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Home Publications Blogs Beat the Press Why Does the NYT Think that Doctors and Other Highly Educated Professionals Need Protection from Foreign Competition?

Why Does the NYT Think that Doctors and Other Highly Educated Professionals Need Protection from Foreign Competition?

Monday, 21 April 2014 04:29

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 (15)Add Comment
Insource Outsourced Doctors
written by Last Mover, April 21, 2014 6:22

From the NYT article:
It’s easy to point the finger at Nafta and other trade agreements for job losses, but there is a far bigger culprit: currency manipulation. A 2012 paper from the Peterson Institute for International Economics found that the American trade deficit has increased by up to $500 billion a year and the country has lost up to five million jobs because China, South Korea, Malaysia and other countries have boosted their exports by suppressing the value of their currency.

Surprise! Dean Baker and the Peterson Institute agree on something: If these exports to America must continue why don't they include doctors as well?
written by s ken brown, April 21, 2014 6:52
The advent of universal connectivity has unmasked the concerted efforts by the Worlds economic elites to stuff their wallets. I applaud the idea of doing well but when it comes by beggaring everyone else I advise a rethink. This creates a force of unstoppable magnitude against those who do well. Have a look at the French Revolution. It was bad for everyone. The Attitude of the French Elite was indeed "let them eat cake" as they had no idea how most Frenchman had to live. The measure of whether you went to the block was were your hands calloused. It can happen again. I cannot fathom the particulars but America is rife with guns. Talk about hoisting on ones own petards.
Sorry Dean, you lost me!
written by Dave, April 21, 2014 8:11
I'm not sure what this line of attack is about, but using Republican tactics to fight your foes is not something we should be doing. Arguing towards hypocrisy is not a strategy that will succeed. Rather than arguing against the only high-wage work we have left in this country, you should be arguing against the high-capital hold on the system that continues to oppress labor of all kinds. Your prescription here is just gasoline on the fire of American economic destruction.
written by Larry Signor, April 21, 2014 9:03
And you thought you might eliminate the "silly comments", Dean.
1. We should use whatever tactics work. Our cause is correct.
2. Doctors are one of the major "high-capital" cabals. This is a large part of the reason for their out-sized compensation (i.e. rent extraction). Now, that's hypocrisy.
3. Reduced rent seeking by doctors due to increased competition would leave a chunk of change in consumers (read:labors) pockets. Hardly a "prescription...(for)...economic destruction".

Now, what was your point?
written by craig, April 21, 2014 10:15
One trillion dollars over ten years! That sure sounds like a lot of money. It's a really big number.
This conversation is pointless
written by Outta here!, April 21, 2014 1:30
This conversation is too strange, too contrived, and you have provided no data.

What a strange profession to attack when the CEOs of major health organizations make 10s of millions, you go after the doctors? This is not a smart place to start.
keeping the supply limited
written by dorothy, April 21, 2014 3:19
You have forgotten one thing. The US is the only country where an MD is a graduate degree. In Europe , in China and everywhere else a medical doctor is an undergraduate degree. So the real question is why is it a graduate degree here? Especially since there is no evidence that MD from the US are any better than MD's from Europe for instance. There are valid reasons for MD's to pursue graduate work - ie research etc but just to see patients there is not one of them. So it is true that we would save money if MD's were treated like teachers. In reality a better outcome for our country would be to do what Europeans do and treat teachers and MD's the same ie they should provide very good solid lifestyles and salaries. If that were the case we wouldn't have half the problems we do. The AMA works very hard to limit the number of doctors in the US and keeps wages high. They then import the doctors they need from poor counties to fill the less lucrative fields such as GP's and pediatricians. Sad really.
Let's hire Chinese Economists
written by Poverty For All, April 21, 2014 7:25
I have a much better idea. Let's just import a bunch of Chinese economists. The good-to-bad ration in the field is 1/100 at best. They're all way overpaid given that it took people outside the industry to figure out your problems.
penny-wise, pound-foolish
written by squeezed turnip, April 21, 2014 8:44
This conversation is pointless
written by Outta here!, April 21, 2014 1:30
This conversation is too strange, too contrived, and you have provided no data.

