Case 4.2 Licensing and Laissez Faire Essay

1314 Words Jun 15th, 2016 6 Pages
PHIL303E

Case 4.2 Licensing and Laissez Faire Milton Friedman, a Nobel Prize winning economist believes that the licensing in all fields interferes with Laissez Faire, the principle of the free market. The case titled “Licensing and Laissez Faire” focuses on the issues of licensing within the American Medical Association (AMA). The AMA was formed to raise physicians’ incomes by paying hospitals to limit the number of physicians they train. It is well known that their strategy worked, American physicians make far more than physicians in other countries. Friedman argues that limiting the numbers of students in the admission policy violates a moral rule and is restricting freedom of opportunity; however, letting incompetent physicians
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Their plan seemed work. Now American physicians make far more than physicians in any other countries which their average wages are similar to ones in the U.S. However, doctors themselves worry competition would lower their incomes as any business in free market would do.
The AMA diagramed two strategies to protect physicians’ incomes by preventing from over supplying themselves. First, limit the number of students admitted to medical schools by closing some medical schools. Second, decrease the number of immigration of foreign physicians to practice in the U.S. Furthermore, in order for physicians to get licensed by the AMA, they must graduate from the AMA approved programs. Also, license boards will accept only the AMA approved internships. As a result, fewer students apply to medical schools these days compare to the 1990’s. In order to limit the number of students to practice at hospitals, the AMA decided “to pay hospitals around the country hundreds of millions of dollars to decrease the number of physicians they train (as cited in Shaw, 2011, p.143).” Otherwise, hospitals which reject their requirements would risk losing their “AMA” accreditation.
Manipulating the system with money to control with limiting the numbers admission policy violates a moral rule and is restricting “freedom of opportunity” consequently; this policy will continue to keep the price of the services stable. In this case, medical fees are kept artificially high,…