A Three-Item Post-Pandemic Regulatory Wishlist

The silver lining, if there is one, in the COVID-19 pandemic has been the easing up of at least some regulatory restrictions that were actively preventing rapid and innovative responses (Americans for Tax Reform is keeping an inventory here; several economists blogging for the LSE Business Review discuss their research on how COVID-19 might yield better regulatory environment). I would like for all of the reductions in regulation to stay permanent after the pandemic is over and things return to normal, but here are a few things on my specific post-COVID wishlist.

1. Abolish the FDA. Don’t reform it. Straight-up and flat-out abolish it. Market forces are pretty robust regulators, as has been amply documented in M. Todd Henderson and Salen Churi’s The Trust Revolution and my AIER colleague Robert E. Wright’s Financial Exclusion: How Competition Can Fix a Broken System. First, it is reasonable to think that grownups should not be prevented from making their own choices. Second, a lighter regulatory burden will likely mean more innovation not only in food and drugs but in assurance, information, and verification. While sitting in a dentist’s chair earlier this year, I had plenty of time to ponder the lights above me which bore the Underwriters’ Laboratory logo showing that they had been tested and approved by a private organization with a lot of skin in the game. Since 1909, the Good Housekeeping Seal of Approval has told people whether or not this or that product was reliable and trustworthy. For the last decade or two online reviews and ratings have been the “microregulatory” solution to information and assurance problems. If people absolutely insist on keeping the FDA, it should have a substantially reduced role doing certification rather than licensing and approval.
2. Abolish medical licensing. I once read an article (which, of course, I cannot find) about someone who was a doctor in his home country but who delivers pizza in the United States because he is not allowed to practice here without a medical degree from a US school and a medical license, which he cannot get without that degree. As ATR points out, the COVID-19 pandemic has meant “allowance of licensed health care professionals to work in a different state from which they are licensed.” Once again, if governments simply must have a role, they should be limited to certification rather than outright restrictions on who can practice. If we can’t abolish medical licensing, then it would at least make sense for licenses to be portable across jurisdictions. Someone trained as a doctor in India, for example, should not lose the right to practice medicine just because she moves to the United States.
3. Open more Doors to Telemedicine. We live in a world where virtually everyone is carrying around powerful cameras in their pockets at all times and in which zoom lenses for those cameras aren’t particularly expensive. There is no reason why a lot of medical examinations cannot be done remotely. The additional technology needed for even more advanced examinations is pretty cheap. Several years ago, we got our kids a microscope that is attached to our computer. This means we have more medical-quality close-up pictures of teeth and boogers than I really care to think about. A lot of things medical professionals handle in person could be done more cheaply and more simply with telemedicine.

These restrictions don’t seem to make a whole lot of sense if you view everything through the prism of class conflict. Expanding the market for medicine seems like a good idea for doctors as a class. However, if you take a careful look at their incentives, doctor-driven restrictions start to make more sense. Many restrictions are more about protecting doctors’ incomes than they are about protecting patients.

In The Trust Revolution, Henderson and Churi point to a series of innovations that have been thwarted–or almost thwarted–by special interests. A lot of cities tried to kill ride-sharing when it first entered. I was in Winnipeg, Manitoba in early March, and they don’t have ride-sharing in large part due to a very powerful taxi union. More relevant to the question of telemedicine is the example of Visibly, a startup that would have provided low-cost eye exams at a distance using people’s mobile devices. That innovation was killed by optometrists lobbying for the special privilege of treating patients.

I was especially interested in the specific regulatory changes in my state of Alabama. Licensed alcohol vendors got permission to sell wine, beer, and spirits curbside. Ideally, you wouldn’t need a license to make or sell anything, alcohol included, of course, but making this change permanent would be a step in the right direction. Alabama has also “suspend[ed] certificate of need laws for projects deemed necessary for fighting COVID-19.” The very idea of a “Certificate of Need Review Board” for medical services is questionable, to say the least (should “Certificate of Need Review Boards” require certificates of need?). If we’re looking for things that make healthcare more expensive, these restrictions on entry are almost certainly near the top of the list. 

Massachusetts, home of AIER, has dropped local bans on plastic bags and allowed “some pharmacies to make hand sanitizer” (emphasis added). “Some” is important here, and it allows me to emphasize an important point about the nature of post-COVID regulatory changes. These changes should be permanent and should apply to everyone, not just those who are able to navigate byzantine labyrinths of regulation and restriction. 

Governments should not be allowed to pick and choose, in other words, for several reasons. First, it creates a lot of uncertainty on the part of those who might want to enter an industry. Will they be approved? Won’t they be approved? This uncertainty–what Robert Higgs called regime uncertainty–is an important constraint on people’s willingness to enter a market in the first place. Second, government picking and choosing gives people incentives to put themselves among the chosen, which can mean resource-wasting efforts to secure special privileges. Third, it’s not clear that a “picking and choosing” regime is superior or less burdensome than what we have already. Of course, it is easy to say “this is what the government should do;” however, it is a lot harder to actually make the government do it. Progress toward a permissive, innovation-embracing political and cultural constitution would be just that: progress.