Thoughts on economics and liberty

Category: Public policy

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Panjab irrigation corruption continues unabated. A report from Devinder Pal.

Readers know that I’ve covered the Panjab irrigation scandal extensively on this blog.  E.g. see this.

Please watch this report from Devinder Pal, a dedicated reporter from Panjab, from 10 minutes 50 seconds:

I do differ from Devinder Pal in that India’s ultra-corruption in India is NOT related to a loss of character. Instead, the loss of character is the direct result of the socialist incentives that are built deeply into our system, where EVERYONE on the top must NECESSARILY be corrupt. I’ve shown this extensively over the years, including in BFN.



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Rationale for town planning #2 – the 1917 views of Frank Stapley, architect

In continuation of my notes here, I found this. Word version below:


Town Planning probably owes its birth to the desire to improve the conditions brought about by the evils that have developed through the rapid growth of the cities and towns in the old country. Great objection has been taken to the manner and method of carrying out these enormous extensions. The whole business of laying out the streets and building the houses, had almost entirely fallen into the hands of the land jobbers, and jerry builders, with the result that they have built miles and miles of attached or terrace houses, of uniform monotonous ugliness. [Sanjeev: DISAGREE. This is purely a subjective matter, none of the business of government] There are probably hundreds of miles of these terraces in streets around London, which are built on much the same plan; and similar conditions prevailed in nearly every other city and town.

It is obvious that these conditions do not apply to Melbourne, we certainly have the land jobber and jerry builder, but they are not building terraces in our outer suburbs. We have other undesirable conditions, which require regulating and improving, therefore we should welcome and give careful study to town planning principles, and apply them for the improvement and beautification of the metropolis.

The present restrictions regulating the laying out, building and extending the metropolis, have been almost entirely of a utilitarian nature; with very little regard for the revivifying effect of art, which would add so much to the general attractiveness of the whole.

There can be no question that further restrictions are necessary to provide for the artistic building and planning of all extensions, which must—amongst other things—provide for the reservation of open spaces for parks, gardens, sports grounds, squares, and main avenues, and sites for buildings of a public nature. Our present method of erecting buildings before the roads are made, and before the sewers are constructed and water laid on, is radically wrong and insanitary; it is very necessary if improved methods are to be introduced, that this practice should not be permitted and that provision should be made to prohibit the building of houses before these necessary works are completed. [Sanjeev: one can agree with this on public health grounds]

Provision has been made for all new streets to be not less than 50ft wide; this is sufficient for most streets, but main arterial roads should be wider and treated as avenues. For most residential streets, a carriage way of eighteen feet wide is ample, the footpaths should be paved and each 6ft. wide, this would leave strips between the footpaths 10ft. wide on each side for tree planting; this form of construction would cost less to construct and maintain than the usual method. The lighting should be by central swing lamps to avoid the trees. [Sanjeev: one can agree to this on efficiency grounds]

The width between the houses is of greater importance than the width of the street, therefore, there should be a space of not less than 10 feet on the inside of the fence line on which buildings should be prohibited; this reserve is usually provided for in England and called the forecourt; it was for this purpose that the old building regulations provided that the building surveyor may define the general building line, but it was apparently not understood, and became a dead letter. [Sanjeev: DISAGREE. This is nothing but a subjective preference, unrelated to any harm]

The width of streets should be in proportion to their lengths, long straight streets should be avoided because of the unending perspective, and cul de sacs should be prohibited, because they create drainage difficulties, and dead ends in the water supply. [Agreed on grounds of efficiency]

Tree planting in our streets, gardens and parks should be encouraged. In residential streets —if forecourts are provided— the back of the footpath—as mentioned before—is the best place. It is not a very creditable fact, that a great numbers of trees have been planted in the past, which have been neglected and allowed to die. Tree planting should only be carried out by trained arboriculturists and provisions should be made for their proper maintenance, there should be no divided control, such as the power given to the P.O. authorities to mutilate trees to protect their telephone wires. The present want of uniformity and system in our building restrictions is most unsatisfactory, if possible some modified regulations should be made to apply to the whole of the metropolis in conformity with modern ideas; consideration should be given as to the desirability of adopting zones or areas, to regulate the class of buildings to be erected thereon. It is an anomaly that Government and municipal buildings are exempt from all regulations, they at least should comply.

