Nova workboard

a blog from young economists at Nova SBE

Professional associations (Ordens): ensuring standards or ensuring earnings?


            There are some professions where unions are the most common form of collective bargaining and lobbying and they are widely seen as having a perverse lobbying effect, in some of their forms of negotiation. However, professional associations, called “ordens” in Portugal, are often seen as benign entities that preserve standards of services provided and allow for their associates to share their expertise. Yet, in the opinion of some, like Friedman, they can be much more harmful, namely for competition.

            A point in favor of these institutions is that, through the promotion of discussion and innovation, by the way of seminars, conferences and other events like these. It is true that most of these professions (like economists or psychologists) work in a trade where techniques evolve rapidly and sharing experiences and new approaches can increase their productivity and be welfare-increasing for both professionals and consumers. Moreover, another field where these associations can do an important job is in the preservation of ethical standards. Lawyers are to be disbarred if they do not abide by their Code and it is important for the system to work that there is trust in that lawyers will indeed abide by it.

            Still, there is always a difference between theory and intentions and the actual practice of institutions, and the latter is the one that we have to evaluate. Despite being true that these professional associations promote ethical codes for their professions, it seems that not always are they completely interested in enforcing them. In Portugal, it has been the case that professionals are only investigated after they are prosecuted or even convicted of crimes in a court of law, as happened for example to medical doctors or the famous case of the lawyer Vale e Azevedo.

            Thus, what are professional associations also interested in doing? An answer could lie in anti-competitive activity: these organizations represent the interests of those already established on one of these trades and they have a lot to gain in restricting competition and entry of others. In Portugal, it is known that the Lawyers association wishes to restrict entry. As for doctors, there have always been suspicions that the insufficient supply of medical degrees is upheld by their lobbying. So far, the Portuguese competition authorities have not gone as far as to prove these claims, but several others, regarding control of prices, have been the object of fines by the AdC. Nevertheless, is it that ensuring standards somewhat seems to require restricting boundless competition, or that restricting competition is best disguised as ensuring standards? For the moment, it seems like there is no clear-cut answer.

#628 , José Miguel Cerdeira

Author: studentnovasbe

Master student in Nova Sbe

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