As someone who studied economics and once considered making a career out of it, I’ve always found Milton Friedman to be one of the most intriguing thinkers of the 20th century. He received a Nobel Prize for conceiving the concept of the velocity of money -- a fascinating idea that holds measuring how quickly various units of money change hands reveals a great deal about the business environment, from animal spirits to inflation potential.
So a few months ago, I did some reading about his early background and discovered that he devoted his doctoral thesis to critiquing medical licensing boards. To make a long story short, he concluded that they obstructed competition and were therefore undesirable.
No doubt Friedman was correct on the competition issue. Regulations and minimum standards do raise cost for consumers. But what costs are people willing to pay for free markets and low prices? An unlicensed podiatrist is one thing, an unlicensed cardiologist or neurosurgeon is quite another.
The biggest and least discussed crisis in the U.S. health system is that 25 percent of physicians are over 55 years old. Medical schools could easily expand their enrollments by 10 percent or 15 percent without sacrificing quality, but the American Medical Association has limited admissions because, heaven forbid, an increasing supply of doctors might reduce what they could charge.
It’s an issue that is relevant to many professions, including the financial advisory business. People in this business have long complained that its biggest problem is that one has to meet higher standards to become a hairdresser than to be a financial planner. The counter-argument is that you can’t prevent people from earning a living.
The reaction of professionals in this business, as in many others, has been to create designations that require individuals to pass certain tests certifying that meet a series of standards requiring that they have mastered a variety of skills. The problem in the advisory world is that this has led to such a proliferation of designations that it only serves to confuse consumers.
Friedman’s point regarding medicine is that markets ultimately are the best arbiter of who are the winners and losers in various medical fields. Some people with highly aggressive cancers will even harm themselves by waiting for months to get the best oncologist to perform surgery when just getting it removed would serve them better. Determining who is the best knee surgeon or retirement advisor is a subjective exercise.
But the fact that American society, and others, decided that licensing boards were a small price to pay to create a minimum standard to prevent outright quacks from butchering patients is hardly a bad thing. Hell, even with licensing, plenty of quacks still practice their quackery. Although I haven’t checked on him lately, without any licensing there are still a lot of Harry Dents predicting the Dow will go to 38,000 before it falls to 380, or something of the sort.
I’ve always found the libertarian philosophy appealing and intriguing, but as many would say, that's libertarianism with a very small “l.” More than a few times, I have voted Libertarian, though frustration with the other choices was usually the driving factor. So I can’t wait to ask Dr. Ron Paul, a former Libertarian Party president candidate, what he thinks of unlicensed neurosurgery at our retirement conference in Orlando in two weeks.