The housing question is of great importance and requires very careful consideration, it is desirable that facilities should be given to families of small means to acquire their own homes, which should be within reasonable distance from their places of business; it is very probable that the adoption of minimum allotments will defeat this object; that is, provided it is intended that one family should occupy each allotment, because the cost will be expensive for a man of moderate means. Unless there are restrictions as to the class, and height of buildings erected on these blocks, the effect may be that houses 3 or 4 stories high will be erected, which will be in habited by several families; in other words these people will be forced to live in flats or apartment houses, which surely was never intended.

Regulations for residences can only provide for a minimum in such matters as structural requirements, dimensions of rooms, natural lighting and ventilation, and special restrictions for particular localities might be made; for instance, there might be a limitation in the height of houses in some residential streets. With regard to open yard spaces, the area allowed should be in proportion to the number of storeys and the class of building; if two squares are required for a single storeyed cottage, occupied by one family, it is not logical for the same area to be sufficient for a 5-storeyed building let out as a flat, or apartments, and occupied by at least ten times more people. In small residences some relaxation of conditions might be allowed; for instance in semi-detached residences the party wall above the roof could be omitted with advantage to the appearance.

The whole of our existing regulations have been framed entirely on utilitarian lines, designed purely for the safety, health and comfort of the citizens. One of the essentially novel features in modern town planning, is the desire to develop the beautiful; it is clear that you cannot estimate the value of living in beautiful surroundings, and the suggestion has been made that it is desirable to establish some architectural standard. It must be remembered that, in a young community like ours, we have had little time for anything but the utilities of life, as we progress, and acquire more wealth and leisure we can look forward with confidence, to the increased growth of a love for the beautiful, and the development of the artistic, which no doubt will be fostered by a love of our country. Great progress has been made in the design and construction of our buildings, and it is the buildings that make the city, and it may be said they reflect the artistic attainments of the inhabitants.

We have no official regulations restricting the class or value of residential buildings proposed to be erected; that the necessity has been felt for some restrictions of this character, is proved by the fact that private owners have made conditions of sale which provided that designs must be submitted for approval, and that the buildings to be erected must be of a certain value.  [Sanjeev: The market works]

Also the Government years ago, sold some of the frontages to St. Kilda Road and Sydney Road under conditions that only villas or terraces could be erected of a certain value, and in accordance with the then existing Melbourne Building Regulations, the other frontages to these roads, were sold without these restrictions. The result is an object lesson to anyone studying this question because the buildings on the restricted areas are far superior to those on the unrestricted frontages, where they are of a mixed character including shops, public houses, factories and residences, with a very bro ken building line with the residences set back and the business premises built out to the street. The general effect is very disappointing and clearly points to the desirability of permanently reserving areas for residential buildings.

With regard to street architecture there is a growing feeling that the private owner should not be allowed to build for advertising purposes, which would be out of harmony with the surroundings, the suggestion to standardise street architecture would probably produce mono tony and failure. The question is an important one and should not be left to the engineer alone to decide; a solution of the difficulty might be found by appointing a board of experts to determine the suitability and architectural fitness of the designs of all buildings in certain principal streets and main avenues; also the suitability of designs for distinctive features, such as public buildings, bridges, river improvements, squares, monuments and memorials, and churches should be referred to them for approval.

Recently there has been considerable controversy over our primary industries, which are classified under our Health Act, as noxious trades; the popular solution for dealing with these businesses and factories, is that they are noxious, and cannot be improved, and that they should be removed to a remote district, where they could pollute the atmosphere, with evil smells, without let or hindrance; obviously this is all wrong, the whole matter is of importance to the whole community, and is essentially one that requires the very best expert advice. It is unquestionable that these industries are necessary, certainly some of them can be, and have been driven out of the country, there is no doubt that there has been steady improvement in the methods of manufacture which have resulted in minimising the evil smells, but still there is room for great improvement.

