The contemporary debate over occupational licensing typically involves the fields of medicine and law.
In fact, you would be hard pressed to find anyone being arrested for or accused of practicing history without a license.
While many individuals would consider that sort of licensing scheme borderline retarded under the reductio ad absurdum fallacy (after all, why not license all commercial activity?), in South Korea, and just about every other country, this ridiculous policy actually exists.
For instance, a Canadian was just arrested and sentenced to six months in prison for fabricating his academic record to receive an E-2 Visa, the kind you need if you want to teach English here.
Now, while I certainly do not condone falsifying documents and committing fraud in any kind of business transaction, another overlooked criminal act is the artificial barrier to entry that South Korea has placed on the market for tutoring services.
Aside from needing a bachelors degree from an accredited institution, applicants must originate from an approved list of countries. And foreigners are only allowed to work at licensed/registered hagwons or public schools due to the fact that private one-on-one tutoring sessions are illegal.
Thus, the larger issue is that the Korean government is in effect insulating teachers here from outside competition: it is modern-day protectionism.
In addition, a lively debate is taking place on a popular ESL/EFL forum surrounding this issue and whether or not you should snitch/tattle-tale on someone teaching illegally.
Scratch and sniff
Two pillars of a free-market involve the freedom of association and freedom of contract, and in this instance the government is meddling in the affairs of businesses at the detriment of both the business and client.
In short, because schools are not at liberty to hire whomever they feel qualified for the job, an artificial shortage is created by government regulation. In addition, the negative distortions are no different than in any other market that the government regulates (such as the housing market in NYC).
And as a result, a black market for education exists and thrives because effective instructors will still be approached to fill the market demand.
And this protectionist attitude is no better illustrated by one of the forum posters who suggests that the market price for an English teacher would drastically decline if the current requirements were dropped — they are scared of competition and are willing to use force to prevent a change in the business model.
The end result of this market regulation and government intervention is that customers cannot get the cheapest education, nor can they be offered the best, because some of the most creative and innovative teachers will never attend college.
Note: residents of India and many other former British colonies are not in the pool of acceptable E-2 applicants… because they aren’t honkies.