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Category: Economics

Letter from Adam Smith to Dr William Cullen blasting doctors and all medical monopolies

Dr Cullen had written to Adam Smith seeking his opinion on proposals from the Royal College of Physicians of Edinburgh.  The petition suggested that doctors should be graduates, they should have attended university for at least two years and that they should present themselves for examination. Smith rejected the proposals from the Royal College. [Source]

Source for the letter:


My dear Doctor:

In the present state of the Scotch Universities; I do most sincerely look upon them as, in spite of all their faults, without exception the best seminaries of learning that are to be found anywhere in Europe.

You propose, I observe, that no person should be admitted to examination for his degrees unless he brought a certificate of his having studied at least two years in some university. Would not such a regulation be oppressive upon all private teachers, such as the Hunters, Hewson, Fordyce, etc.? The scholars of such teachers surely merit whatever honour or advantage a degree can confer much more than the greater part of those who have spent many years in some universities, where the different branches of medical knowledge are either not taught at all, or are taught so superficially that they had as well not be taught at all. When a man has learnt his lesson very well, it surely can be of little importance where or from whom he has learnt it.

The monopoly of medical education which this regulation would establish in favour of Universities would, I apprehend, be hurtful to the lasting prosperity of such bodies-corporate. Monopolists very seldom make good work, and a lecture which a certain number of students must attend, whether they profit by it or no, is certainly not very likely to be a good one.

… All those different causes of negligence and corruption, no doubt take place in some degree in all our Scotch Universities. In the best of them, however, those causes take place in a much less degree than in the greater part of other considerable societies of the same kind; and I look upon this circumstance as the real cause of their present excellence. In the medical College of Edinburgh in particular, the salaries of the Professors are insignificant. There are few or no bursaries or exhibitions, and their monopoly of degrees is broken in upon by all other Universities, foreign and domestic. I require no other explication of its present acknowledged superiority over every other society of the same kind in Europe.

To sign a certificate in favour of any man whom we know little or nothing about, is most certainly a practice which cannot be strictly vindicated. It is a practice, however, which, from mere good nature, and without interest of any kind, the most scrupulous men in the world are sometimes guilty of. I certainly do not mean to defend it. Bating the unhandsomeness of the practice, however, I would ask in what manner does the public suffer by it? The title of Doctor, such as it is, you will say, gives some credit and authority to the man upon whom it is bestowed; it extends his practice, and consequently his field for doing mischief; it is not improbable, too, that it may increase his presumption, and consequently his disposition to do mischief. That a degree injudiciously conferred may sometimes have some little effect of this kind, it would surely be absurd to deny: but that this effect should be very considerable, I cannot bring myself to believe. That Doctors are sometimes fools as well as other people, is not, in the present time, one of those profound secrets which is known only to the learned. The title is not so very imposing, and it very seldom happens that a man trusts his health to another merely because that other is a doctor. The person so trusted has almost always either some knowledge or some craft which would procure him nearly the same trust, though he was not decorated with any such title. In fact, the persons who apply for degrees in the irregular manner complained of, are, the greater part of them, surgeons or apothecaries, who are in the custom of advising and prescribing, that is of practising as physicians; but who, being only surgeons and apothecaries, are not feted as physicians. It is not so much to extend their practice as to increase their fees, that they are desirous of being made doctors. Degrees conferred even undeservedly upon such persons can surely do very little harm to the public. When the University of St. Andrew’s, very rashly and imprudently, conferred a degree upon Green, who happened to be a stage-doctor, they no doubt brought much ridicule and discredit upon themselves; but in what respect did they hurt the public? Green still continued to be what he was before, a stage-doctor, and probably never poisoned a single man more than he would have done though the honours of graduation had never been conferred upon him. Stage-doctors, I must observe, do not much excite the indignation of the faculty; more reputable quacks do. The former are too contemptible to be considered as rivals: They only poison the poor people; and the copper-pence which are thrown up to them in handkerchiefs, could never find their way into the pocket of a regular physician. It is otherwise with the latter: They sometimes intercept a part of what perhaps would have been better bestowed in another place. Do not all the old women in the country practice physic without exciting murmur or complaint? And if here and there a graduated doctor should be, as ignorant as an old woman, where can be the great harm? The beardless old woman, indeed, takes no fees; the bearded one does, and it is this circumstance, I strongly suspect, which exasperates his brethren so much against him.