The tenure of these properties under the existing restrictions is precarious, and probably is responsible for the fact that the buildings are mostly dilapidated shanties, erected on low-lying land near the rivers which were originally both their source of water supply and their sewer. Probably it will be found, that, if proper methods, are adopted and enforced, there is no reason why these businesses should not be carried on without being a nuisance, but they should be under conditions which must be made to apply to them all. They should not be allowed in residential areas.

Factory areas should be defined where these premises and buildings could be erected, the first consideration for them is water and sewerage, also they must not be too remote from the homes of the employees who probably number over 10,000; and the transport of material should be considered. The sites should be isolated and the machinery and manufacturing methods the most up-to-date, and housed in substantial buildings, with impervious floors, tiled walls and changing rooms and lavatory accommodation for the employees.

The ventilation of the buildings should be designed to confine any smells within the buildings and extracted by fans through furnaces, or some other efficient method adopted.

The buildings should not be allowed to disfigure the landscape, they should be designed in a simple manner to give pleasing architectural results, and they should be compelled to plant and lay out the grounds and maintain them and the fences in a proper manner. The whole question is a matter of great urgency and requires the very best expert advice to overcome the many difficulties.

There is no doubt that the traffic congestion is the result of bad planning. The original lay out of Melbourne was in rectangular blocks, regardless of contour, consequently we have steep gradients in many of our streets which the traffic naturally avoids, and prefers the easy grades of Flinders-street, Elizabeth-street and parts of Swanston and other streets; as these streets form the approaches to the bridges and the railway station on the Yarra, the traffic becomes concentrated at the intersections of Flinders and Swanston Streets particularly between and 6 in the afternoon. Owing to the desire of all the electric tramways to continue their trams into the city, and the probable convertion of the cable trams into electric traction, everything points to the fact that this congestion will become more and more serious, unless some remedy is provided which would divert or spread the traffic and so give relief.

The proposal to erect a bridge over the Yarra opposite Spencer-street, has been under consideration for years, and should in the near future be taken in hand again, because it will give an outlet to the traffic and help to develop the southern side of the river in an area which should be reserved for stores, factories and buildings of that class. There are questions of levels, approaches and navigation, in connection with this proposed bridge which should be determined by expert engineers and architects.

In dealing with traffic congestion the result of bad planning, other countries in their endeavors to remedy the defects, have taken drastic action and have cut new streets through the congested centres of their cities, and we, in the future, may have to carry out similar work.

Finally it must be admitted that town planning is mostly an engineer’s job, and that their work in the past has generally been well carried out on utilitarian lines, and beneficial as a whole.

The beautification of the city should not be left more or less to chance, therefore, provision should be made for the  engineer to consult with the architect,  the artist, and the sculptor, especially  with regard to the atristic treatment of  all matters of public interest connected  with town planning.

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Against the government’s licensing of doctors – Milton Friedman

Adam Smith wrote against the monopolistic tendencies of doctors but Friedman’s doctoral research took him much further into this area. He then wrote a book: Incomes from Independent Professional Practice [The book is available here for download].


This one.

and this:

and this:

And chapter 9 of his book, Capitalism and Freedom.

Medical Licensure

The medical profession is one in which practice of the profession has for a long time been restricted to people with licenses. Offhand, the question, “Ought we to let incompetent physicians practice?” seems to admit of only a negative answer. But I want to urge that second thought may give pause.

In the first place, licensure is the key to the control that the medical profession can exercise over the number of physicians. To understand why this is so requires some discussion of the structure of the medical profession. The American Medical Association is perhaps the strongest trade union in the United States. The essence of the power of a trade union is its power to restrict the number who may engage in a particular occupation. This restriction may be exercised indirectly by being able to enforce a wage rate higher than would otherwise prevail. If such a wage rate can be enforced, it will reduce the number of people who can get jobs and thus indirectly the number of people pursuing the occupation. This technique of restriction has disadvantages. There is always a dissatisfied fringe of people who are trying to get into the occupation. A trade union is much better off if it can limit directly the number of people who enter the occupation—who ever try to get jobs in it. The disgruntled and dissatisfied are excluded at the outset, and the union does not have to worry about them.

