The vaccine, the market, and government

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John Cochrane writes,

In a free market, vaccines would be sold to the highest bidder. The government could buy too, but you wouldn’t be forbidden from buying them yourself, and companies and schools would not be forbidden from buying them for their employees. Businesses would likely pay top dollar to vaccinate crucial employees who are off the job due to the pandemic. And only businesses know just which employees are crucial to the economy, and which can wait.

Government rationing gives power to public officials. It does not necessarily lead to superior moral outcomes. So far, the main accomplishment has been to slow the rollout.

29 thoughts on “The vaccine, the market, and government”

  1. So, how to allocate a good that’s intrinsically worthwhile to the individual, but also has humongous positive externalities attached to it? The primary reason we have lockdowns is to protect the >65 population, particularly those with pre-existing conditions. The faster we can get that group vaccinated, the faster the rest of us can move on with our lives. Is the price system more efficient in this regard?

    • If one were to choose a government rationing system, “anyone over 65 show up with proof of age and first come first serve” mass vaccination sites would be the best way to do it. Israel choose that, and its almost done eradicating the virus from the group that matters.

      Everything else has been a shit storm, including NYC having a 51 point process for registering and Cuomo threatening to criminally charge people who gave a 68 year old diabetic who runs food pantries his shot “out of turn”.

      You’ll note that the CDC actually acknowledged that 65+ was the easiest to implement of all vaccination schemes (in addition to saving the most lives), but that pesky (woke) ethics category trumped all.

      Turned out that those 30 year old Hispanic nurses aids that social justice demanded be at the front of the line were turning the vaccine down in high numbers, because healthy 30 year olds don’t actually need the vaccine all that much and they know it. Then of course Cuomo wants the no show tossed in the trash rather than given “out of turn”.

      Within the 65+ bucket, I don’t see any reason not to do it based on price. It’s clear that people aren’t being compensated enough for vaccination and that means they aren’t vaccinating very quickly. Nights and weekends the vaccine is just sitting idle. Price signals would solve this problem.

      I’m not remotely worried about “affordability”. I have essentially no worries that if some senior citizen came into church and asked for donations to get the COVID vaccine people wouldn’t open their wallets. I would.
      —-
      Also from the link:
      Once it finally approved paper-strip tests in November, the FDA insisted that $5 paper-strip tests require a prescription and be bundled with an app, driving the cost to $50. Rapid testing that lets people who are sick isolate, and lets businesses ensure that employees are healthy, is only just becoming widely available, held back for six months by the FDA.
      —-
      His point about tests is solid. Far less “risk” with tests versus injection but I suspect $5 instant tests would have been enough to beat the pandemic on its own.

      This is truly an FDA/CDC caused catastrophe. Are they possibly the worst human being on the planet right now.

      • –“Once it finally approved paper-strip tests in November, the FDA insisted that $5 paper-strip tests require a prescription and be bundled with an app, driving the cost to $50. Rapid testing that lets people who are sick isolate, and lets businesses ensure that employees are healthy, is only just becoming widely available, held back for six months by the FDA.”–

        This is one of the saddest things I’ve read in awhile.

      • “If one were to choose a government rationing system, ‘anyone over 65 show up with proof of age and first come first serve’ mass vaccination sites would be the best way to do it. Israel choose that, and its almost done eradicating the virus from the group that matters.”

        This sounds exactly like what DeSantis is already doing in Florida.

        Vaccine tourism is now a real thing in Florida, due in part to the crazy blue states.

        But, still long lines and frustration there. Can we not derive a decent online queue system so that people don’t have to physically wait in line?

        • Why should someone being from out of state matter? I mean in the grand scheme of things. I’m not forbidden from going too McDonalds in another state, nor going to see a doctor in another state.

          Also, nobody is really doing 65+. They are now doing….basically everyone. Anyone with practically any sort of job, anyone about age 18 with any kind of health condition (including obesity and smoking), anyone in one of these congregate settings like prisons they’ve designated important enough.

          Basically everyone is an improvement over 30 year old nurses aids and 25 year old shelf stockers, but its still a lot more complicated then show up with birth certificate.

