A License to Steal?

John Kindley and nmsnow recently conducted an interesting (if somewhat acrimonious) debate in these pages (see Mitt Romney's Planet) on the subject of professional licensing. Supporters of licensing believe that it is the best way to ensure that professionals such as doctors, lawyers, and real estate agents are competent to perform their tasks. Libertarians, on the other hand, regard licenses as nothing more than state-imposed monopolies that do nothing more than raise prices, unfairly exclude some people from the professions, and do little to raise professional competence. That is to say that they are little more than a license to steal. Needless to say, these two positions are irreconcilable. However, I believe that distributism offers a way out of this dilemma, a way that addresses the concerns of both sides, and vastly improves the present system.

The reason we need, or think we need, a system of licenses is that the professions provide services of such a specialized nature that the ordinary consumer simply cannot judge their services. I certainly cannot judge the work of a neurosurgeon, and am in less of a position to do so at the time I need one. The license at least guarantees me that the surgeon has had a certain level of training, and re-training and has passed some sort of examination. This may be, as the libertarians claim, thin cover, but at least it is some cover.

On the other hand, John Kindley ably sums up the arguments of Milton Friedman against licenses. On the whole, I must say that I do not find Friedman's totally convincing. Mostly, I wish that Milton, who claims to be an empiricist, would occasionally look at the empirical world. The fact of the matter is that medical licensing in the United States is of relatively recent origin; it didn't come about until the early 20th century. Prof. Friedman doesn't need to speculate about what a medical system looks like without licenses; he could have simply looked to the 19th century. At that time, “doctors” earned their right to practice by taking 9 to 18 months of courses at a local doctors college, a for-profit institution often run by local physicians. The student would never have seen a cadaver or touched a microscope, and would know little of pharmacology. Quackery and incompetence were the order of the day, and the shortcomings of the system became apparent in the great Influenza Epidemic of 1918, which afflicted 25% of the population. Few people would be tempted to return to 19th practice.

Nevertheless, Friedman does point to real abuses of the system. There is no question that when the state assumes control of the licensing process, members of a given profession use the law to raise their own incomes and limit their own liabilities. (In the interest of full disclosure, I am a real estate agent, and we are past masters of the art of using the law for these purposes.) Medical boards (as well as Bar Associations and other professional organizations) frequently overlook abuses by their own members. And given the frequency with which doctors and other professionals are successfully sued, there are valid arguments against the claim that licenses guarantee a standard level of competency.

Of course, some have a simple solution to this last problem: they would simply end or restrict the right to bring a lawsuit against doctors and other professionals. However, restricting a citizen's right to bring a tort is a violation of both constitutional and common law, not to mention common sense. Removing the penalties for incompetence will only encourage the worst practices and discourage the best. This is clearly the wrong solution.

I believe it is clear that we need a system of licenses; however, it is not clear that these licenses need to be directly granted by the state. Rather, there is another vehicle of ancient and honorable lineage that could fill this role, and do it in a manner consistent with both professional competence and the free market. That institution is the guild. Rather than have the state grant licenses, let the state license any number of guilds to do the job. The guild would take responsibility for anyone to whom they granted a license. That is, a person who has harmed by the incompetence or malpractice of a doctor, lawyer, real estate agent, etc., would not sue that doctor or lawyer, but would sue his guild. The guild, and each of its members, would be financially responsible for malfeasance by any one of its members. If a suit were successfully carried against a guild, that guild could in turn sue the doctor involved in an attempt to recover their losses and their reputation.

This would force the guild members to take responsibility for each other. An incompetent member of the guild could have his license revoked by his colleagues, and they would be more than willing to do so, since such an incompetent threatens not only the reputation of all of the members, but their financial health as well. The guilds could set their own education, training, and practice standards. By common consent of the members, and by their internal and mutually agreed-on constitution, the guild would have the right to audit the practice of each of its members, and would likely do so at regular intervals for its own protection. Instead of one vast AMA, there would be all sorts of competing guilds, all with their own approach to medicine (or law, or whatever.) These guilds would compete with other guilds on service, science, and price, and the market, as well as science, would get its say. Over time, best practices would win out, as the worst practices fell victim to the market and the tort system.

