The Cartels the Supreme Court Protected: How Professional Licensing Evades Antitrust Law
In 1890, Congress looked at the American economy and saw a problem. Powerful incumbents were colluding to fix prices, restrict entry, and crush competition. The response was the Sherman Antitrust Act, which outlawed contracts, combinations, and conspiracies in restraint of trade. Violators faced prison time and triple damages. The message was clear: you don’t get to rig the market against consumers and competitors just because you have the power to do it.
Over a century later, that principle has a glaring blind spot — and it’s hiding in plain sight inside every state bar association and professional regulatory body in the country.
What the Sherman Act Was Built to Kill
The Sherman Act targeted what antitrust lawyers call “naked restraints” — agreements with no purpose other than fixing prices or suppressing competition. When Standard Oil coordinated with railroads to crush independent refiners, that was a naked restraint. When meatpackers colluded to divide up markets and set prices, that was a naked restraint.
Now consider the American legal profession. To practice law in nearly every state, you must hold a degree from an ABA-accredited law school, pass the state bar exam, and submit to the regulatory authority of the state bar association. The ABA controls accreditation. Lawyers dominate the state legislatures that write licensing statutes. Lawyers sit on the boards that enforce them. And the state bar functions as a mandatory membership organization — you literally cannot compete without joining.
If a group of private businesses got together and said “nobody can enter this market without spending three years and $150,000 at an institution we control, passing an exam we design, and joining our mandatory trade association,” the Sherman Act would obliterate them. That is a textbook conspiracy in restraint of trade. It restricts entry, suppresses competition, and inflates prices — which is exactly what it does to the cost of legal services in America.
The State Action Shield
The reason professional licensing survives antitrust scrutiny is a legal doctrine called “state action immunity,” established in Parker v. Brown in 1943. The Supreme Court held that the Sherman Act was never intended to apply to anticompetitive conduct by state governments acting in their sovereign capacity. If the state itself is the one restricting competition, it’s not a violation — it’s deceptively called governance.
But professional licensing isn’t governance in the classically liberal understanding of neutral laws for the overall benefit of society. It’s regulation designed by the guild, enforced by the guild, and operated for the benefit of the guild. The state doesn’t independently decide that three years of law school is the minimum threshold for competent legal practice. The profession tells the state what the requirements should be, and the state rubber-stamps it. Monopolies and cartels are illegal when they are kept in the private domain, but are currently protected and promoted when they are fused with governance and regulation.
The Real Cost
The average law school graduate carries over $160,000 in student debt. That debt gets passed on to clients in the form of higher fees. Americans navigating tort claims, contract enforcement, property disputes, and civil litigation routinely cannot afford legal representation because the licensing regime artificially restricts who can provide legal services and at what price point.
Meanwhile, people who are perfectly capable of handling routine legal matters — document preparation, court filings, demand letters, contract review, basic civil representation — are legally barred from doing so without a six-figure credential. The profession calls this “protecting consumers from unqualified practitioners.” But the exposed preference is protecting incumbents from lower-cost competition and imposing a wealth requirement on those seeking entry into the industry.
The same logic applies across professions. Occupational licensing now affects roughly one in four American workers, up from about one in twenty in the 1950s. Cosmetologists, interior designers, florists, auctioneers — the list of professions that require government permission to practice has expanded relentlessly, almost always at the behest of existing practitioners who benefit from reduced competition.
What Reform Looks Like
Professional licensing must be abolished at the state level to break apart guild cartels, increase market competition, and reduce rent-seeking. Professional licensing is not the only way to ensure competence and consumer protection. Apprenticeships produced competent lawyers for most of American history — Abraham Lincoln never set foot in a law school. Self-directed study has always been a viable path to mastery for people disciplined enough to pursue it. The idea that competence can only be verified by a guild-controlled, expensive credential is not an empirical claim. It is a protection racket dressed up as public policy.
Competence should be the only bar to market entry and we already have a mechanism for verifying ability that did not exist when these licensing regimes were constructed: the internet. Customer satisfaction is instantly accessible through reviews, ratings, and public feedback. A consumer hiring someone for a straightforward legal matter can check that person’s track record in seconds — read what past clients experienced, see how disputes were handled, and evaluate competence based on actual outcomes. Transparency, competition, and accountability through reputation are more powerful consumer protections than any licensing board has ever provided — and they do not come with the anticompetitive market controls and rent seeking extraction tethered to licensing boards.