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Should prostitution be cartelized?
What else does one ponder in Amsterdam? Majkthise says yes, prostitution should be cartelized:
It is important to legalize and regulate the sex trade in ways that enhance the autonomy of sex workers. There are many good reasons not to let sex work become another service sector job.
It seems only fair that the world's oldest profession should be granted the legal status of other self-regulating profession. Sex workers should have professional organizations that license and certify members according to the standards of their peers. Doctors and lawyers have a similarly sweet deal in which the state agrees to impose a monopoly on the supply of healers and advocates in exchange for quality assurance. If the law said that you had to be a registered member of your State Prostitute's Guild in order to legally sell sex, then only people who actively sought to qualify themselves would be eligible to work as prostitutes.
I see two paths. The first is an anti-egalitarian premise. "It is only the politically connected prostitutes we should care about. They will bring prostitution to a higher art form and lead better lives."
Second, prostitution as an occupation, might be subject to crowding costs. In that case a tax or quantity restriction can improve matters, just as a toll on a busy road might decrease congestion by pushing people toward less crowded routes (average vs. marginal values).
The argument must be that as prostitute wages fall, the sector brings more abductions and beatings. Perhaps the lower wage attracts the legally helpless. For this effect to imply the efficiency of cartelization, the worsening of treatment must be stronger in the sex industry than in the other sectors "marginal prostitutes" might work in.
I worry about the secondary consequences of cartelization. Cartelization creates supra-normal profits for illegal entrants; this encourages the very kinds of illegal and oppressive behavior that cartelization was designed to prevent.
I wish to legalize prostitution, not cartelize it. But it is tricky. Communities should zone prostitution out of most areas, and that will limit supply. Even minimal health regulations on prostitutes will limit supply as well. Partial cartelization is probably part of a good solution, but that is distinct from seeking cartelization for its own sake.
Please note this is not a post about immigration; for the purposes of argument take the number of women in a country as given.
As for zoning, had I mentioned that in Amsterdam one can find a kindergarten right between two open-window whorehouses? I was told by one woman that this is "not a problem." She was, however, a former prostitute and perhaps not a credible source; she may have been concerned with the Pigouvian definition of externalities (the externality runs one way only) at the expense of the Coasean definition (consider the effects on all relevant parties).
In Amsterdam (I am told), twenty minutes in the red light district costs 30 to 50 Euros. I wonder how close that is to an optimal degree of cartelization?
Addendum: How is this for a bizarre sentence?
In the year 2000, the Dutch Ministry of Justice argued for a legal quota of foreign sex workers, because the Dutch prostitution market demands a variety of bodies (Dutting, 2001: 16). [Source here]
That is one of the most er...creative arguments for protectionism I have heard...
Second addendum: Here is a fascinating article about French policy.
Posted by Tyler Cowen on July 31, 2006 at 02:29 AM in Economics | Permalink
Comments
Herr Cowen,
If disease were not a concern, an unrestricted market for prostitution would make perfect sense.
It would be nice if STD tests were readily available (i.e. home kits etc...), inexpensive and with immediate results.
I don't think that a cartel would help. Prostitutes will cheat. The degrees of a doctor can be verified once and the accreditation remains valid. This is not possible with prostitution.
What if prostitutes had to buy insurance, and the premium would increase based on the number of claims made against it (for disease). That may help to keep out the sickly people.
Posted by: Chairman Mao at Jul 31, 2006 4:37:12 AM
Is my understanding of irony insufficient? The sentence is not an argument for protectionism but for its opposition. It is a plea for the lowering of import barriers (in this case the rules covering immigration) in a politically viable manner. True it is not classical market opening, in that there is little wish to increase competition in terms of price or quality of service. However, it is an attempt to offer [insert inoffensive substitute for the word "products" here] previously unavailable due to import exclusion rules.
Posted by: MTC at Jul 31, 2006 4:38:41 AM
I took it that way at first too, (pro trade), but I think the author is concerned about too many foreign bodies (from the same couple of regions) and not enough variety.
Posted by: bluto at Jul 31, 2006 7:50:27 AM
Second, prostitution as an occupation, might be subject to crowding costs.
A crowd of beautiful, naked, women?! That's a positive externality, Tyler.
Posted by: Christopher Rasch at Jul 31, 2006 8:16:11 AM
It seems to me that professionalisation is at least arguably appropriate where there is a very large information problem: because outcomes are multifactorial, it is hard for consumers to tell whether they are getting good medical care, accounting or legal advice (although the internet is changing this somewhat.) When coupled with decisions that have very large impacts--bad legal advice can bankrupt you, bad medical care kill you--the dangers of bad decisions are very large. One trades off the risk (certainty) that members of the profession will collude to exclude new entrants in return for their services in establishing at least minimal standards of what constitutes good practice.
I see no such problem with prostitution. Surely customers are fairly good judges of the quality of the product? And as long as one wears a condom, the long-term consequences of a bad experience are practically nil.
As for the prostitutes, I have the same answer for them as for every profession that thinks it is so special that the government should protect it from competition: if you don't like it, learn to do something else. Surely prostitution, with its risk of disease and the dim prospects for workers over 35, is not something the government should be encouraging more women to get into.
Posted by: Jane Galt at Jul 31, 2006 8:22:07 AM
Surely prostitution, with its risk of disease and the dim prospects for workers over 35, is not something the government should be encouraging more women to get into.
Asian massage parlors here on Long Island get busted with some regularity, and it always seems as if the women who are arrested are in the 40+ age range.
Posted by: Peter at Jul 31, 2006 10:21:41 AM
As long as a sex worker has the right to say no -- the legal distinction
between prostitution and dating is as nuanced as the distinction between
gambling and insurance. The participants need to accept some
set of rules -- and should be protected by either a contract or
minimal oversight. Registration, at the very least.