One might ask, “Why would any doctor join a group where he has to take financial liability for all the other members of the group?” The simple answer is that he already does; this is what insurance is. Insurance is merely a method of cost averaging. A competent doctor, who has never had a claim or a complaint, nevertheless pays in his insurance premiums for all the mistakes of his colleagues. The difference is that now he does not get to choose the colleagues with whom he will share this liability. Under a guild system, a doctor would not have insurance at all; his guild fees would cover that, and he, as a member of the guild, could pass judgment on which of his colleagues he will share the liabilities.

The role of the state would be to license the guilds, set some minimum standards to prevent outright quackery, and audit them to ensure that they had the financial stability and resources to stand behind their members. This would greatly reduce the role of the state without eliminating it entirely. The state would do things that it is equipped to do, while guilds could provide a wide variety of competing services and prices. Further, it would be much easier for the public to judge the overall performance of a guild than to judge individual doctors or lawyers. John Kindley wants a system were he could practice law as an apprentice, and I suspect that any number of guilds would be willing to do this, since it would lower their costs and provide them with a way to develop talent without relying on the expensive law schools.

In this area, as in so many, I believe that distributism provides creative answers to the practical problems that we face everyday.


Anonymous,  Monday, January 14, 2008 at 12:37:00 PM CST  

My argument for licenses is that they create easy legal burdens. If I hire Joe Smith to do my taxes, I have different expectations (moral and legal) than if I hire Licensed Accountant Susie Jones. In the former case, the best I should reasonably expect is a best effort. In the latter case, I should expect competence.

As for barriers to entry, many licensed occupations have no greater a barrier to entry than an Amway distributorship. Pay $100 or so fee and maybe show up to a class is generally all that is required. In some cases, a criminal background check is done, which one would think would be a positive.

When it comes to law and medicine, there are unlicensed equivalents. One can solicit advice from a paralegal or a nurse, generally family members. They cannot however stand with you in court or perform surgery. Considering that most law is practiced out of court and most medicine isn't surgery, we aren't speaking of gross limitations.

John Kindley Monday, January 14, 2008 at 5:23:00 PM CST  

I very much like the idea of bringing back the guilds. It seems to me like an optimal way of operating. I'm not necessarily convinced, however, that licensing the guilds themselves is a necessary and proper function of government. It seems like you would run into the same problems we have today, perhaps even more so, because the guilds will still have an incentive to push the legislature to raise the requirements for licensing the guilds and therefore the bar for entry to new guilds. You'll still have the problem that, e.g., practicing attorneys or guilds of practicing attorneys are a more concrete, focused and thus more politically-powerful group than the universe of people who need or may someday need legal services and/or who may want to be lawyers "when they grow up."

You envision the role of the state in licensing guilds as "set[ing] some minimum standards to prevent outright quackery, and audit[ing] them to ensure that they had the financial stability and resources to stand behind their members." This would basically be a system of enforced insurance, and while insurance is definitely a good idea, the costs of such insurance are in any event going to be passed onto the consumer and I think it should be up to the consumer whether they're willing to pay for insurance in addition to the actual services themselves. With regard to preventing outright quackery, it seems that this could legitimately be accomplished by criminalizing misrepresentation to one's potential clients of one's professional credentials and training, whether or not harm actually results from such misrepresentation. Such laws would have to be reasonable: someone with an M.D. or J.D. should ordinarily not be required to give the details of his/her professional training unless specifically asked by the client (since with regard to such practitioners informed consent re: qualifications can be presumed under today's prevailing assumptions), but a "doctor" or "lawyer" with less than that would under such a reasonable law find it in his best interest to always use some kind of "informed consent" form. Failure to produce such a signed form in the face of an allegation by a client that the practitioner misrepresented his/her qualifications could result in a fine, corresponding to the nature and seriousness (whether financial or medical) of the client's affairs that were implicated. If actual harm results to the client, the penalties should be correspondingly stiffer, aside from any malpractice liability.

