Thoughts on economics and liberty

Category: Economics

Thomas Szasz’s argument against licensing doctors

I mentioned Friedman’s argument against licensing doctors here. And two of Adam Smith’s arguments here and here. Here is Thomas Szasz’s argument:


KURTZ: Your point, then, is that the state should not license doctors.
SzAsz: Certainly not. The licensing of doctors is the symbol of what I am talking about. It’s as if the state would license Catholic priests for the ministry—and would prohibit all other clergymen to practice religion because they are quacks.
KURTZ: But then who should do the licensing?
SZASZ: There should be no licensing.
KURTZ: No licensing? Anyone could practice medicine?
SZASZ: Of course.
KURTZ: But how would you protect the public? What about the quacks?
SZASZ: Professor Kurtz, the idea that licensing doctors protects the public is one of the most uncritically accepted falsehoods of our day.
KURTZ: What do you mean?
SZASZ: Well, suppose a professor of medicine or surgery at the University of London were to come to New York; could he practice medicine? Or suppose a professor of medicine or surgery at Har¬vard—or the State University of New York—were to move to Miami because it’s warmer there; could he practice there?
KURTZ: No, not without first passing the state medical-board examinations.
SZASZ: Exactly. And that is to protect the public? Hardly. I grant, of course, that licensure examinations may, inter alia, also protect the public. But I insist that their first and foremost function is to protect physicians, the medical profession, from too much competi¬tion. In short, medical licensure is a method for preserving a closed union shop for physicians—for maintaining an artificial shortage of doctors. And the whole thing has been successfully palmed off on the American public as something done for its protection.
Kuwrz: So how should the public be protected? Doesn’t it need protection from incompetent medical practitioners?
SZASZ: Oh, I agree that people need protection—but not only from bad, stupid, inept, greedy, evil doctors; they need protection also from bad parents and children, husbands and wives, mothers-in-law, bureaucrats, teachers, politicians—the list is endless. And then of course, they’ll need protection from the protectors! So the question of how people should be protected from incompetent medical prac-titioners is really a part of the larger question of how they should be protected from the countless hazards of life. That is a vastly com-plicated problem for which there are no simple solutions. The first line of protection for the public lies, I would say, in self-protection. People must grow up and learn to protect themselves—or suffer the consequences. There can be no freedom without risk and re-sponsibility. More specifically, the public could look to what school the doctor graduated from and could set up all sorts of unofficial testing mechanisms—sort of consumers’ bureaus. The possibilities of nongovernmental checks on competence are immense. The trouble is no one is interested in even thinking along those lines nowadays.
KURTZ: Many people know very little about medicine. They may go to a man who claims to know what he is doing but doesn’t.
SZASZ: That’s true. But what I am talking about now is a long-range view. It’s a view that couldn’t be implemented overnight. To
make it meaningful, practical, we would have to envision correspond-ing changes in education, in people’s interest in, and knowledge about, their own bodies, about drugs, and so forth.
KuRTz: Why do you think that people don’t know more about medicine?
SzAsz: There are many reasons. One is because they aren’t taught anything about it. You know, most professions thrive on mystification, on keeping the public in the dark—despite all the protestations about popularizing medical knowledge. I have always thought that twelve-year-olds and thirteen-year-olds could be taught a great deal about how the body works—really works; it’s no more difficult either to teach or to learn that than is algebra or French grammar.
KURTZ: You would teach medicine in high school?
SZASZ: Certainly. Not how to take out an appendix, but how the body works, what doctors do—the basic principles and facts of phsysiology, pharmacology, the major diseases that affect man and the treatments for them. Real information—what’s in medical text¬books—not the lies children are now taught in the name of sex education, drug education, health education. None of that is pos¬sible, however, so long as education is a state monopoly.
KURTZ: Why not?
SzAsz: Because the doctor is a priest who teaches only his reli¬gion, and only to a select few. As a priest protected by the state, the doctor becomes the keeper of all kinds of secrets. Remember the Latin prescriptions and the diagnostic mumbo jumbo to keep from patients the knowledge of what ails them. Even today, physicians seriously contemplate when patients should and should not be told they have cancer. The whole thing is really quite absurd once one stands back and looks at it as an anthropologist might at another culture. Magic used to be used as medicine. Now medicine is used as magic.
KURTZ: But that is not all the doctors’ fault?
SzAsz: Certainly not. I wouldn’t want to give the impression that I think it is. It takes two to tango. Freud was quite right in emphasizing that one of the greatest passions men have is the passion not to know—to repress, to mystify—the obvious. Thus, there is a sort of conspiracy between people who do not want to
know, who want to remain stupid, and experts who will lie to them, who will make a profession out of stupefying them. The priests used to do a good job of that. Now the physicians do it. And, above all, the politicians are in there pitching to make sure people hear all the lies they want to hear.

