Arnold Kling  

The Guild Problem

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Walter Russell Mead writes,


Most intellectuals today still live in a guild economy. The learned professions - lawyers, doctors, university professors, the clergy of most mainline denominations, and (aspirationally anyway) school teachers and journalists - are organized in modern day versions of the medieval guilds. Membership in the guilds is restricted, and the self-regulated guilds do their best to uphold an ideal of service and fairness and also to defend the economic interests of the members. The culture and structure of the learned professions shape the world view of most American intellectuals today, but high on the list of necessary changes our society must make is the restructuring and in many cases the destruction of the guilds...

In most of our learned professions and knowledge guilds today, promotion is linked to the needs and aspirations of the guild rather than to society at large. Promotion in the academy is almost universally linked to the production of ever more specialized, theory-rich (and, outside the natural sciences, too often application-poor) texts, pulling the discourse in one discipline after another into increasingly self-referential black holes. We suffer from 'runaway guilds': costs skyrocket in medicine, the civil service, education and the law in part because the imperatives of the guilds and the interests of their members too often triumph over the needs and interests of the wider society.

I am not on board with the entire essay, but I certainly agree with these excerpts. I also agree that the Internet is changing the playing field in these areas. The result is that many of these professions are in a defensive posture. The teachers' unions provide the most extreme model of fierce resistance to change, interest-group politics, and credentials that are uncorrelated with productivity. I think that part of the reason that the Great Recalculation is going so slowly is the rigidity of the credentialized sector of our society. These are the sectors where the long-term income elasticity is highest, meaning that they will grow as a share of output. But they cannot absorb an appropriate share of the work force until they become flexible and efficient.


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COMMENTS (10 to date)
Hyena writes:

Why the liberal arts have not become a collection of blogs is not clear to me. In fact, arts seems to be underblogged. BLDGBLOG is the closest to criticism I see in a blog, for example.

GU writes:

The difference between medicine, law, and academia on the one hand, and school teachers (and to a lesser extent journalists) on the other, is that only a small percentage of the populace has the intelligence necessary to competently perform the first group of jobs*, while a much larger portion of the population could be school teachers.

This perhaps explains the extreme defensiveness of school teachers that Kling often decries—they really have to worry about someone else taking their job. There's more of a natural oligopoly on the learned professions (independent of legislated protections).

*At least wrt law and medicine, most people also couldn't stand the long hours that often inure to practitioners of these professions.

George J. Georganas writes:

Alas, too few can be real teachers ...
And the long hours of law and medicine are more boot camp and less productivity. As for academia, publishing in learned journals is, also, more boot camp than productivity. A rite of initiation to keep the riff-raff out.

Shangwen writes:

I like Mead's post. He doesn't mention the uncreative, counterproductive and wealth-destroying issue of how much energy the guilds put into self-perpetuation and how much that knots up our public institutions. If waiters and waitresses had a guild, we would hear a lot of gassy rhetoric from them about their critical role in food safety, intercultural dialogue, and child nutrition.

GU writes:
"And the long hours of law and medicine are more boot camp and less productivity. As for academia, publishing in learned journals is, also, more boot camp than productivity. A rite of initiation to keep the riff-raff out."

How are long working hours a "right of initiation"? The rights of initiation for law are (1) law school [especially 1L], (2) passing the Bar, and (3) first-year associateship or a judicial clerkship. For medicine, the rights of initiation as I understand them are (1) medical school, (2) passing one's "boards," and (3) residency. For professors, it's (1) grad school, and (2) tenure.

A surgeon 20-years removed from medical school that works 60 hours a week, or a law partner that does the same, are in no way participating in an initiation rite.

Floccina writes:
The difference between medicine, law, and academia on the one hand, and school teachers (and to a lesser extent journalists) on the other, is that only a small percentage of the populace has the intelligence necessary to competently perform the first group of jobs*

But that is part of what the reason of division labor is for. The smaller the area that one specializes in, the less educated he needs to be. You may need a Doctor in the office but less trained specialists could do much more than the guild allows them to do.

Douglass Holmes writes:

Arnold wrote: The teachers' unions provide the most extreme model of fierce resistance to change, interest-group politics, and credentials that are uncorrelated with productivity.

Arnold is too kind. The teachers' unions don't pursue policies and credentials that are uncorrelated with productivity. The pursue policies and credentials that are negatively correlated with productivity. Why would a teachers' union want to increase productivity?

GU writes:
"You may need a Doctor in the office but less trained specialists could do much more than the guild allows them to do."

No doubt. But it would be nice if some libertarians actually admitted that there are some professional services that really do require a lot of skill, and without high remuneration, no one would take the time to master these difficult skills. (Kind of like how entrepreneurs wouldn't spend all their waking hours creating new products if it couldn't make them rich)

Brain surgery really is difficult. Planning the tax aspects of a large corporate merger is really difficult. There's never going to be a big supply of people who can do this stuff, therefore it will cost a lot of money. So it would be nice if libertarians stopped pretending like surgeons and corporate lawyers are crooks. From a purely strategic point of view, it needlessly alienates a lot of people who might otherwise be receptive to libertarian ideas.

Jacob Oost writes:
I think that part of the reason that the Great Recalculation is going so slowly is the rigidity of the credentialized sector of our society.

I don't think I've agreed as strongly with anything on this blog as I do with this. NOBODY ever talks about this issue, but I see it as an issue of prime importance. The division of labor is every bit as important as Adam Smith said it was, it is one of the *foundations* of how any economy functions, and these "credentialized" sectors are artificially creating ridigity in the division of labor, especially in areas where maximum flexibility and efficiency is desirable (education and medicine).

But outside of some old Friedman essays, I don't see anybody making an issue of this. If you talk about doing away with licensing, you're some radical who wants to see rodeo clowns performing surgery and illiterate child molestors practicing law. At least, that's the response I tend to get (mildly exaggerated for comedic effect).

I think the first step is to keep making an issue of how artificially-created (and government-maintained) divisions of labor are definitely creating distortions, inefficiencies, and adding cost. People have to be made aware of it as a source of higher prices, even if they want to maintain the status quo.

Eric Hammer writes:
But it would be nice if some libertarians actually admitted that there are some professional services that really do require a lot of skill, and without high remuneration, no one would take the time to master these difficult skills.

I have never heard any libertarian argue with that. Quite the opposite in fact, many (most?) have argued that doctors, for instance, are in such short supply not only because of licensing but also because government limits what they can charge for service, and that it will only get worse with nationalized health care.

The free market position, from my perspective at least, is instead that such licensing increases prices artificially without the corresponding increases in productivity one generally sees.

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