Yesterday I had a piece published at the Ludwig von Mises Institute entitled “Monopoly Dentistry” which highlighted an ongoing trend by states in the U.S. to adopt occupational licensing for mid level dental practitioners as a means to expand the supply of care available.Â In the piece, I documented the push by the American Medical Association to limit the supply of doctors and medical schools through state intervention during the turn of the 20th century; thus decreasing the competition and driving up the wages of the doctors it represents.
Though I received a number of complimentary emails on the piece, some readers were not so pleased.Â One practicing dentist found it necessary to email and critique the argument made in favor of open, unobstructed competition in the dental industry.Â I will address some of his disagreements below, but for the sake of humility and encouraging meaningful discussion, the dentist’s name will remain anonymous.Â I will refer to him as Mr. Smith only.
Mr. Smith emails:
You do us a disservice.Â Selling lemonade and restoring teeth are night and day.Â Yes, yes, itâ€™s an analogy.Â But the ADA would support Â mid-level providers if mid-level licensing would be required to go to areas where there is a need (rural), but they are not.Â So they move down the street and simply undercut pricing with â€œinferior dentistryâ€.Â Now you say, see, you prove my point, but I donâ€™t.Â I say â€œinferior dentistryâ€ because I believe four years of dental school after college is not enough time to learn all you really need to know to perform good dental surgery and you want to train people for two years out of high school?Â Did you know that it is two years of training for a high school graduate for a mid-level license?Â This would be a disservice to the health of the public.Â Bring on mid-level and send them to the rural needs but give them the proper training.
What Mr. Smith is referring to when he writes “lemonade” is a brief example I give on the sort of process some businessman go through in order to impose occupational licensing via the state:
To get a good idea of how state occupational licensing works, consider the following example.Â Imagine Bill runs a lemonade stand in the middle of a bustling city.Â Instead of facing competition from other street vendors and surrounding eateries and grocery stores, Bill had the foresight to lobby the local city council to outlaw all sellers of lemonade who donâ€™t at first obtain a license from the city.Â Due to his influence and close ties to select city council members, Bill fast tracked through the application process and was able to secure a license to sell lemonade before anyone else.Â Little competition stands in his way now. Bill is then able to keep his sale price above the established level of a real free market and reap in profits as consumers are still willing to take the extra hit on their wallet for his delicious lemonade.Â Profits are up, times are good, and Mrs. Bill is happy.Â But now the city council is beginning to change its tune on lemonade licensing and is considering an increase in licensing allotments.Â The free ride is coming to an end so Bill, worried the good life will soon be over, launches a countering lobbying effort on the basis that product quality will decrease if more licenses are given out.
Mr. Smith, like many of his peers who are professionals in specific occupations, regards his practice as above the fray of the lemonade salesman.Â But that is simply not true.Â Sure, dentistry is a very specialized field and under a free market, its service would still cost more compared to the selling of basic foodstuffs.Â But dentistry is a service like any other; nothing makes it unique or worthy of special treatment.Â While dental work can be vital for overall health and well being, the same can be said for food, water, shelter, or clothing.Â Yet the clothing industry or food industry, though stifled by overburdensome regulation, don’t experience the kind of degree of state intervention and privilege granting the medical industry does.
Now Mr. Smith asserts that I am an advocate for mid level dental practitioners when I clearly state in my piece that:
It must be stressed, however, that the advent of an increase in licensing for a type of mid-level dentist is by no means a comprehensive solution for the problems that plague the industry. Previous governmental intervention was the cause of a shortage in dentists and an increase in the price of dental care. Further micromanagement of an already overly managed problem will only bring about more unintended consequences.
I have no desire to “want to train people for two years out of high school” to be mid level dentists as Mr. Smith claims.Â The idea that an arbitrary number of hours or years of training for a specific practice ignores the reality that individuals learn at different paces.Â What may take George five years to learn may take Fred only three if he is naturally skilled and adaptable enough.Â The division of labor, which is fundamental to technological development and the raising of living standards, is built upon the inequalities of man where some excel in occupations that others don’t.Â Like “one size fits all” public schooling that has coerced generations of children into a raw deal of not providing a custom education focused on each child’s inner ability, prohibiting the market from achieving its full potential has disastrous results.
Mr. Smith invokes the term “proper training” without defining it.Â Is that because what is considered good and proper is ultimately in the subjective views of the consumer?Â Mr. Smith doesn’t say.
Answer this question honestly; who would you go to to have your teeth drilled by, someone two years out of high school or 5 years (thatâ€™s what I recommend) of training after 4 years of college.Â Yea, I thought so.Â I rest my case.
Apparently Mr. Smith is a mind reader as he seems to know my answers well in advance.Â If I were to honestly answer the question, I would prefer the person drilling my teeth to have an adequate amount of training.Â Whether that is two yearsÂ or nine years, as per Mr. Smith requests, is beyond the point.Â I graduated college last May with a large number of people who attended school the same number of years as me.Â Were we all on the same level intellectually?Â Of course not.Â People learn at different levels.Â If I have the choice of two dentists, there are a number outlets that could develop outside the sphere of government regulation which would vet the merit of every practicing dentist.Â Like Kelly Blue Book or Angie’s List, market-based rating agencies develop when the demand arises.Â Unlike governmental licensing, the profit incentive exists for rating agencies to provide accurate information in order to gain market share.Â There is no need to believe that such wouldn’t develop in absence of state occupational licensing.
You need to see all sides of an issue and not just the economics of it.Â Itâ€™s called dental â€œcareâ€, â€œserviceâ€, â€œvocationâ€, not just economics.
I will be unsubscribing if this is how you research your articles.Â How can I trust your opinion on other topics when I know you didnâ€™t understand my own?
Economics is a subset of praxeology; which is the science of human action.Â As Mises wrote, “praxeology, like the historical sciences of human action, deals with purposeful human action.Â If it mentions ends, what is has in view is the ends at which acting men aim.Â If it speaks to meaning, it refers to the meaning which acting men attach to their actions.”Â The purpose of my article was not to just take an economic view of state licensing but analyzing the overall purpose behind the push for government intervention.Â It undoubtedly is in the best interest of Mr. Smith to restrict the amount of dental service providers as it means a higher-than-market wage for himself.Â At the same time, intervention not only allows the state to grow in size and influence but also serves as a jobs program for bureaucrats who in turn provide electoral support for the status quo.
Economics ultimately deals with looking at allocation of scarce resources which includes “care” and “service.”Â Applying praxeological and economic analysis to the dental industry does, in fact, allow an observer to see and consider all sides of the issue.
In the end, I don’t do a disservice to the dental industry; the dental industry and its tight connections with the state do a disservice to its customers.Â By lobbying to establish occupational licensing, and hence a decrease in the overall supply of dentists, costs necessarily go up for industries with inelastic demand.Â The narrative Mr. Smith espouses assumes his customers are too ignorant to safely choose amongst a variety of dental services providers.Â If that isn’t a disservice, I don’t know what is.
I would encourage Mr. Smith to not unsubscribe to the literature of the Austrian school but actually attempt to study the material in depth.Â By studying Mises, Mr. Smith stands to learn the proper way of analyzing market phenomena.Â Through Hayek, he can learn how knowledge is widely dispersed throughout society.Â And through Rothbard he can learn the exploitive nature of the state and how its co-opted by various special interests.Â Only then will Mr. Smith realize the type of impoverishing system of state licensing he ultimately supports.
Tags: state licensing