          For Virginia, there are 295,000 are vaccinated with at least one dose. Single does makes up 263k. I will use that because that is how they do the demographics, but know the fully vaccinated looks even more skewed.

          Here is the demographic breakdown:

          Only 14% of those are age 70+.

          Another 15% are age 60-69.

          Meaning that most of our doses are not going to those that need them. The big bulk of the curve appears to be 30-59.

          A whopping 38k twenty somethings have gotten vaccinated, about the same as out entire 70+ bucket. That is staggering incompetence.

          For all the talk of racial justice driving the decisions, whites make up 74% of those who gave a race that got vaccinated. What I’ve heard is that when healthcare professionals are offered the vaccine it often falls by racial lines. Whites want it, minorities don’t.

          For all the talk of the patriarchy, women make up 2/3rds of the vaccinated despite being at far less risk of COVID.

          Not only had Virginia failed to get its doses out to the public, it has literally chosen the worst possible people to give them to.

          https://www.vdh.virginia.gov/coronavirus/covid-19-vaccine-demographics/

          Florida is a bit better.

          http://ww11.doh.state.fl.us/comm/_partners/covid19_report_archive/vaccine/vaccine_report_latest.pdf

          At least there the old make up the largest vaccine groups, about 70% has gone to age 60+, versus under 30% in VA. Less then maybe 4% have been wasted on twenty somethings, as opposed to several times that in Virginia.

          Elections and ideologies have consequences. Florida’s decisions will lead to dramatically lower death then Virginias.

      • >—“Cuomo threatening to criminally charge people who gave a 68 year old diabetic who runs food pantries his shot ‘out of turn’.”

        Actually, New York State is offering it to everyone over 65. Don’t believe everything you read on the internet.

    • The price system isn’t that efficient, but sadly in our reality have woke institutions trying to push the vaccine more towards younger essential workers because they are “more diverse”.

      Separately, as Arnold said, the government hasn’t exactly managed the rollout well. Many news stories exist of vaccine supplies that have gone unused. Compare this with PS5 stocks.

  2. Above is the relevant question. The name of the game is vaccinating the over 65 crowd. Once that’s done there is effectively zero reason / justification for broad lockdowns etc.

    So the questions is really then: Is the 65+ crowd vaccinated faster if this is done by private purchasing (certainly plausible that many in that group would pay out quite a bit leading to increased manufacturing) but I’m not certain of it.

    I’m also not sure which crucial employees he’s referring to. I’m not sure the star programmer isn’t doing fine from home. I’m also not sure the manufacturing company will pay all that much to vaccinate the star builder, and either way he’s an essential employee so working regardless.

  3. The problem is not strictly governmental, it is not something inherent in the handling of distribution by the state.

    Israel is well on it’s way to vaccinating every elderly (+65) person in the country by the end of this month, and reaching total national herd immunity by March. Taiwan’s famously effective early efforts were run mostly by their competent and professional bureaucrats, and similar for Singapore and South Korea. China, for all its totalitarian scariness, nevertheless crushed the virus effectively and early and practically eradicated it from their country as early and as humanely and competently as any government anywhere.

    Heck, even NYC was able to vaccinate the whole city against smallpox in two weeks, back when NYC government was a thing that worked. It doesn’t now.

    There is something fundamentally wrong and broken with our current society and system of government that is not “government” per se. The libertarian analysis of “this is what you get when any state is in charge” is not correct, it’s what you get when *our* state is in charge. I think it would be more productive to identify what, in particular, is so deeply sick with our particular state, then to merely say “it’s the government” and just leave it at that.

    • Is it time yet to consider an amicable divorce between the blue states and the red ones? I see no other way out at this point and I’m afraid that things are going to get worse, not better in the coming years. Let the blue states go full woke along with their open borders and drug legalization and let the red ones try something different. We don’t need to tolerate our differences when there are other viable alternatives available.

      The biggest roadblock that I see (among others) is how to allocate and fund the social security and Medicare obligations amongst blue vs. red states. That would make these implicit (i.e off-the-books) retirement benefit obligations much more explicit, which is a non-starter.

