The Exclusion of Foreign Born Doctors: Where are the Free Traders?

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Tuesday, 03 August 2010 04:10

The media have played a huge role in fundamentally misrepresenting trade policy and thereby larger economic policy. As a result, the public is quite confused on key economic issues.

This is brought home in an article today about a study showing that foreign-born foreign-trained doctors perform slightly better than doctors who were born and trained in the United States. The article notes in passing that an extensive set of tests required for licensing make it difficult for foreign doctors to practice in the United States. The number of foreign medical residents who can enter the United States is also tightly constrained.

This suggests that the United States could get many more highly qualified foreign doctors if it eliminated these barriers so that they only ensured the quality of training. (It is easy to design mechanisms to ensure that the physicians' home countries benefit from having their doctors' practice in the United States, so this need not be a concern.) 

Remarkably, this point is never raised explicitly as an issue of trade and economics in this or other articles. Trade policy is usually only discussed in the context of trade agreements such as NAFTA (which are wrongly labeled "free-trade" agreements) even though the barriers that prevent foreign professionals like doctors from practicing in the United States cost our economy tens or hundreds of times as much as the money at stake in these agreements.

The failure to seriously discuss trade in the media leads the public to have the misleading view that less-educated workers, like those in manufacturing, can't compete in the modern world economy, while the most highly-educated workers have the skills and ability to prosper. In reality, the most highly educated workers prosper because they have the political power to limit the number of Chinese, Indian and other foreigners who are allowed to compete with them, unlike manufacturing workers.

If there was genuine free-trade in highly paid professional services then doctors, lawyers, and economists would see the same downward pressure on their wages as autoworkers and textile workers. The gains to the economy from lower prices for health care and other services that would result from free trade in highly-paid professional services would be enormous, but it is as hard for most economists to notice these gains as it is for them to see an $8 trillion housing bubble.