April 21, 2014
That is undoubtedly what many readers of the NYT’s editorial on new trade agreements will be asking. The editorial made many useful points about the administration’s approach to trade, notably criticizing the privileged role that business interests are playing in the negotiations. However it never raised the issue of the barriers that protect doctors and to a lesser extent other professionals from international competition.
Over the last quarter century, U.S. trade policy has been quite explicitly focused on putting U.S. manufacturing workers in direct competition with low-paid workers in Mexico, China, and elsewhere. The predicted and actual effect of trade in these circumstances is to reduce the wages of U.S. manufacturing workers. Furthermore, by reducing the number of jobs and lowering wages in a major sector of the U.S. economy, trade has put downward pressure on the wages of less-educated workers (those without college degrees) more generally.
There is nothing inevitable about this process, it is deliberate policy, not “globalization” as an abstract force. We can use trade agreements to open our economy to foreign doctors. Our doctors get paid more than twice as much as the average for doctors in other wealthy countries. The pay gap with doctors in developing countries is even larger.
There are hundreds of thousands of smart kids in countries like Mexico, India, and China who would be happy to train to U.S. standards and work as doctors in the United States for half the pay our doctors receive. Anyone who really believed in free trade, and not just using trade to redistribute income upward, should be arguing that trade agreements focus on eliminating the barriers that prevent foreign doctors from coming to the United States in the same way that they have focused on eliminating the barriers to importing manufactured goods.
To facilitate foreign investment and the importing of manufactured goods, past trade agreements did not just remove tariffs and quotas. In the case of deals like NAFTA, they totally rewrote countries’ rules on investment, taxes, and regulation. Similar efforts will be needed to establish free trade for physicians. This will mean writing clear standards that foreign doctors can train to meet anywhere in the world. It would also mean that they have the opportunity to test to meet U.S. standards in their home countries (by U.S. certified testers). Those who met U.S. standards would then have the same right to practice wherever they want in the United States just like any doctor who grew up in New York or Los Angeles.
And, to ensure that this arrangement will benefit the developing countries as well, we should implement a tax structure on the earnings of foreign doctors with the money rebated to the home countries so that they can train two or three doctors for every one that comes to the United States. (Please read the last sentence as many times as necessary to understand it, in order to avoid writing silly comments about how this will hurt the quality of health care in developing countries.)
The potential savings to patients from bringing our doctors’ wages down to world levels could exceed $1 trillion over the next decade. There is no excuse not to pursue this path except the power of the medical profession. It is unfortunate the NYT would not even mention the issue in an otherwise thoughtful editorial.
Comments