Governing the Professions: Does Self-Regulation Equal Self-Interest?
Samuel, Graeme, Review - Institute of Public Affairs
PROFESSIONALS such as doctors, lawyers, vets, architects, nurses and pharmacists deserve to hold respected and esteemed positions within our society.
Do they also deserve unique market privileges? Should they be excluded from competition and market disciplines? Probably not.
Whatever service they are delivering, whether it be brain surgery or conveyancing, the fact is that professionals work in a demand-driven marketplace-the workings of which can be easily manipulated.
Consider the hypothetical consequences of, for example, a decree by a new `National Plumbers Association' that, as of next year, the number of apprentice plumbers would be kept to a certain limit-regardless of demand.
Basic economics tells us that, as the number of plumbers decreased, the availability of plumbing services would fall, waiting times would increase and plumbers could start to charge more and more for their services. Of course this would never happen, the community would never stand for it.
Yet, this power of market manipulation is what many professions have had since almost time immemorial. Their `self regulatory' powers allow them to set the rules and regulations for themselves. The powers can include, among other things, stipulating who can enter the profession, how they practise, qualification requirements, training requirements, locational requirements, restrictions on advertising and disciplinary procSimply through virtue of their qualification, professionals have been considered to be deserving of market privileges and justified in excusing themselves from competition.
Obviously, particularly in the health and legal professions, we would want to ensure that professionals are competent and appropriately qualified, and that public health, safety and financial integrity are protected. Consumers of these services need to have confidence in the competence of professionals, because it is difficult for consumers to make judgements about these things without help.
But are professionals really so different from other service providers that we should not even question some of their regulatory practices?
For example, I know nothing about cars. When I take my car to a garage I have no way of knowing whether the mechanic who will be working on it is any good or not. I have to make an assumption which, I suppose, I base on their qualifications, the reputation of the establishment, membership of industry associations that assure quality and personal references. General prohibitions in the Trade Practices Act and other consumer legislation on anticonsumer market behaviour, such as misleading conduct, help me to make my judgement.
When I visit a doctor I again need to make an assumption based on not dissimilar criteria. The difference is, of course, that the potential for damage should the workmanship be incompetent or unethical is far greater.
Thus, government has an absolutely legitimate role to regulate the professions in order to protect the public interest.
Equally, however, for the public to receive quality service at the lowest possible cost they have every right to require the Government to ensure that any regulation has a clear objective of harm minimization and is the minimum necessary to achieve that objective. …