Reddit reviews The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality

There's a great book called The Captured Economy about this.

Chapter 6 of The captured economy has a great summary of how we got to where we are. Give a copy to your coworker.

The main gist of it is that Trump's deregulating the wrong areas (where regulation might have some benefit) while leaving other cronyist policies in place.

Brink Lindsey used to be (or still is) at CATO and now he's in the Niskanen institute, so I suppose a caveat might be that such regulations don't effectively serve their intended purpose and distort the market to some extent.

Regardless the overall effect seems to be pretty negative according to the authors.

Brink Lindsey and Steve Teles have a book out talking about this and more broadly low productivity, inequality and other issues called The Captured Economy.

EDIT: Another key point is the authors pointing out the vagueness or even toxicity of the word 'deregulation'.

This seems to imply that we really need to properly define the conversation around what areas we want the state to regulate, and whether the trade off in economic efficiency is justified or not.

Here's an abridged version of the chapter on medical licensing in this book.. It's a good little intro to the topic.

>...the role of licensing has been largely ignored in the debate on spiraling healthcare costs. The apparent explanation is that nobody can imagine that there is any alternative. The complexity of modern medicine, the need for extensive training to master that complexity, and the harms that can be inflicted by incompetent physicians all lead to the seemingly obvious conclusion that state screening of physicians is inescapably necessary...

>This point of view was encapsulated in an exchange between Justices Stephen Breyer and Antonin Scalia in a recent Supreme Court case that addressed the composition of state licensing boards for dentists. During oral argument Breyer observed, “I would like brain surgeons to decide [who can perform brain surgery in this state].” Scalia, no stranger to dissent, found nothing to disagree with. “I want a neurologist to decide,” he added.

>A strong status quo bias is understandable here; after all, state licensing of doctors has been around for more than a century. When looking at
the situation with fresh eyes, it is striking how little in the way of genuine consumer protection the current licensing system provides. Indeed, there are good arguments that existing policies actually reduce the overall quality of American healthcare.

>Let’s start with the fact that Justices Breyer and Scalia were incorrect in thinking that state licensing decides who can perform brain surgery. A medical license entitles its holder to practice medicine generally; no specialties are licensed by the state. Complete an approved residency program in the United States in podiatry, pass the state medical examination, and you are legally authorized to do brain surgery, heart transplants, or any other procedure you wish. Given how specialized medicine is these days, a state medical license is therefore not a reliable indicator of relevant competence in a wide range of critical, life-or-death situations.

>Furthermore, medical licensing’s stringent requirements are imposed only on those entering the profession. Since a career can span many decades, during which time best practices frequently change in dramatic fashion, the mere possession of a license offers little assurance that large numbers of practicing doctors are actually competent. Yes, licensing boards do have the power to suspend or revoke licenses as well as
issue fines and reprimands, but the actual discipline imposed by such boards is notoriously lax. Of doctors who made at least 10 separate malpractice payments between 1990 and 2005, only one third received any kind of discipline from their state medical boards. When sanctions are imposed, they are usually for illegally prescribing drugs, substance abuse, or inappropriate behavior with patients, not simple incompetence.

>Virtually all the real quality screening that does occur is performed by the private sector. Private specialty boards certify competence in particular practice areas. Practice groups and health maintenance organizations decide which physicians to hire, while hospitals decide which physicians will be granted admitting and surgical privileges. These decisions about employment and affiliations are made with a view toward burnishing and safeguarding reputation and minimizing exposure to liability.

>In particular, the looming threat of malpractice liability, and the consequent need to acquire insurance, creates strong incentives for greater quality. Insurance premiums are heavily experience-rated, meaning they go up sharply for physicians who have to pay claims. Malpractice insurers offer discounts for participation in risk management programs; they impose surcharges for things like failed board examinations and failure to obtain hospital privileges. They can even restrict a
physician’s practice or require supervision or more training. Despite claims from conservatives and the medical profession that the system is out of control, there is good evidence that malpractice awards are in line with actual damages and little evidence that a so-called liability crisis is driving doctors out of practice or forcing them into wasteful defensive medicine. All told, normal commercial motives for providing good service,
backstopped by the courts and malpractice insurers, do much more to protect the public from bad doctors than anything accomplished by state
medical boards.

>...

> In addition, licensing can reduce the quality of healthcare provision by constricting the supply of doctors, raising their fees, and thereby inducing people not to go to the doctor. Instead, they rely on self-help or seek out some non-mainstream but more affordable alternative. By reducing the number of qualified physicians and thereby boosting the market share of homeopaths, nutritional supplement hawkers, crystal therapists, and other assorted quacks, licensing pushes the overall quality of healthcare downward.