The American Medical Association is in this position. It is a trade union that can limit the number of people who can enter. How can it do this? The essential control is at the stage of admission to medical school. The Council on Medical Education and Hospitals of the American Medical Association approves medical schools. In order for a medical school to get and stay on its list of approved schools it has to meet the standards of the Council. The power of the Council has been demonstrated at various times when there has been pressure to reduce numbers. For example, in the 1930’s during the depression, the Council on Medical Education and Hospitals wrote a letter to the various medical schools saying the medical schools were admitting more students than could be given the proper kind of training. In the next year or two, every school reduced the number it was admitting, giving very strong presumptive evidence that the recommendation had some effect.

Why does the Council’s approval matter so much? If it abuses its power, why don’t unapproved medical schools arise? The answer is that in almost every state in the United States, a person must be licensed to practice medicine, and to get the license, he must be a graduate of an approved school. In almost every state, the list of approved schools is identical with the list of schools approved by the Council on Medical Education and Hospitals of the American Medical Association. That is why the licensure provision is the key to the effective control of admission. It has a dual effect. On the one hand, the members of the licensure commission are always physicians and hence have some control at the step at which men apply for a license. This control is more limited in effectiveness than control at the medical school level. In almost all professions requiring licensure, people may try to get admitted more than once. If a person tries long enough and in enough jurisdictions he is likely to get through sooner or later. Since he has already spent the money and time to get his training, he has a strong incentive to keep trying. Licensure provisions that come into operation only after a man is trained therefore affect entry largely by raising the costs of getting into the occupation, since it may take a longer time to get in and since there is always some uncertainty whether he will succeed. But this rise in cost is nothing like so effective in limiting entry as is preventing a man from getting started on his career. If he is eliminated at the stage of entering medical school, he never comes up as a candidate for examination; he can never be troublesome at that stage. The efficient way to get control over the number in a profession is therefore to get control of entry into professional schools.

Control over admission to medical school and later licensure enables the profession to limit entry in two ways. The obvious one is simply by turning down many applicants. The less obvious, but probably far more important one, is by establishing standards for admission and licensure that make entry so difficult as to discourage young people from ever trying to get admission. Though most state laws require only two years of college prior to medical school, nearly 100 per cent of the entrants have had four years of college. Similarly, medical training proper has been lengthened, particularly through more stringent internship arrangements.

As an aside, the lawyers have never been as successful as the physicians in getting control at the point of admission to professional school, though they are moving in that direction. The reason is amusing. Almost every school on the American Bar Association’s list of approved schools is a full time day school; almost no night schools are approved. Many state legislators, on the other hand, are graduates of night law schools. If they voted to restrict admission to the profession to graduates of approved schools, in effect they would be voting that they themselves were not qualified. Their reluctance to condemn their own competence has been the main factor that has tended to limit the extent to which law has been able to succeed in imitating medicine. I have not myself done any extensive work on requirements for admission to law for many years but I understand that this limitation is breaking down. The greater affluence of students means that a much larger fraction are going to full time law schools and this is changing the composition of the legislatures.

To return to medicine, it is the provision about graduation from approved schools that is the most important source of professional control over entry. The profession has used this control to limit numbers. To avoid misunderstanding let me emphasize that I am not saying that individual members of the medical profession, the leaders of the medical profession, or the people who are in charge of the Council on Medical Education and Hospitals deliberately go out of their way to limit entry in order to raise their own incomes. That is not the way it works. Even when such people explicitly comment on the desirability of limiting numbers to raise incomes they will always justify the policy on the grounds that if “too” many people are let in, this will lower their incomes so that they will be driven to resort to unethical practices in order to earn a “proper” income. The only way, they argue, in which ethical practices can be maintained is by keeping people at a standard of income which is adequate to the merits and needs of the medical profession. I must confess that this has always seemed to me objectionable on both ethical and factual grounds. It is extraordinary that leaders of medicine should proclaim publicly that they and their colleagues must be paid to be ethical. And if it were so, I doubt that the price would have any limit. There seems little correlation between poverty and honesty. One would rather expect the opposite; dishonesty may not always pay but surely it sometimes does.