      • Lots of people are fleeing the blue states for red ones. It is only a matter of time before they help implement the same failed policies in the red states that ruined the blue states.

        • How much of this is conservatives in blue states moving to greener pastures vs. liberals moving to red states and importing their failed policies?

          I don’t know and I’m not silly enough to pretend otherwise. But, I’m betting that self-selection has a lot to do with it and that Texas will be just fine for the next decade or so and probably longer.

          Here is our Texas governor on the topic:

          https://youtu.be/pzfyve5yfBc

          • Virginia used to self select for people that were fleeing DC and Maryland due to dysfunction, now it’s solid blue. The bluest non-black parts are precisely those with the most blue state migration.

            The same appears to be happening in GA and NC along a similar timeline.

            This issue was studied:

            https://www.brookings.edu/wp-content/uploads/2016/02/SOC2016report.pdf

            Scenario C is that everyone votes the way they did for GWB in 2004, but Demographics change. You’ll recall GWB did pretty decent with Hispanics for a Republican, but still lost them.

            Scenario E is the GOP diversity dream that they can win another 7.5% of Hispanics and Asians (so a 15% total close in the gap).

            Scenario F is the Sailer Strategy of giving up on minority outreach and maximizing white votes. They juice the white vote all the way to 1984 Reagan landslide levels.

            In Scenario F is the only one where the GOP wins in 2016…and amazingly Trump ran on it and won. Shocker. $100 bill on the sidewalk and all.

            Scenario C, re-running Bush 2004, narrowly loses but is a close call. Can possibly luck out in the EC despite losing. Romney did in fact lose in 2012 running on the GOPe platform.

            All other scenarios lose in 2016.

            Looking at the 2016-2032 projections, the only scenario where the GOP is competitive is Scenario F, which remains competitive through 2024, then starts losing.

            All other scenarios, including GWB 2004 and all the minority outreach ones, lose worse and worse every single year. GWB might squeak by an electoral college win in the early years before fading entirely, but is generally far inferior to Scenario F.

            And it’s worse than that because the electoral college favors the Sailer Strategy. You can actually lose the popular vote and still win with the Sailer Strategy.

            Trump lost in 2020 because he embraced Scenario E (more minority votes) over Scenario F (more white votes). The white men in the rust belt that he let down turned on him.

            This is just the reality that faces the GOP. The GOP aren’t trying to win minorities because, in addition to probably being impossible to win them in plurality, it just doesn’t help them a whole lot on the map.

            Lastly, most Hispanics and Blacks, along with Rust Belt Whites, are proles. They are generally going to respond to a “prole-ish” candidate like Trump is and like GWB pretended to be. Elite whites hate hate hate proles (they hated GWB too) and so there is never going to be peace.

          • You aren’t quite getting it yet. Making an easy marginal move across the state lines near your job is a lot different than re-locating your entire family to an entirely different part of the country. So, the Texas case is entirely different from the Virginia case. Texas is reasonably well insulated (Oklahoma, New Mexico, Louisiana, etc.) from those marginal moves.

            Honestly, the thing that concerns me most in Texas is not the folks from California (like my family from the SF Bay Area). Rather, it’s the IT folks from India who seem politically crazy (if the local Nextdoor.com is any indication).

      • The issue is that there really are red states and blue states.

        There are blue cities, purple suburbs, and red exurbs/rural.

        Unlike the Civil War, there isn’t some Mason Dixon line where we know people on one side have close to a single culture, viewpoint, and goal.

        There is no clear way to carve things up. The countryside can’t divorce from the cities, and the cities can’t form any kind of unified geographical area.

        • >—“There is no clear way to carve things up. The countryside can’t divorce from the cities, and the cities can’t form any kind of unified geographical area.”

          Exactly right. It’s really a rural versus urban split much more than a state versus state divide.

          • Uh oh…a bi-partisan critique of my idea. Maybe I should just stick to comments about future presidential libraries?

            The UK was able to leave the EU despite a rural vs. urban divide within the country. Not suggesting that is was easy, but completely possible.