We can't have sex workers charging rape every time a check bounces.
Posted by: SheetWise at Jul 31, 2006 4:08:51 PM
I wonder why sex workers don't form voluntary trade associations. Seriously, if I were out looking for a hooker, I'd pay a pretty huge premium for one with a certificate saying she is regularly tested for diseases and meets other standards that such an organization could implement. Similarly, if I were a prostitute, I'd gladly give part of my income to be part of an organization that provided such a certification so that I'd have a competitive advantage, while also perhaps providing some form of security.
Maybe there's a liability issue that prevents these kinds of unions from forming though; if you get a VD from an independent prostitute, maybe she's liable, but that liability is ultimately limited to how much she can pay; if you get a VD from a union member, you're getting the full payout, which might be a thousand times more. Is there anywhere where prostitutes have to have insurance against this kind of thing?
Posted by: Chris B. at Jul 31, 2006 4:33:07 PM
"As for zoning, had I mentioned that in Amsterdam one can find a kindergarten right between two open-window whorehouses?"
Where is that? OK, so I don't have the red light district memorized or anything but...
The Dutch are pretty controlling in this area as well as coffee shops. Try to get a license to open either in Edam!
Posted by: Davebo at Jul 31, 2006 5:54:17 PM
We can't have sex workers charging rape every time a check bounces.
I sorta doubt they accept checks. More likely it's cash-only, please pay in advance :)
Posted by: Peter at Jul 31, 2006 6:14:52 PM
Tyler,
Recall of course that there was an attempt at cartelisation here in NZ after legalisation. A street worker was killed by competitors for chiselling on prices. I don't know why the Commerce Commission didn't investigate.
The zoning issue's been an interesting one. City Councils have sought to zone brothels out of suburban areas, but that was tossed out by the courts as being unreasonable in the case of SOOBs (Suburban Owner-Occupied Brothels) where a woman would work out of her home.
It will be fascinating to see how this all plays out.
Posted by: Eric Crampton at Jul 31, 2006 6:48:26 PM
My wee wifey once read an article about the Salvation Army's early work among prostitutes in London around the time the trade was outlawed. The finding was that criminalization resulted in criminalization. While it was legal, farm girls with few prospects would come to the City for a couple of years to earn a nest egg and then go home and marry the boy next door. These girls were very much open to Sally's missionaries. After the legislation of morality, these girls stayed home, leaving the market to gin-soaked raddled skanks who were rarely saveable.
Kinda like the way the War On Drugs creates an environment better suited to vicious people selling crank and crack than to flower children spreading the kind herb.
Posted by: triticale at Jul 31, 2006 8:42:03 PM
Prostitution Cartels...a related post
The police have arrested ten foreign nationals for alleged involvement in prostitution…
“From what we gathered from the investigation so far, it appears that they are sending the money made from prostitution to their agents in their country…The individuals themselves are paid by their agents...
http://truckandbarter.com/mt/archives/2006/07/prostitution_ca.html
Posted by: paul at Jul 31, 2006 11:04:40 PM
As I recall the Friedman take on medical licensing, it increases the quality of the providers, but decreases the quality of service provided (if you count "service not provided" as well as that provided, and assuming "none" is worse than even the worst service). There are more substitutes for this service than there are for doctors, and poor quality prostitutes could kill customers at least as effectively as quack doctors. Isn't a policy which favors the quality of provider therefore to be more highly valued than one which favors the quality of service provided?
Err, yeah, that's about as far as I'm going to take this in a family-friendly blog.
Posted by: Eric H at Jul 31, 2006 11:12:30 PM
Concern for sex workers is all very well, but I'm concerned that it is distracting attention from the
serious issue of the exploitation of men in the furniture moving business. Although some women work in
this industry, it mostly preys upon men. Many large, strong, poorly-educated men are lured into the
industry by the promise of easy money, but often after only a couple of decades in the business these men
are so degraded physically that they are no longer able to work and lack skills to gain employment outside
of physical labour. Spinal injuries are common and quite literally many of these men work themselves into
an early grave. I would like the government to improve educational opportunites for young men at risk so
they won't fall into furniture moving, and for training to be offered to those who want to get out of the
industry so they can make better lives for themselves and their families.
Posted by: Ronald Brak at Aug 1, 2006 1:00:36 AM
"We can't have sex workers charging rape every time a check bounces."
Why not? I doubt the judge would send the John down for as long as he would for a normal rape but the principle that taking something without paying for it is a crime whoever the victim is worth defending. Taking this on a wider scale it is probably because the same protection is not extended to prostitues by the law as is to butchers, bakers & even lawyers that causes it is such a dangerous job. If contracts will not be enforced by the law they will be enforced by the Mafia & the Mafia charge more than the IRS. Compulsory medical inspection is reasonable but butchers have this too without cartelisation.
Posted by: Neil Craig at Aug 1, 2006 8:24:38 AM
Neil -
My point was there is a risk the actors intentions could
be misrepresented or selectively reporesented in the absence
of a contract. It may have been a clumsy example. Of course
the service provider has a case for the debt -- but not for rape.
Posted by: SheetWise at Aug 1, 2006 11:32:05 AM
"Concern for sex workers is all very well, but I'm concerned that it is distracting attention from the serious issue of the exploitation of men in the furniture moving business."
That's a great argument by analogy.
I usually use the example of carpet installers. Crawling around on your knees with the kids seems like fun, but do it for 8 hours a day for a couple of decades and your knees are going to be seriously messed up.
Posted by: Windypundit at Aug 1, 2006 12:20:29 PM
I was flipping through the blog quickly, after reading the post about procrastination. For a moment I thought the title of this post was "Should procrastination be cartelized?" Now THAT would be an interesting question!
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