When it comes to medical procedures that could result in death or permanent disability, some sensible requirements beyond these would need to be written into the law: e.g. it seems obvious that someone with no training or one year of medical training who tried to perform neurosurgery on a patient would be committing a serious crime, informed consent or no. But only a crazy person would consent to have such a person with such minimal qualifications perform neurosurgery on him or her, which would invalidate the supposed consent. So perhaps the need for such legislation, which might be difficult to appropriately draft, is not as pressing as might first appear. Nevertheless, some kind of legislation along these lines would seem to be appropriate and legitimate.

John Médaille Monday, January 14, 2008 at 9:22:00 PM CST  

John K. says I'm not necessarily convinced, however, that licensing the guilds themselves is a necessary and proper function of government. Granting licenses to guilds has always been the function of gov't; that's what makes them guilds. They have the right, for example, to practice law within the limits of their charter, and with guilds, those charters could be varied indeed.

But this goes to the heart of the dispute I have with libertarianism. It is not with their description of an exchange economy that I take issue. Rather, they fail to define the starting conditions for any exchange, which are a set of agreed-upon rules, that is some sort of government of the market.

There are three possible statements about the power of governments: "Nothing!" "This, but not that." Or "Everything!" The first statement is made by libertarians, the last by statists, and the middle statement by everybody else. But I believe that the first and last statements are functionally equivalent. There is no precedent for a society without some form of government, and I am always suspicious of ideas that have no precedent in human history. The problem of gov't is not to abolish it, but to define its proper course and limits, and when we forsake that task, we merely give free rein (and reign) to the statists.

John K. also says, This would basically be a system of enforced insurance, and while insurance is definitely a good idea, the costs of such insurance are in any event going to be passed onto the consumer and I think it should be up to the consumer whether they're willing to pay for insurance in addition to the actual services themselves. I have no problem with requiring sufficient financial reserves to cover the damage a profession can do. A doctor can kill you and a lawyer can ruin, and a restaurant can give you a severe illness. Those who undertake these enterprises should surely be able to provide for the damage that might be done. This could be done by insurance, it could be done by posting a bond or pledging one's personal assets. But without this license requirement, people have a license to do damage with no real risk to themselves.

I have never had a claim against me, but I still carry E&O insurance. And it is right that I do so. I could make a mistake. I am only human. Despite the fact that I have never had a claim, my rates keep going up; it is a kind of punishment for my failure to clean up the profession, since many people really do suffer real losses, and have a right to compensation.

John Kindley Tuesday, January 15, 2008 at 12:18:00 PM CST  

John M. said... "There is no precedent for a society without some form of government, and I am always suspicious of ideas that have no precedent in human history."

And rightly so. I like these words of Henry David Thoreau, the very first passage of his essay on Civil Disobedience: "I heartily accept the motto, — 'That government is best which governs least;' and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which also I believe, — 'That government is best which governs not at all;' and when men are prepared for it, that will be the kind of government which they will have."

Although the guild system does have precedence in human history, the Middle Ages were a very different time from today, and so enacting such a system overnight would seem to be just about as radical as repealing current licensure laws. You've expressed concern before about the dangers of privatizing current government functions, and putting licensure into the hands of guilds would seem to tend towards that category and have the potential for those kinds of dangers. It still seems to me that such a guild system would be preferable to what we have today; I'm just pointing out that in today's world it would be quite innovative and would seem to have plenty of the risks inherent in the unknown. It's conceivable to me that, depending on how guilds formed themselves and how hard it was to form a new guild, somebody could have more trouble getting himself licensed and accepted by a guild than he would getting licensed under the current licensure regime.