            Maybe time to move on from the Mason Dixon analogies from the 19th Century? I’m looking for an amicable divorce here vs. a civil war.

            We have irreconcilable blue vs. red differences that will probably get worse and definitely not better over the next few years. Why not just have both sides agree that “it’s not you, it’s me” and allow the parties to move on to their next relationship?

    • I agree that for some reason *our* government is particularly bad.

      Even something as simple as passport control seems to be beyond the ability of our government to pull off competently.

      Why?

      • All the good governments are homogenous societies with high IQ.

        Secondarily, smaller size also seems to help.

        • Exactly. Time to consider decreasing the size of our government by peacefully breaking it apart and bringing back more homogeneity into the mix as part of the process by separating on the basis of blue vs. red.

  4. Arnold, I agree with you. Politicians, government officials, and bureaucrats want to have more power. They use “vulnerable” people as an excuse to grab more power. Now the barbarians will laugh at John and you and say that they will put an end to the pandemic by appointing Cuomo-type gods to manage other people’s lives (including their money).

    To readers Hans Gruber and J: in the past 60 years, I have promoted many policy proposals to mitigate the poverty of “vulnerable” people in several countries. The few times politicians/government officials/bureaucrats said they were willing to consider, they focused on how to expand the set of beneficiaries, so the proposals became a way to redistribute income to their constituencies (alternatively, when the funding was from foreign sources they looked for ways to redefine “vulnerability” so the funds were spent on their constituencies).

  5. BTW, the total failure of elites and officials, written about quite accurately in the link, is one of the reasons 10% less democracy could be a real failure. The government finally switched to 65+ over woke protocols based on democratic pressure. Without it, they would just have kept on with killing people.

  6. Playing devil’s advocate, the best argument I think that I have seen for pharmaceutical regulation is that it could supplant the also costly tort liability law. Of course, now we have both. If we can’t privatize drug approvals, at least allow a “FDA Approval “ tort defense.

    See: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3402725

    and

    https://ir.vanderbilt.edu/bitstream/handle/1803/5673/Deterring%20Inefficient%20Pharma.pdf?sequence=1&isAllowed=y

  7. Thinking back to Arnold Kling’s post (yesterday) about experiments and tampering:

    It’s a pity that the pandemic ordeal won’t yield comparative evidence about relative performance of government and market allocation of vaccines. All polities have converged on government allocation. The counterfactual (market allocation) will remain abstract. Controlled experiments are the gold standard of evidence. But ‘natural experiments’ — happenstance policy divergence in the wild, if some countries or States adopt market allocation — would provide rough evidence. And even comparative analysis of performance across endogenous policy divergence might provide ‘suggestive evidence.’ However, market allocation seems a non-starter everywhere.

    Is anti-market psychology so entrenched around public-health issues that we can’t even learn by trial and error with market mechanisms in the mix?

    BTW, market mechanisms can be combined with (a) priority and (b) subsidy via government. For example, government could grant a priority group (say, the elderly) ‘vaccine tickets’ to receive immunization by vendors. Vaccine tickets would embody a subsidy to the target group. Vendors would receive payment by government for the tickets they receive upon delivery of immunization. The mechanism must set the value of tickets high enough to provide strong incentives to vendors to accomplish swift immunization. Economists surely have relevant expertise about effective mechanism design here.

    • John, I must presume you are young and are not familiar with what both politicians and intellectuals have been doing for a long time. My understanding of history (pre-1950) and personal experiences (post-1950) is that in all nation-states well over 2/3 of the politicians and an absolute majority of intellectuals have always been seeking the legitimate coercion power of the state (preferably by minimizing the size of the powerful coalition). It has always been a tough competition because too many are seeking that power. Once they grab power they attempt to maximize their personal benefit first by eliminating the competition and second by ruling ordinary people like Olson’s stationary bandit. Reliance on markets is often their default position when the economy collapses and exceptionally a priority when they believe they can let people free under their terms and watch.

      It was quite different when our ancestors could discover new territories but since 1950 we have populated all our planet. Today it looks like my grandchildren will have to vote with flying feet to discover new territories outside our planet. Or to fight back.

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