>...

>Most analysis of American doctors’ lavish pay focuses on the demand side—in particular, heavy reliance on third-party payment (whether by private insurers or the government through Medicare and Medicaid) that renders the actual consumers of healthcare (patients) indifferent to costs at the point of sale, as well as the continued dominance of a “fee for service” payment model that effectively rewards doctors for inefficiency. But supply-side factors play an important role as well.

>First of all, the rigorous training and examination requirements imposed by state licensing act directly to impede entry into the medical profession. Furthermore, these entry barriers are buttressed by limits on who can provide the necessary training. Under state licensing laws, the American Medical Association is vested with the authority to provide accreditation for U.S. medical schools, and accreditation is limited to a particular class size. Thus the medical profession controls how many newly minted MDs are produced in the country every year. From 1980 until around 2005, the number of medical school slots was frozen at around 16,000 first-year students; since then, expansion has brought the number above 20,000.

>Although graduation from a U.S. medical school is not required to obtain a medical license, completion of a U.S. residency program is (in
contrast to other advanced countries, which regularly license foreign-born physicians who did their training abroad). The U.S. residency requirement, combined with highly restrictive policies on high-skill immigration, makes AMA power over medical school accreditation a powerful
lever to constrict supply. Meanwhile, by historical accident the vast bulk of funding for residency slots is provided by Medicare, and for cost saving reasons the number of slots has been frozen since 1997. In 2016, for example, 8,640 graduates of accredited medical schools who applied for residencies—or roughly a quarter of all applicants—failed to be given a match. The consequence is that, at a time when there is a
desperate need for more general practitioners, thousands of graduates of medical schools are prevented from becoming doctors.

>The final layer of supply control consists of laws against the unauthorized practice of medicine. Here physicians have lost some ground in recent decades as midlevel healthcare professionals—physician assistants, nurse practitioners, and midwives—have won the right to
perform many functions previously reserved for M.D.s. The liberalization remains patchy; currently, just 21 states and the District of Columbia allow nurse practitioners to diagnose and treat patients and prescribe medication without a physician’s supervision.

>The regulation of entry into the dental profession follows the same general pattern as that for doctors. All dentists must graduate from an
accredited dental school in the United States, with the limited exception that some schools in Canada have also been approved. A commission operating under the auspices of the American Dental Association performs accreditation. Dentists must also pass a licensing exam, whose relative rigor has much more to do with improving earnings for dentists than improving outcomes for patients. A study by Morris Kleiner and Robert Kudrle examined differences in pass rates among the states to gauge the effect of entry regulation. They estimated that dentists in the most restrictive states earned 12 percent more than their colleagues in the least restrictive states; however, they were unable to find any evidence that the quality of care was higher in the more restrictive states.

No, not really. But I'm not sure the government mandating particular qualifications for an increasing number of jobs in our economy is really a wise course, so laws like this deserve scrutiny. Safety is so often the justification used to exclude competing workers from the labor pool.

I think the question of importance (to which I do not know the answer in this case) is just who it was lobbying the legislature for this change. Was it the public, outraged at the lack of safety in power plants? Was it the workers at such facilities, who feel they are working with incompetent colleagues who endanger their lives? Or was it the credentialing organization within the industry, eager to ensconce itself as gatekeeper able to limit the number of competitors who can enter the labor force?

The latter situation is where the trouble usually is.

Relevant book: https://www.amazon.com/Captured-Economy-Powerful-Themselves-Inequality/dp/019062776X

Brink Lindsey has a new book called The Captured Economy that goes over this.

The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality

And an episode of EconTalk on his book.

>Kevin Carson and I'm hooked

(Me too! I've been listening to him while at work lately!)

Another great source would be to look up libertarian philosopher Roderick Long. He writes for the Center for A
Stateless Society (where Kevin is) and the Bleeding Heart Libertarians blog (bleedingheartlibertarians.com); he also writes a good amount on the labor movement and has a paper (however I haven't read all of it) called Towards a Libertarian Theory of Class that might give an insight into his work (I'm not as well read on him as I would like, but you can also find some lectures of his on youtube, like this one How (and Why) to Be a Free-Market Radical Leftist).

I think in general you could read libertarian economists as this is a common theme, maybe some of Friedman's work, etc.

If I run across something today, I'll try to edit to let you know, but hopefully this will help get you started.

Edit: You might be interested in this talk given in the 90's at the Institute for Humane Studies (Race, Class, and Gender | Roderick T. Long, Jacob T. Levy, David E. Bernstein, & R. Richard Geddes)

Found an article Long wrote: Corporations versus the Market; or, Whip Conflation Now