Control of entry is explicitly rationalized along these lines only at times like the Great Depression when there is much unemployment and relatively low incomes. In ordinary times, the rationalization for restriction is different. It is that the members of the medical profession want to raise what they regard as the standards of “quality” of the profession. The defect in this rationalization is a common one, and one that is destructive of a proper understanding of the operation of an economic system, namely, the failure to distinguish between technical efficiency and economic efficiency.

A story about lawyers will perhaps illustrate the point. At a meeting of lawyers at which problems of admission were being discussed, a colleague of mine, arguing against restrictive admission standards, used an analogy from the automobile industry. Would it not, he said, be absurd if the automobile industry were to argue that no one should drive a low quality car and therefore that no automobile manufacturer should be permitted to produce a car that did not come up to the Cadillac standard. One member of the audience rose and approved the analogy, saying that, of course, the country cannot afford anything but Cadillac lawyers! This tends to be the professional attitude. The members look solely at technical standards of performance, and argue in effect that we must have only first rate physicians even if this means that some people get no medical service—though of course they never put it that way. Nonetheless, the view that people should get only the “optimum” medical service always lead to a restrictive policy, a policy that keeps down the number of physicians. I would not, of course, want to argue that this is the only force at work, but only that this kind of consideration leads many well-meaning physicians to go along with policies that they would reject out-of-hand if they did not have this kind of comforting rationalization.

It is easy to demonstrate that quality is only a rationalization and not the underlying reason for restriction. The power of the Council on Medical Education and Hospitals of the American Medical Association has been used to limit numbers in ways that cannot possibly have any connection whatsoever with quality. The simplest example is their recommendation to various states that citizenship be made a requirement for the practice of medicine. I find it inconceivable to see how this is relevant to medical performance. A similar requirement that they have tried to impose on occasion is that examination for licensure must be taken in English. A dramatic piece of evidence on the power and potency of the Association as well as on the lack of relation to quality is proved by one figure that I have always found striking. After 1933, when Hitler came to power in Germany, there was a tremendous outflow of professional people from Germany, Austria and so on, including of course, physicians who wanted to practice in the United States. The number of physicians trained abroad who were admitted to practice in the United States in the five years after 1933 was the same as in the five years before. This was clearly not the result of the natural course of events. The threat of these additional physicians led to a stringent tightening of requirements for foreign physicians that imposed extreme costs upon them.

It is clear that licensure is the key to the medical profession’s ability to restrict the number of physicians who practice medicine. It is also the key to its ability to restrict technological and organizational changes in the way medicine is conducted. The American Medical Association has been consistently against the practice of group medicine, and against prepaid medical plans. These methods of practice may have good features and bad features, but they are technological innovations that people ought to be free to try out if they wish. There is no basis for saying conclusively that the optimum technical method of organizing medical practice is practice by an independent physician. Maybe it is group practice, maybe it is by corporations. One ought to have a system under which all varieties can be tried.

The American Medical Association has resisted such attempts and has been able effectively to inhibit them. It has been able to do so because licensure has indirectly given it control of admission to practice in hospitals. The Council on Medical Education and Hospitals approves hospitals as well as medical schools. In order for a physician to get admission to practice in an “approved” hospital, he must generally be approved by his county medical association or by the hospital board. Why can’t unapproved hospitals be set up? Because under present economic conditions, in order for a hospital to operate it must have a supply of interns. Under most state licensure laws, candidates must have some internship experience to be admitted to practice, and internship must be in an “approved” hospital. The list of “approved” hospitals is generally identical with that of the Council on Medical Education and Hospitals. Consequently, the licensure law gives the profession control over hospitals as well as over schools. This is the key to the AMA’s largely successful opposition to various types of group practice. In a few cases, the groups have been able to survive. In the District of Columbia, they succeeded because they were able to bring suit against the American Medical Association under the federal Sherman antitrust laws, and won the suit. In a few other cases, they have succeeded for special reasons. There is, however, no doubt that the tendency toward group practice has been greatly retarded by the AMA’s opposition.