What a strange profession to attack when the CEOs of major health organizations make 10s of millions, you go after the doctors? This is not a smart place to start.

Uhm, there are a LOT more physicians than there are CEOs. Sure the CEO pay needs to be brought in line too, perhaps. But to say it's not a smart place to start is, erm, stupid too.
great idea to replace U.S. economists with lower cost Chinese economists
written by Dean, April 21, 2014 9:28
Poverty for All,

As I said I want free trade in all professions. I focus on doctors because there are a lot of them and they get the highest pay. But I think it would be great to replace our crew of economists (I'll go too) with much lower paid Chinese economists.
This has to be a winner for the economy since, in addition to the money saved, the Chinese economists could not possibly be worse on average than the folks they replace.
written by John, April 21, 2014 11:36
Yes, yes. Doctors should be competitive like everyone else. But how about demanding wage equality and basic work standards in trade agreements? It is clear with TTP Obama is trying to push export jobs to Malaysia and Vietnam. If wages are on par for each country signing on then wage issues can be taken out of the equation when Apple decides to outsource manufacturing.
How Many Americans Would Want This?
written by jerseycityjoan, April 22, 2014 5:17

I think what we need is fair trade. I am sick of being battered by various free trade notions, many of which have made life for Americans worse, not better.

Based on prior posts on this, I looked some things up and I will mention some of them again. 25% of our doctors already come from overseas. They will not remain temporary foreign workers for long; they will get green cards (many go on to get citizenship).

This idea is becoming more and more elaborate with countless moving parts involving hundreds of foreign medical schools and foreign governments.

And yet what evidence is there that our own government, our medical establishment and our people approve?

Even if the foreign doctors only earned 1/2 of what American doctors do (and isn't that against the rules of temporary work visas -- aren't such workers supposed to get market rate pay?) who is to say that savings will be passed on to the consumer?

Are houses any cheaper when they are built with illegal immigrants, or do the cost savings wind up in the pockets of all the contractors and subcontractors?

I would like us to build more medical schools. I want more Americans to go into medicine; it is good for the country on many levels. I would to see more of our smartest people go into medicine instead of finance and other rent seeking professions.

We need to reengage our elite and have them direct their attention to us, the people of America. Right now far too many are only nominal Americans, with their real loyalty to the interests of other elites here and around the world.
Practice Makes Perfect
written by AlanInAZ, April 22, 2014 11:26
In the area of surgery it is important to perform many procedures to stay proficient. I think that an economic strategy that relies on oversupply of surgeons to reduce costs goes against this need. I know that European systems don't rely on supply and demand for cost control and purposely encourage a small shortage to limit unnecessary procedures.
written by ezra abrams, April 22, 2014 8:46
is a short article by 4 of the most distinguished biomedical researchers in the world
The talk about the funding crisis in biomedical research, which is simple malthusianism: new scientists are produced at a faster rate then the budget grows

Their solution, in essence, is to help people like themselves by restricting the entry of people into graduate school

Dear Dr Baker: can you *please* explain the morality of letting poor countries like the phillipines or egypt spend large amounts of tax dollars to train nurses and doctors whoom we then employ ?
are we not stealing from the people of these countries ?
written by Clyde, April 24, 2014 6:59
Dean refers to comments about the effect on developing countries as "silly". I disagree with this assessment. I think it's important to consider the effects of our actions on other populations.

Some, like Dean, may care more about the quality of health care for the soda sipping obese Americans than the kids in Haiti, but taking a qualified doctor from a land with little and poor quality health care and sending him to a country that spends more on cosmetic surgery than many countries spend on basic health care may not be the best allocation of resources.

Dean may not care, but to label these concerns as "silly" is, well, it's silly (and blatantly ignorant).

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.