OCCUPATIONAL LICENSING: THE MERRISON REPORT ON THE REGULATION OF THE MEDICAL PROFESSION—A REPLY

AuthorW. S. Siebert
DOIhttp://doi.org/10.1111/j.1467-8543.1978.tb00271.x
Publication Date01 Mar 1978
OCCUPATIONAL LICENSING: THE MERRISON REPORT ON
W.
S.
SIEBERT*
THE REGULATION OFTHE MEDICAL PROFESSION-A REPLY
DR
ENGLEMAN
has misunderstood my argument. My paper’ was directed towards
consideration
of
restriction
of
entry into the medical profession, not towards the setting
of wages. Data on doctors’ relative pay were used as one strand
of
evidence to aid in
judging the importance of union action as opposed to considerations of public safety in
limiting entry. Other strands
of
evidence, for example, the opposition of the profession
to re-licensure, were also examined (but none
of
these are mentioned by
Dr
Engle-
man). No piece
of
this evidence can be said to be conclusive in itself, but together the
pieces build up a coherent picture
of
significant protective elements in medical entry
regulation, which should be of concern in formulation of public policy.
A
bilateral monopoly model might well be appropriate in analysing the setting of
doctors’ pay, though there are difficulties in using it. This is because while the Health
Service can be taken as the near-monopsony employer (there is a private sector, and the
market is to some extent international), its advisers on vital questions of manning levels
and entry standards must necessarily be members
of
the profession itself.
To
put it
bluntly, the public, and the Health Service managers, do not know much about
medicine. They are rightly fearful of making mistakes which are irreversible. This gives
doctors much power and appears to make the even-handedness of the ‘bilateral
monopoly’ model inappropriate. Let us however accept this model for the setting
of
pay
levels. We are then led to the unhelpful conclusion, that the outcome is ‘indeterminate’.
Fortunately bilateral monopoly is logically a side-issue here. This is because, whether
the outcome
of
the wage setting process is indeterminate or not, we
estimate
that
doctors’ pay has been relatively high in the sense
of
providing a more than reasonable
return on human capital invested. This
is
a matter
of
fact, not speculation. There is also
evidence
of
restriction of entry.
No
matter how doctors’ pay
is
decided, this restriction
of
entry appears therefore to have had the desired effect. It can be seen that the inde-
terminateness
of
the bargaining process, which Dr Engleman emphasises, is quite
irrelevant to my argument, which only depends on
the
pay
outcome.
Let us now turn to the argument that doctors’ pay is determined by a Review Body
which emphasises ‘comparability’,
so
ruling out the influence of supply restriction on
pay. It is true that the subjective reasons (for example, ‘comparability’) that individuals
and organisations give for their actions are an interesting object of inquiry. However
these reasons shoulcfh regarded as a separate issue, best analysed from the viewpoint
of
psychology
or
sociology. That comparability has in practice been over-ridden
is
shown by the fact that there have been appreciable shifts in doctors’ relative pay over
time.2 Analysis
of
most economic problems has been found to be least clouded if we
ignore what the actors say, and concentrate instead on outcomes. This has been
generally accepted since the Lester-Machlup debate on the theory
of
the firm.3 Seen in
this light Dr Engleman’s methodology must be regarded as confusing as well as his
interpretation of the paper.
*
Lecturer in Economics, University
of
Stirling.
REFERENCES
1.
W.
S.
Siebert, ‘Occupational Licensing: The Merrison Report on the Regulation
of
the
2.
See Table
2
of
the paper.
3.
See
F.
Machlup, ‘Theories
of
the
Firm:
Marginalist, Behavioural, Managerial’,
American
107
Medical Profession’,
British Journal
of
industrial Relations,
Vol.
15,
1977.
Economic
Review,
1967, p. 57.

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