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PaperclipPerfector  4mo ago (text post)   36097 thread views

Culture War Roundup for the week of February 3, 2025

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Alex Tabarrok reviews "The Licensing Racket" in the WSJ:

Governments enact occupational-licensing laws but rarely handle regulation directly—there’s no Bureau of Hair Braiding. Instead, interpretation and enforcement are delegated to licensing boards, typically dominated by members of the profession. Occupational licensing is self-regulation. The outcome is predictable: Driven by self-interest, professional identity and culture, these boards consistently favor their own members over consumers.

Ms. Allensworth conducted exhaustive research for “The Licensing Racket,” spending hundreds of hours attending board meetings—often as the only nonboard member present. At the Tennessee board of alarm-system contractors, most of the complaints come from consumers who report the sort of issues that licensing is meant to prevent: poor installation, code violations, high-pressure sales tactics and exploitation of the elderly. But the board dismisses most of these complaints against its own members, and is far more aggressive in disciplining unlicensed handymen who occasionally install alarm systems. As Ms. Allensworth notes, “the board was ten times more likely to take action in a case alleging unlicensed practice than one complaining about service quality or safety.”

She finds similar patterns among boards that regulate auctioneers, cosmetologists and barbers. Enforcement efforts tend to protect turf more than consumers. Consumers care about bad service, not about who is licensed, so take a guess who complains about unlicensed practitioners? Licensed practitioners. According to Ms. Allensworth, it was these competitor-initiated cases, “not consumer complaints alleging fraud, predatory sales tactics, and graft,” where boards gave the stiffest penalties.

You might hope that boards that oversee nurses and doctors would prioritize patient safety, but Ms. Allensworth’s findings show otherwise. She documents a disturbing pattern of boards that have ignored or forgiven egregious misconduct, including nurses and physicians extorting sex for prescriptions, running pill mills, assaulting patients under anesthesia and operating while intoxicated.

In one horrifying case, a surgeon breaks the white-coat code and reports a fellow doctor for performing a surgery so catastrophically botched that he assumes the practitioner must be an imposter. Others also report “Dr. Death” to the board. But Ms. Allensworth notes, “at the time of the complaints to the medical board, [Dr. Death] was only one third of the way through the thirty-seven spinal surgeries he would perform, thirty-three of which left the patients maimed or dead.” The board system seems incapable of acting decisively and Dr. Death’s rampage is only ended definitively when he is indicted—the initial charges include “assault with a deadly weapon,” the scalpel—and eventually imprisoned.

This is reminiscent of my recent comments about imagining that we set up a licensing regime for grocery stores, under the pretext that we do need some training to ensure food safety... but that we let the grocery stores control the process. I predicted:

Grocery stores get the government to set up a licencing requirement to stock shelves, with some boilerplate reasoning about food safety or something. The thing is, the only way to get licensed is to get a grocery store to give you the mandatory years of experience. And, of course, they refuse to have such positions unless the government pays them for it. I would predict that there would be fewer grocery store employees, their pay would be higher, industry profits would be higher, government outlays would be higher, prices to the consumer would be higher, and service quality would decrease.

And sure, Tabarrok also agrees that we're not going to go to zero licensing for doctors. But he echos some of what I said here:

Let's put it this way - perhaps there is a "right" level of training for doctors, and perhaps there is a "right" level of training for grocery stores. Maybe the latter is much smaller than the former. Now, imagine we set up the system I described in my last comment for grocery store training. Do you think their incentives would lead to them selecting the "right" level of training?

Do we have any evidence that turning over control to them does actually have perverse incentives and results in not the "right" kind of controls (not necessarily in the patients' interests)? Back to Alex:

No system is perfect, but Ms. Allensworth’s point is that the board system is not designed to protect patients or consumers. She has a lot of circumstantial evidence that signals the same conclusion. The National Practitioner Data Bank (NPDB), for example, collects data on physician misconduct and potential misconduct as evidenced by medical-malpractice lawsuits. But “when Congress tried to open the database to the public, the [American Medical Association] ‘crushed it like a bug.’”

One of the most infuriating aspects of the system is that the AMA and the boards limit the number of physicians with occupational licensing, artificially scarce residency slots and barriers preventing foreign physicians from practicing in the U.S. Yet when a physician is brought before a board for egregious misconduct, the AMA cites physician shortage as a reason for leniency. When it comes to disciplining bad actors, the mantra seems to be that “any physician is better than no physician,” but when it comes to allowing foreign-trained doctors to practice in the U.S., the claim suddenly becomes something like “patient safety requires American training.”

We see this in industry after industry after industry that has captured the regulatory apparatus. Academia, real estate, the list goes on. Doctors are not some magic exception to perverse incentives. Alex and Ms. Allensworth disagree on possible solutions. There are hard problems here... but it's important to remember that there are, indeed, problems with the status quo. It's important to remember that we have a pretty good idea how these problems are manifested in terms of incentives. (No doubt someone can put a timer on for how long it will take a doctor to say that the solution involves putting doctors more in control of everything...)

It's not that these kind of complaints are invalid, but they miss the true utility of liscensing regimes.

Part of the reason for licensing regimes, btw, isn’t that the licensing teaches you anything or that it makes you more effective or that it makes you more ethical or that it successfully identifies protocriminals before they get the magic piece of paper. It’s that you have to put a $X00k piece of paper at risk as the price of admission to the chance of doing the crime. This deters entry and raises the costs of criminal enterprises hiring licensed professionals versus capable, ambitious, intelligent non-licensed criminals.

One might even say that this is yet another workaround that society has settled on for distinguishing the people who suck from the people who don't suck. The set of people with six-figures of capital to throw around is just better in almost every way from the set of people who don't have six-figures of capital to throw around.

In practice, giving the state leverage over people's livelihoods does a lot more to ensure regulatory compliance than restricting it to the set of people who can afford six figure outlays.

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