The first question I tend to ask with respect to government (and I realize it's a fundamentally different approach than yours) is, by what right does it purport to have authority to do such-and-such? In today's environment, what with people of lower incomes being robbed of such a substantial amount of their labor and thus hindered from amassing the capital that distributists would like to see them accumulate, etc., etc., it's a fruitful attitude to take. I can't help but think that government authority is for the most part a lot of smoke and mirrors. I think my attitude is pretty much in line with Thomas Aquinas, who said: "Every human law has just so much of the nature of law as it is derived from the law of nature. But if in any point it deflects from the law of nature, it is no longer a law but a perversion of law."

This also seems to me to be the principles of the Declaration of Independence. Recognizing that there is a natural law and corresponding natural rights still gives plenty of scope to government. If the government prevents or punishes murder, rape, robbery, theft, fraud, etc., etc., there is obviously no injustice, even if one accepts (as I do, theoretically) the argument of Lysander Spooner that the Constitution is of no authority. It may sound like treason just to say that, but how dangerous is it really for a just man to think and say that? I think our current prevailing subservience and acquiescence to whatever the government decides to do (albeit through the "democratic" process), our awe of its "authority," is far more dangerous.

Again, I think the natural law gives plenty of room for enforcement of the prevailing expectations regarding the conditions of free exchange, the perceived lack of which you find to be a major failing of libertarianism. Reasonable expectations are a big element in contract law, on which libertarians have traditionally put a lot of emphasis.

So my theoretical "anarchism" doesn't entail an immediate overthrow of everything we think we've relied on for stability. Rather, it entails putting the emphasis and the focus where it belongs: on real and basic justice rather than on, e.g., what a real or imagined "majority" tries to pass off on the rest of us as "law." My attitude is first and foremost to "question authority." But if after seriously asking that question I'm convinced that what the government is doing (coercively) is justified by natural law, then I have no problem. It's not just a matter of my personal predilections and personal sense of justice. Rather, I think the government and more importantly the wider culture should take the attitude of what Randy Barnett called the "presumption of liberty," and that the burden of proof is on the government to demonstrate that everything it does is both necessary and proper. I.e., it doesn't have the right to do something just because 51% of the supposed "representatives" in a particular legislative body want to do it.

I'm unfortunately not a well-read student of distributism, though I think I understand its goals well enough, and agree with them wholeheartedly. Forgive me if I'm wrong, but I wonder if part of the resistance to libertarianism isn't the fact that distributists have often hoped to achieve their goals through pro-active kinds of legislation (along the lines of Kelso and Adler). It seems to me, on the other hand, that the simpler and more efficient path to distributist goals has not so much to do with what government should do, but with what it should stop doing. It should, among other things, stop taxing the poor entirely, stop making it harder for them to earn an honest living, and stop giving the well-connected special privileges what wind up increasing everybody's cost of living.

John Médaille Tuesday, January 15, 2008 at 3:12:00 PM CST  

John, Thoreau's dictum always leads to statism; you can refuse the task of determining the proper bounds of gov't, but you thereby leave it to others. We will have gov't; man is a social being; that's his nature. Which brings us to natural law.

One has to be careful, because the "natural law" of the Scholastics become transmogrified into its opposite, the "naturalism" of the Enlightenment. The words are used interchangeably, but mean opposite things. Man doesn't have a "nature" in the sense that other natural objects do. Hence, he doesn't have a fixed nature in the same sense as these other objects. Rather, man chooses his ends, and what will be "natural" to him will depend on the ends chosen. If you chose sex, drugs and rock'n'roll as the natural end of man, one set of statements will be "natural." If you choose union with your divine origins as the end, another set of statements will seem natural. Hence the "natural law" will be teleological; it depends on the ends chosen.

Aquinas was aware of this, and hence refused to make the NL a "fixed" thing. Rather, he pointed out that the NL could change, and that in four ways: by addition and subtraction; by knowledge and rectitude. And he realized that it would vary from culture to culture.