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The problem of groupthink and the madness of crowds

A placeholder post. Some recent tweets:

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Six reasons why there won’t be an economic depression

The virus may have caused the recession but only governments can convert this calamity into a depression. Fortunately, I am able to predict that most governments will not reimpose strong lockdowns even if there is a spike in cases.

  1. Serological studies confirm that this virus is not a Spanish flu. Its IFR is far lower than originally anticipated.
  2. In some countries many people have already got the virus, so its future spread will be slower. That assures their governments that they can manage its further spread.
  3. Politicians can see that hospitalisation capacity was not breached (in most countries). In addition, PPE and equipment shortfalls that were seen initially have been mostly overcome. This gives politicians comfort in dealing with the virus.
  4. Governments are facing dire fiscal consequences from continued lockdowns. They desperately need economic activity to resume so revenues can start rolling in.
  5. Politicians can sense opposition to indefinite lockdowns starting to build. Nobody can wait for two years for a vaccine which may never come. The youth, in particular, realise that they are not significantly affected and need to get back to their normal work and life.
  6. Sweden’s success will put great pressure on other nations. Within days now we will start seeing pictures of an even fuller level of normalcy in Sweden. That will put enormous pressure on other countries to review their lockdowns.

If governments give in to these pressures and do not re-impose lockdowns and, instead, learn to live with the virus, we won’t get a Depression – just a prolonged, bad recession. Sweden will in any case return to the pre-pandemic level of economic activity from September 2020, but even other nations could return to these levels from late 2020 or early 2021.

If major countries re-impose lockdowns then all bets are off – we may well see an economic depression, then.


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Economic consequences of lockdowns – including their regressive impacts

Lockdowns are nothing short of suicidal. Upper class elites are very relaxed about them (at least for now), but the poor are beginning to suffer very badly.

There is a lot of literature floating around. I’m unable to spend time to bring all this together, but a few links below when I find time.

My earlier blog post: Further notes on CBA for pandemic options

My TOI article on economic impacts: An outline cost-benefit test of COVID-19 lockdowns

Experts are blind: “Medical scientists’ … opinions ought not to be given undue weight. They are only focusing on what can be seen – the COVID-19 deaths and not the unseen deaths, misery and loss of liberty.” [Source]

The lockdown is killing people, too – 16 April 2020

SARS-CoV-2 Response: Where Do We Go from Here? (Introduction) – 16 April 2020

Coronavirus: We can win this war — and avoid an economic defeat – Henry Ergas, 17 April 2020

Although estimates vary, merely extending the restrictions by another two months could permanently reduce gross domestic product by $95bn, almost equal to a year’s public spending on education. The decline in what economists call “welfare”, which adds to the GDP cost the losses consumers and producer incur when they are prevented from engaging in mutually beneficial trades, would be even larger, taking the total to about $130bn.

The supply chain starts to fail, part two – 13 April 2020

Another U.S.-Wide Housing Slump Is Coming – 12 April 2020

JPMorgan economists have recently amended their forecast to a 40 per cent decline in GDP in the quarter and a 20 per cent unemployment rate. [Source]

Coronavirus Australia: worst year since Great Depression, says IMF – 15 April 2020

New OECD outlook on the global economy – 26 March 2020

For each month of containment, there will be a loss of 2 percentage points in annual GDP growth.


Jim Cramer advises investors to sell these groups of stocks ‘whenever they bounce’ – 16 April 2020

Sectors that will suffer badly without herd immunity

  • travel (including air, train/public transport)
  • tourism and hospitality (including airbnb, hotels, cruise ships)
  • entertainment (TV live shows, opera, theatre, theme parks, movies, big events, small events – political and religious gatherings/ events are included here)
  • sports and gyms (all – cricket, football, tennis, competitive and recreational sports etc. except maybe chess and such “distant” sports)
  • restaurants (many will minimise visits), street food.
  • house repairs (people will minimise outsiders visiting their homes)
  • hair dressing (many will avoid)
  • clothing and shoes (less “big social events” means less need for fancy clothes)
  • retail malls (fewer trips made)
  • executive education (many aged students will minimise such courses)
  • food processing (particularly industries with intense human involvement)

Many other sectors will suffer second-order affects – through reduced demand (e.g. furniture, house furnishings, toys, pet stores, IT hardware, etc.).




A zoo is struggling so much that it may have to feed some animals to other animals – 15 April 2020

When Home Is More Dangerous Than the Coronavirus – 27 March 2020

Coronavirus outbreak raises threats to mental health – 27 March 2020

People in countries without herd immunity will remain in a perpetual state of fear, flattening their economies:

reversion to the use of firewood


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