The AMA negotiation of their own salaries is a good example of how vulnerable non-market negotiations are to capture by those with concentrated benefits from those with distributed costs.. in this case raising average GP salaries to over £100,000/yr.
What happens…? Adam Smith would be happy to look into the future:
Action 1: Many Drs. retire (final salary pension now sees them on a much increased pension of around £50k for the rest of their lives – plus still being able to do all the hours they might choose to do locum-ing now.
Consequence 1: Shortage of Drs
Action 2: Despite needing more Drs, the hospitals can’t afford to pay even the remaining existing salaries
Consequence 2: 7000 of the 15000 new graduates for this year are unemployable.
The AMA answer to this is to request… yet more money for the system: How about instead we let all those newly minted fit and smart young Drs trained at our expense simply bid for the jobs of the existing Drs: establish a new price. I’m guessing they’ll do the work for half the price and be very happy to get the work.