There never was, and, I will venture to say, there never will be, a University from which a degree could give any tolerable security, that the person upon whom it had been conferred, was fit to practise physic. The strictest Universities confer degrees only upon students of a certain standing. Their real motive for requiring this standing is, that the student may spend more money among them, and that they may make more profit by him. When he has attained this standing, therefore, though he still undergoes what they call an examination, it scarce ever happens that he is refused his degree. Your examination at Edinburgh, I have all reason to believe, is as serious, and perhaps more so than that of any other University in Europe. But when a student has resided a few years among you, has behaved dutifully to all his Professors, and has attended regularly all their lectures, when he comes to his examination, I suspect you are disposed to be as good-natured as other people. Several of your graduates, upon applying for a licence to the College of Physicians here, have had it recommended to them to continue their studies. From a particular knowledge of some of the cases, I am satisfied that the decision of the College, in refusing them their licence, was perfectly just; that is, was perfectly agreeable to the principles which ought to regulate all such decisions, and that the candidates were really very ignorant of their profession.

A degree can pretend to give security for nothing but the science of the graduate; and even for that it can give but a very slender security. For his good sense and discretion, qualities not discoverable by an academical examination, it can give no security at all. But without these, the presumption which commonly attends science must render it, in the practice of physic, ten times more dangerous than the grossest ignorance, when accompanied, as it sometime is, with some degree of modesty and diffidence.

If a degree, in short, always has been, in spite of all the regulations which can be made, always must be, a mere piece of quackery, it is certainly for the advantage of the public that it should be understood to be so. It is in a particular manner for the advantage of the Universities, that, for the resort of students, they should be obliged to depend, not upon their privileges, but upon their merit,—upon their abilities to teach, and their diligence in teaching; and that they should not have it in their power to use any of those quackish arts which have disgraced and degraded the half of them.

A degree which can be conferred only upon students of a certain standing is a statute of apprenticeship which is likely to contribute to the advancement of science, just as other statutes of apprenticeship have contributed to that of arts and manufactures. Those statutes of apprenticeship, assisted by other corporation laws, have banished arts and manufactures from the greater part of towns-corporate. Such degrees, assisted by some other regulations of a similar tendency, have banished almost all useful and solid education from the greater part of Universities. Bad work and high price have been the effects of the monopoly introduced by the former. Quackery, imposture and exorbitant fees, have been the consequences of that established by the latter. The industry of manufacturing villages has remedied in part the inconveniences which the monopolies established by towns-corporate had occasioned. The private interest of some poor Professors of Physic in some poor Universities, inconveniently situated for the resort of students, has in part remedied the inconveniences which would certainly have resulted from that sort of monopoly which the great and rich Universities had attempted to establish. The great and rich Universities seldom graduated anybody but their own students, and not even them till after a long and tedious standing; five and seven years for a Master of Arts; eleven and sixteen for a Doctor of Law, Physic, or Divinity. The poor Universities, on account of the inconveniency of their situation, not being able to get many students, endeavored to turn the penny in the only way in which they could turn it, and sold their Degrees to whoever would buy them, generally without requiring any residence or standing, and frequently without subjecting the candidate even to a decent examination. The less trouble they gave the more money they got, and I certainly do not to pretend to vindicate so dirty a practice. All Universities being ecclesiastical establishments, under the immediate protection of the Pope, a degree from any one of them gave, all over Christendom, very nearly the same privileges which a degree from any other could have given; and the respect which is at this day paid to foreign degrees, even in the Protestant countries, must be considered as a remnant of popery. The facility of obtaining degrees, particularly in physic, from those poor Universities, had two effects, both extremely advantageous to the public, but extremely disagreeable to the graduates of other Universities, whose degrees had cost them much time and expense. First, It multiplied very much the number of doctors, and thereby no doubt sunk their fees, or at least hindered them from rising so very high as they otherwise would have done. Had the Universities of Oxford and Cambridge been able to maintain themselves in the exclusive privilege of graduating all the doctors who could practice in England, the price of feeling a pulse might by this time have risen from two and three guineas, the price which it has now happily arrived at, to double or triple that sum; and English physicians might, and probably would, have been at the same time the most ignorant and quackish in the world. Secondly, It reduced a good deal the rank and dignity of a doctor. But if the physician was a man of sense and science, it would not surely prevent his being respected and employed as a man of sense and science. If he was neither the one nor the other, indeed, his doctorship would no doubt avail him the less. But ought it in this case to avail him at all? Had the hopeful project of the rich and great Universities succeeded, there would have been no occasion for sense or science. To have been a doctor would alone have been sufficient to give any man rank, dignity and fortune enough. That in every profession the fortune of every individual should depend as much as possible upon his merit, and as little as possible upon his privilege, is certainly for the interest of the public. It is even for the interest of every particular profession, which can never so effectually support the general merit and real honour of the greater part of those who exercise it, as by resting upon such liberal principles. Those principles are even most effectual for procuring them all the employment which the country can afford. The great success of quacks in England has been altogether owing to the real quackery of the regular physicians. Our regular physicians in Scotland have little quackery, and no quack accordingly has ever made his fortune among us.

