Should Kenyan Economists be Regulated?

Post date: Fri, Aug 10, 2012
Category: General
By: IEA Kenya,

One week ago, I made a presentation at the meeting by the Association for Professional Societies in East Africa (APSEA). The subject of my discussion was about the role of Kenyan professionals in the new system of devolved government. At the end of the session, I received a public challenge on behalf of the cadre of professional economists to join the APSEA, which is perfectly acceptable but I am unsure that the injunction to call on the profession of economists for regulation is as sound.

Having considered this question for that time, I respond here with my views about whether economists organized in an exclusive association should be regulated by government. Regulation of a profession or industry arises because of the need to protect the “public interest” or because of its practitioners call upon government for recognition in exchange for setting up and governing its membership.

Professionals who have studied economics hardly qualify for regulation under any of the two reasons for the following reasons. First, I am unconvinced that it is necessary or possible to try and maintain a perfect or minimum standard of economics practice. This is especially because students of economics perform many roles that require an understanding of economics. It is thus difficult to state clearly that these roles in economics can be defined neatly and therefore require regulation.

Secondly, formation of professional bodies of every kind makes sense and the economics profession has these too, with the most famous and prestigious being the American Economics Association. However, the study of microeconomics advises against professionals coming together under the guise of imposing standards because they become price-setting cartels. They do this by purporting to establish minimum standards for qualification and controlling entry into the profession. The result of this is that the consumers pay a far higher price for professional services than would be the case with more open competition. It may be in the interest of these professionals to convince government to keep certain standards of practice of economics while making sure that the established people reap greater profits.

Thirdly, regulated trades with professional associations are essentially trade unions. In many cases, the bodies assume that the public would be unable to tell between a good professional and another. That may be true but I would rather firms and public determine independently what economist they prefer. Consider the regulated professions in Kenya today and how many of them provide less than competent service to their members despite the existence of statutes that are supposed to ensure high standards of professional service.

So, the establishment of an open professional association for professional and studying economists is long overdue. I remain unconvinced that there is any public interest to be served by asking for government regulation of economists.

Some quotes for Consideration

“All professions are conspiracies against the laity”- George Bernard Shaw

“People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public or some contrivance to raise prices.”- Adam Smith

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