I disagree with this.

If someone has a broken arm it’s observable and it’s pretty clear what the next step is.

With mental health diagnosis it’s not clear what the underlying issue is and at best you’ll be given something to supress symptoms.

We are doing a bit better on this with things like Psychedelics and Open Dialogue, but mental health is more of a context than a condition.

Only when they are made by psychiatric professionals who are suitable detached from the scenario they are judging.

I can think of a few people I know who took one year of highschool psychology or once read a pop-sci book about it who like to tell people what the root cause of their behavior is. It's usually done as a dominance move.

I think OP meant non-professionals. A mental health diagnosis from a laymen is no different than saying "you're crazy!"

This is true as well. But historically diagnosis was used as a way to strip liberty away from people.

Women who refused to sleep with husbands were routinely committed.

Capitalism is intense and is resulting in mental health issues for many people. The system doesn’t self critique rather it labels the people as “ill” and sells them a pill, at a profit of course.

The practitioners often benefit and reinforce the dynamics that create the symptoms in our culture.

Open Dialogue is an approach which does a great job at healing folks in the context of community.