After all, this trade in degrees I acknowledge to be a most disgraceful trade to those who exercise it; and I am extremely sorry that it should be exercised by such respectable bodies as any of our Scotch Universities. But as it serves as a corrective to what would otherwise soon grow up to be an intolerable nuisance, the exclusive and corporation spirit of all thriving professions and of all great Universities, I deny that it is hurtful to the public.

What the physicians of Edinburgh at present feel as a hardship is, perhaps, the real cause of their acknowledged superiority over the greater part of other physicians. The Royal College of Physicians there, you say, are obliged by their charter to grant a licence, without examination, to all the graduates of Scotch universities. You are all obliged, I suppose, in consequence of this, to consult sometimes with very unworthy brethren. You are all made to feel that you must rest no part of your dignity upon your degree, distinction which you share with the men in the world, perhaps, whom you despise the most, but that you must found the whole of it upon your merit. Not being able to derive much consequence from the character of Doctor, you are obliged, perhaps, to attend more to your characters as men, as gentlemen, and as men of letters. The unworthiness of some of your brethren, may, perhaps, in this manner be in part the cause of the very eminent and superior worth of many of the rest. The very abuse which you complain of may in this manner, perhaps, be the real source of your present excellence. You are at present well, wonderfully well, and when you are so, be assured there is always some danger in attempting to be better.

Adieu, my dear Doctor; after having delayed so long to write to you, I am afraid I shall get my lug (ear) in my lufe (hand), as we say, for what I have written. But I ever am most affectionately yours,


London, 20th Sept. 1774.

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A reputational platform: a market-based alternative to occupational licensing

Occupational licensing (OL) is one of the worst ways to deal with alleged problems of information asymmetry (essentially problems about trustworthiness including trustworthy delivery of a product of agreed quality and in a timely manner). There is a good amount of literature on this issue.

However, we need to explore whether market based solutions exist, to alleviate this problem.

I am thinking of a voluntary reputational platform that will deal with information asymmetry issues and ultimately eliminate the need for occupational licensing. [See my FB post here.]

To be durable and credible, the government should build such a generic platform covering all licensed occupations. The government would need to ensure that only genuine consumers are able to provide feedback on individual professionals (say, doctors or builders). The professionals being rated would be in a position to read the names of the reviewers while the public would only see the review, not the reviewer’s name. The professionals being rated would also have the right to provide their own view on any adverse situation reported by a customer. It is important that the professionals relinquish any recourse to defamation laws against consumers who provide honest feedback, as part of entering this platform.