For example, if you use "naturalism," whence comes your "presumption of liberty"? I see no degrees of freedom in the natural order. The orbit of the planets is fixed by the law of gravity, and salts do not suddenly decide that they will no longer be soluble. They are what they are, without choice or question.

But the problem of the libertarians is that they want freedom without the conditions of freedom. Freedom depends (paradoxically) on rules. Markets, for example, depend on rules, and rules depend on authority. Somebody has to be able to throw a yellow flag and declare a foul. Otherwise, there is no game, no, nor any freedom either.

Andrew Stine Tuesday, January 15, 2008 at 4:06:00 PM CST  

John, the AMA and BAR associations are, in fact, guilds. They are independent organizations licensed by the government to regulate and license the practice with an aim to maintain standards and protect the interests of the practitioners. The system you propose is nearly indistinguishable from the current one.

As to your complaint against libertarians is only valid against anarcho-capitalists. If I recall, most orthodox libertarians do acknowledge a role for the government, otherwise, they would not be libertarians but anarchists. The role they assign it, however, is just extraordinarily limited.

Generally, the role is set to preventing, as far as is feasible, theft, force, and fraud. Usually this is meant to be carried out through the criminalization of practices that concretely imply these crimes.

John Kindley Tuesday, January 15, 2008 at 4:48:00 PM CST  

I think it's very important for the project of freedom that the culture honor and cultivate virtue, and that it honors and cultivates the family. A culture in which the family has broken down, which characterizes our culture to a large extent, will feel enormous pressure to provide for single parents and the offspring of single parents through the mechanism of the state, and will likely have to deal through the criminal justice system with the many of its citizens who haven't learned basic social values and responsibilities at home. So, although I perhaps haven't done so in my comments on this blog, every word we utter against unnecessary government coercion should be balanced with a word urging the necessity of self-government -- and self-government starts with the government of one's own life and soul.

I agree with Aquinas and the Catechism that the purpose of human life is to know, love and serve God in this life and be happy with Him forever in the next. Despite man's ability to choose "goods" other than God, his nature is determined by his true purpose, which is objectively knowable through philosophy, even if our minds can't plumb the depths of God and therefore of what we are ultimately seeking. A man can choose sex, drugs and rock 'n roll over God, but by doing so he does violence to his own nature.

But it's also evidently part of man's nature to be free and to freely choose his ends, and it is contrary to nature for a man to use coercion and bend another to his will, except in the case of bringing up children and in defending against and punishing unjustified aggression. More could be and has been said about this basis for the "presumption of liberty" I was talking about, but I would agree with Jefferson that it's really a self-evident truth.

Now, "freedom" has several different meanings, and I believe that man is only free in the deepest sense when he makes choices that allow the freest reign to what is best in him, to his deepest capacities. A man who is a slave to his passions is not "free." But the State will not "make" him good, and the State has no authority to try to make him good, except to the extent that it prevents him from doing injustice to others.

International trade is now, for the most part successfully, carried on in a state of "lawlessness." Evidently, however, despite the lack of an overarching authority, there are rules and expectations in place that smooth the way for and make possible such trade.

Children from a very early age have an innate sense of justice, although they may violate that sense. As we get older and become involved in more complicated transactions, that simple sense of justice still serves us, although it's supplemented by traditional expectations, formed by the experience and traditions of the market within which we do business, about the rights and obligations of various transactions. Those expectations inform our sense of justice. So nurture as well as nature plays a role, but these rules are not bestowed from on high by the government. Rather, government, at its best, first in the common law and occasionally when necessary in legislation, simply records and enforces and makes explicit the expectations and assumptions of people freely engaging in trade. And people generally have the right to make explicit contracts that deviate from the way business is generally conducted.

Just as I don't see a problem with a government preventing and punishing murder or robbery, I don't see a problem from a libertarian perspective with government's role in the market as described above.

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