise, since its founding, it is re markable the concern which many regulators will attach to a designa tion such as "engineer," "doctor," "architect," or anyone of a multi tude of others. Somehow, it is thought, the unscrupulous will· be thwarted if they, cannot use the proper titles. But human ingenuity 1975 ENGINEERING REGULATION: THE RETURN TO MEDIEVALISM 695 is boundless, and the small matter of a word presents but a tiny ob stacle to either con man or j our neyman. To the predictable con sternation of every regulator, there is at· least one bestselling author who baldly asserts that "licenses and regulations can be avoided by using a little imagina tion. There are plenty of· psychol ogists who are unlicensed because they don't call themselves psychol ogists. And there are plenty of people who do the same things that teachers, doctors,architects, law yers, beauticians, engineers, bank ers, 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 regula tors, 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 ap plication of special knowledge of the mathematical, physical, and engineer ing sciences to such professional ser vices or creative work, including con sultation, investigation, evaluation, planning, design, surveying and map ping, and supervision of construction for the purpose of assuring compli ance with specification and design, in connection with the utilizing of the forces, energies, and materials of na ture in the development, production and functioning of engineering pro cesses, apparatus, machines, equip ment, facilities, structures, buildings, works, or utilities, or any combina tion or aggregations thereof, em ployed in or devoted to public or pri vate enterprise or uses.I 2 Clearly such a definition could con ceivably be construed to include just about anything anyone did that employed the "forces, ener gies, 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 con tinued 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 ap plication of the laws is not an ob Jective, but a subjective applica tion of their provisions? The fault surely lies not with the definition; can anyone think of a better defi nition that will not encounter the same difficulties?

Additionally there is a total lack of evidence to show that any fewer 696 THE FREEMAN November incidents of fraud, deceit, or mis representation 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 acti vity 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. Inso far as the predisposition of the government is in favor of its regu latory over its criminal proce dures, the difference in penalties represents a net gain for the dis honest; at the very least, it repre sents the opportunity to plea-bar gain. Alternatively, however, the honest practitioner who would not normally be subject to fraud pen alties because he has committed no crime could be held to an inj unc tion 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 dis parity of such results does not in still confidence in the process.

Further if a person is truly un ethical and wants the title, how does the regulatory procedure de signed to test his "ethics" conceivably prevent him from exercis ing his lack of them by lying to the authorities and consequently decepti vely 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? Freedom Violated Of them all, however, the most impressive argument to me against state interventio~ is on the third point, that regulation violates hu man rights and freedom. Mr. Con stance makes the point that a mini mum 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 na ture requires a full application of liberty in every pursuit; the only legitimate restraint is that he not initiate force against another hu man being, or threaten to initiate force. His liberty includes the right to engage in mental and phys1975 ENGINEERING REGULATION: THE RETURN TO MEDIEVALISM 697 ical 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 volun tarily choose to purchase it. It is my· contention, as a point of per sonal 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 re sisted at every turn. As philos opher 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 sanc tion 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.

Attractive Alternatives The alternatives to regulation can be attractive, provided peo,. pIe do not lock themselves into thinking only in terms of govern ment 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 assur ance that any member of the pub lic 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 turn ing 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 reputa .. tion is still uncertain, the ques tions 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 rec ognized that it is possible, indeed even probable, for private bonding agencies to certify technical com petenceand for customers to ex pect bonding. Unlike government agencies, bondsmen would have a financial stake in making correct decisions on competence (deny it, they lose a premium; grant it, 698 THE FREEMAN November they could lose the bond), and fur ther, unlike government agencies, they do not have life or death powers aver the profession. It would .not be criminal to be un bonded; at present, it is criminal to be unlicensed.

And there are also the other al ternatives: professionally devel oped and voluntarily subscribed codes of ethics, m,embership 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 cor rectly and gets what he wanted or paid for, perhaps more, does it matter if the professional was "un licensed"? And ultimately if the consumer selects unwisely and is criminally inj ured, he has recourse to the law for recovery and pun ishment. 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 j udg ment and allow' the faceless mass of the body politic to assure him tha this 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 his tory and potential in all areas. 15 Regulation undermine,s this, as I have attempted to show, by relying on the power and me'chanical proc esses of the 'state's attempts to assure' that a judgment on charac ter and breadth of understanding is unnecessary. Promoting Integrity Ourpurpose,as set forth in the Eligibility Code, is the promotion of true integrity, sine qua non.16 But regulation destroys the im portance of integrity by presum ing an inherent tendency to de fraud and destroy. It attacks those with integrity by requiring them to submit their standards of pro fessionalism to review by com mittee. How can "high standards of truth and justice" be deter mined by a majority vote?

And regulation is attacking the root of the profession, theengi neer himself. As Milton Friedman asserted in his essay, "There are many routes to knowledge and learning and the effect of restrict ing 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 amoun.t of experimen1975 ENGINEERING REGULATION: THE RETURN TO MEDIEVALISM 699 tation 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 ad vocacy. If this matter is as impor tant 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 per sonally ever be in a positon to do so, Twill gladly introduce the legislation. To le'ave 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 illu sion. 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 com posing it; and a State which post pones the interest of their mental ex pansion 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 instru ments in its hands even for beneficial purposes - will find that with small men no great thing can really be ac complished; and that the perfection of machinery to which it has sacrificed everything, will in the end avail it nothing, for want of the vital pow er which, in order that the machine might work more smoothly, it has preferred to banish.l 8 , REFERENCES 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 Re form of Licensing Boards Urged in Many States," The Wall Street Journal, 8 Jan. 1975 (92:5), pp. 1, 14. 1 Ewegen, pp. 1, 16. 8 Colorado Revised Statutes 1973, Sec tions 12-25-107 and 12-25-109. 9 Constance, p. 23. 10 Alexis de Tocqueville, Democracy in America, Book I (New York: Schocken Books, 1961), I, p. 510. 11 Harry Browne, How I Found Free dom 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, Liberta,rianism .(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.