It is interesting, and this is an aside, that the medical association is against only one type of group practice, namely, prepaid group practice. The economic reason seems to be that this eliminates the possibility of engaging in discriminatory pricing.8

It is clear that licensure has been at the core of the restriction of entry and that this involves a heavy social cost, both to the individuals who want to practice medicine but are prevented from doing so and to the public deprived of the medical care it wants to buy and is prevented from buying. Let me now ask the question: Does licensure have the good effects that it is said to have?

In the first place, does it really raise standards of competence? It is by no means clear that it does raise the standards of competence in the actual practice of the profession for several reasons. In the first place, whenever you establish a block to entry into any field, you establish an incentive to find ways of getting around it, and of course medicine is no exception. The rise of the professions of osteopathy and of chiropractic is not unrelated to the restriction of entry into medicine. On the contrary, each of these represented, to some extent, an attempt to find a  way around restriction of entry. Each of these, in turn, is proceeding to get itself licensed, and to impose restrictions. The effect is to create different levels and kinds of practice, to distinguish between what is called medical practice and substitutes such as osteopathy, chiropractic, faith healing and so on. These alternatives may well be of lower quality than medical practice would have been without the restrictions on entry into medicine.

More generally, if the number of physicians is less than it otherwise would be, and if they are all fully occupied, as they generally are, this means that there is a smaller total of medical practice by trained physicians—fewer medical man-hours of practice, as it were. The alternative is untrained practice by somebody; it may and in part must be by people who have no professional qualifications at all. Moreover, the situation is much more extreme. If “medical practice” is to be limited to licensed practitioners, it is necessary to define what medical practice is, and featherbedding is not something that is restricted to the railroads. Under the interpretation of the statutes forbidding unauthorized practice of medicine, many things are restricted to licensed physicians that could perfectly well be done by technicians, and other skilled people who do not have a Cadillac medical training. I am not enough of a technician to list the examples at all fully. I only know that those who have looked into the question say that the tendency is to include in “medical practice” a wider and wider range of activities that could perfectly well be performed by technicians. Trained physicians devote a considerable part of their time to things that might well be done by others. The result is to reduce drastically the amount of medical care. The relevant average quality of medical care, if one can at all conceive of the concept, cannot be obtained by simply averaging the quality of care that is given; that would be like judging the effectiveness of a medical treatment by considering only the survivors; one must also allow for the fact that the restrictions reduce the amount of care. The result may well be that the average level of competence in a meaningful sense has been reduced by the restrictions.

Even these comments do not go far enough, because they consider the situation at a point in time and do not allow for changes over time. Advances in any science or field often result from the work of one out of a large number of crackpots and quacks and people who have no standing in the profession. In the medical profession, under present circumstances, it is very difficult to engage in research or experimentation unless you are a member of the profession. If you are a member of the profession and want to stay in good standing in the profession, you are seriously limited in the kind of experimentation you can do. A “faith healer” may be just a quack who is imposing himself on credulous patients, but maybe one in a thousand or in many thousands will produce an important improvement in medicine. There are many different routes to knowledge and learning and the effect of restricting the practice of what is called medicine and defining it as we tend to do to a particular group, who in the main have to conform to the prevailing orthodoxy, is certain to reduce the amount of experimentation that goes on and hence to reduce the rate of growth of knowledge in the area. What is true for the content of medicine is true also for its organization, as has already been suggested. I shall expand further on this point below.