Such a platform being voluntary would ensure that only good professionals step forward to be rated. Customers will, of course, not provide custom to anyone who is not willing to get himself/herself fated. Those who agree to be rated would also have an incentive to provide excellent quality of service to ensure continued high ratings. This would improve the quality of services provided by the professionals. The last period problem would remain but it is likely to be relatively small, and other mechanisms could be designed to deal with it.

Such a platform can initially run in parallel with existing schemes and over time, after it is evaluated, it could allow the scrapping of such schemes.

We can call this platform Citizens’ Eye.

In 2011, Poland decided to liberalise access to 250 of the 380 currently regulated professions. Need to find out more about this bold experiment.

Overall, I think it is high time to think of a new models that support the market instead of requiring major government involvement – which merely increases inefficiency and makes things worse.

Have you thought in detail about any such reputational platform? Happy to receive any inputs.

Here’s a generic framework to look at this issue:


My FB post here.

Why do we need to license GPs? They are harmless creatures. The worst they can do is to misdiagnose – in which case one has to go to the specialist in any case.

Even most specialists can do no serious harm. So only those with the most potential for harm (mainly surgeons) need to be under the scrutiny of government. Even that can be minimised through a voluntary reputational platform.


Citizens’ Eye

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What Bitcoin really represents: a historic war between the people and government

Satoshi wrote in his white paper:

“What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.”

This harks back to the origin of money – which was an entirely people-based creation. During barter there was no role for government, nor later, when initial money was created by the people.

Much later, the government violently attacked and grabbed this money-making power from the people.

And so it continued for thousands of years.

Now, finally, Bitcoin’s rise is the market’s way of saying it doesn’t trust any government.

Governments have been an unmitigated evil for the most part, confiscating common people’s wealth for thousands of years and splurging this hard earned wealth on the utterly useless “projects” of idiotic self-glorifying “politicians”.

Now the people are voting with their feet – and governments across the world will soon be on their knees: and then, they will, as usual, become very vicious and violent.

I suspect a major battle of wills is now brewing – and governments will be forced – after a very long battle – to retreat from their socialist projects.

I do notice that socialist “economists” like Stiglitz and crony capitalists like JP Morgan are entering this battle in a big way – as they realise that this is a historical shift in power, and their cosy lives – based on bilking the common man, will soon come to an end.

Before long, start expecting central banks to blow their tops. According to them, it is OK for them to print endless amounts of worthless paper and give it “value”, but it is not OK for markets to do so. That theory is now being challenged in a very big way.

By 2018, cryptocurrencies would have probably reached a trillion dollars in capitalisation. That will be simply intolerable for governments worldwide – but the problem is that in this case they can do next to nothing about the situation, except to unleash a lot of violence. And then the question will be: how much violence can governments unleash?

Now, note that I have already written about the need for sensible regulation of cryptocurrency, but essentially, this is a self-regulating thing, and there is no role for government.

Governments need to accept the reality that there will now be competing forms of currency that it can no longer control, and that it should focus on getting its taxes in various sensible ways, without trying to destroy this highly efficient people-to-people currency/asset.

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Two essential papers – by Daniel Klein and Richard Ebeling – if you ever wish to make good public policy

I’ve found Daniel Klein’s paper Trust for Hire to be one of the most insightful about how markets regulate trust. Unfortunately, it is not readily available on the internet (at least I was unable to find it), so I’ve finally taken the time to scan and OCR it.

The paper is now available here in Word format. This must be made mandatory reading for every policy maker, given the amount of statist rubbish that comes out of most policy makers’ thick heads.

In like vein, this latest paper by Richard Ebeling is a must read: Capitalism and Asymmetric Information.

These papers warn us against rushing to resolve alleged “information failures” through licensing/ registration and other statist means.

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