Economics can't predict who'll win an election or what the stock market will do next week. But it does analyze one problem very, very well: scarcity.
Is an item in short supply? Then economics can tell you not only why, but also what kinds of things ought to be done in order to ease the shortage.
Take the issue of "too few veterinarians," which an Associated Press story documented in the Sunday Grand Forks Herald ("States aim to alleviate vet shortage," Page B1).
"Farmers and ranchers across the country complain of a shortage of large-animal veterinarians," the story reported.
"Many states recognize the critical need and are approving or considering bills to provide tuition reimbursement or scholarships to veterinarians who agree to work in underserved areas."
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Moreover, "veterinary schools have been pushing federal legislation that would award $1.5 billion in competitive grants, so (veterinary) schools could expand."
Both of those policies will help. The first basically aims to boost wages for large-animal veterinarians, an effective tool for drawing workers to any field.
And the success of that tool is a good reminder of the key to answering almost any question of scarcity: price. A talk-show host fielded a question once from a frustrated home seller. My house won't sell, the caller said. It has sat on the market for months.
Well, let's clarify something, the host replied. If you priced your house at $1, would it sell?
Of course, the caller replied.
So, your problem isn't too few buyers, said the host. Your problem is the price. If you cut that price by enough, you'll reach the point where you'll find a buyer -- guaranteed.
Likewise, employers in North Dakota often complain about how hard it is to attract entry-level workers. They, too, should ask themselves: If this job paid $100,000 a year, would I get applicants?
Of course, the answer is yes. So, the solution is not to raise the job's wage to $100,000, but to raise it to whatever level is needed to attract and keep good workers.
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Back to large-animal veterinarians: Raising the wage of large-animal veterinarians and boosting the supply of them (by generating more veterinary school graduates) both will ease the current shortage.
But both measures also are very expensive, given that veterinarians have a legal monopoly on the practice of veterinary medicine, and the "barrier to entry" to the profession -- admission to one of America's comparatively few veterinary medical colleges -- is high.
Might there be a less costly way of delivering basic medical care to large animals?
Well, how about reforming the licensing laws? That's how people hospitals have boosted the supply of primary care practitioners, after all: by letting physician's assistants and similar professionals handle physical exams, write some prescriptions and handle other aspects of basic medicine.
By limiting veterinary practice to veterinarians and veterinarians alone, the licensing law means many animals go without any medical care at all. Easing the law and creating a new class of "paraprofessional" practitioners could bring basic care to more animals at reasonable cost. -- Tom Dennis for the Grand Forks Herald