There is still another way in which licensure, and the associated monopoly in the practice of medicine, tend to render standards of practice low. I have already suggested that it renders the average quality of practice low by reducing the number of physicians, by reducing the aggregate number of hours available from trained physicians for more rather than less important tasks, and by reducing the incentive for research and development. It renders it low also by making it much more difficult for private individuals to collect from physicians for malpractice. One of the protections of the individual citizen against incompetence is protection against fraud and the ability to bring suit in the court against malpractice. Some suits are brought, and physicians complain a great deal about how much they have to pay for malpractice insurance. Yet suits for malpractice are fewer and less successful than they would be were it not for the watchful eye of the medical associations. It is not easy to get a physician to testify against a fellow physician when he faces the sanction of being denied the right to practice in an “approved” hospital. The testimony generally has to come from members of panels set up by medical associations themselves, always, of course, in the alleged interest of the patients.

When these effects are taken into account, I am myself persuaded that licensure has reduced both the quantity and quality of medical practice; that it has reduced the opportunities available to people who would like to be physicians, forcing them to pursue occupations they regard as less attractive; that it has forced the public to pay more for less satisfactory medical service, and that it has retarded technological development both in medicine itself and in the organization of medical practice. I conclude that licensure should be eliminated as a requirement for the practice of medicine.

When all this is said, many a reader, I suspect, like many a person with whom I have discussed these issues, will say, “But still, how else would I get any evidence on the quality of a physician. Granted all that you say about costs, is not licensure the only way of providing the public with some assurance of at least minimum quality ?” The answer is partly that people do not now choose physicians by picking names at random from a list of licensed physicians; partly, that a man’s ability to pass an examination twenty or thirty years earlier is hardly assurance of quality now; hence, licensure is not now the main or even a major source of assurance of at least minimum quality. But the major answer is very different. It is that the question itself reveals the tyranny of the status quo and the poverty of our imagination in fields in which we are laymen, and even in those in which we have some competence, by comparison with the fertility of the market. Let me illustrate by speculating on how medicine might have developed and what assurances of quality would have emerged, if the profession had not exerted monopoly power.

Suppose that anyone had been free to practice medicine without restriction except for legal and financial responsibility for any harm done to others through fraud and negligence. I conjecture that the whole development of medicine would have been different. The present market for medical care, hampered as it has been, gives some hints of what the difference would have been. Group practice in conjunction with hospitals would have grown enormously. Instead of individual practice plus large institutional hospitals conducted by governments or eleemosynary institutions, there might have developed medical partnerships or corporations—medical teams. These would have provided central diagnostic and treatment facilities, including hospital facilities. Some presumably would have been prepaid, combining in one package present hospital insurance, health insurance, and group medical practice. Others would have charged separate fees for separate services. And of course, most might have used both methods of payment.

These medical teams—department stores of medicine, if you will—would be intermediaries between the patients and the physician. Being long-lived and immobile, they would have a great interest in establishing a reputation for reliability and quality. For the same reason, consumers would get to know their reputation. They would have the specialized skill to judge the quality of physicians; indeed, they would be the agent of the consumer in doing so, as the department store is now for many a product. In addition, they could organize medical care efficiently, combining medical men of different degrees of skill and training, using technicians with limited training for tasks for which they were suited, and reserving highly skilled and competent specialists for the tasks they alone could perform. The reader can add further flourishes for himself, drawing in part, as I have done, on what now goes on at the leading medical clinics.

Of course, not all medical practice would be done through such teams. Individual private practice would continue, just as the small store with a limited clientele exists alongside the department store, the individual lawyer alongside the great many-partnered firm. Men would establish individual reputations and some patients would prefer the privacy and intimacy of the individual practitioner. Some areas would be too small to be served by medical teams. And so on.

I would not even want to maintain that the medical teams would dominate the field. My aim is only to show by example that there are many alternatives to the present organization of practice. The impossibility of any individual or small group conceiving of all the possibilities, let alone evaluating their merits, is the great argument against central governmental planning and against arrangements such as professional monopolies that limit the possibilities of experimentation. On the other side, the great argument for the market is its tolerance of diversity; its ability to utilize a wide range of special knowledge and capacity. It renders special groups impotent to prevent experimentation and permits the customers and not the producers to decide what will serve the customers best.

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