Who will get the cars and when? Who will get the steak? Who will get the wine? Or, as the Associated Press asked this morning, “who’s first in line for COVID-19 vaccine”? There are two answers: (1) Jane who works for the government will decide. (2) An impersonal, decentralized, efficient exchange process, where everybody is his own Jane, will give the answer.
My first claim is that, if such a process as #2 existed, it would be much superior for satisfying the most urgent demands, promoting prosperity, and preventing social strife if not “the war of all against all.” My second claim is that such a process does exist: it’s called the (free) market.
The market is a continuous, invisible auction in which every individual or association of individuals can bid, and a system in which any producer may choose to fill any bid—which will usually be the highest bids. (Some may choose to serve those who bid the lowest price but they are rare. A mischievous economist would say that they are trying to bid for a place in heaven.)
Who gets the cars? Lots of bidders, in fact. Once the bidding process is over at any point of time, all the auction participants willing to pay the price that clears the market get cars. The others don’t. It’s the same for steak or wine or pretty much everything. Some services, such as love or friendship, are more difficult to bid for, but they can’t be more efficiently allocated by the government.
Why can’t billionaires or governments bid everything away from ordinary people? Suppose a billionaire wants to buy all private guns. Assume there are 200,000,000 private guns in the United States, probably an underestimate. Assume an average price of $200. The minimum value of guns, as evaluated by those who own them and bid for them continuously (if only by not selling), would thus be $40 billion. “Minimum” because of the consumer surplus: one only buys (or not-sells) something whose value is higher than its price. No single billionaire has enough money to buy that and, as we shall see presently, even the trillionaire government could not buy all the guns through voluntary exchanges.
As the government bidder-in-chief (or a billionaire) starts bidding, gun prices will start increasing. The first guns can be bought easily, but as individuals who least want their guns have sold them, the bids for the remaining guns will have to increase, and the fewer the private guns left, the higher the necessary bids. As only a few guns are left in the hands of people other than the bidder-in-chief, their prices will be extremely high not to mention the likelihood of holdouts. “$10 million for my old revolver!” Even with confiscatory taxation, the bidder-in-chief will need eminent domain or the Defense Production Act to get all the guns from all the people.
Moreover—and this additional factor is important—as the price goes up, new producers will jump in the industry to produce more. So if the bidder-in-chief does not have the power to abolish free enterprise (or kill all smugglers), he will never be able to bid away all the guns, all the steak, or all the wine. Similarly, neither billionaires nor the trillionaire state can buy all the steel or all the aluminum to build cars, mansions, or walls.
Now suppose a Covid-19 vaccine is (hopefully) invented. Instead of Jane deciding who gets the vaccine, everyone in a free society would make his own decision on whether to buy or not, now or later. Every individual would decide to which extent he contributes to bidding up the price by deciding whether or not to stop bidding before a price clears the market for all winning bids at that price. Note that our former but humbled bidder-in-chief, the government, would still be able to bid up the vaccine price in order to purchase some—to give, say, to seniors in nursing homes, to government bureaucrats, to White House occupants, or to other favorites and supporters, but he would have no more power than that. The government would have to bid up prices just like ordinary people. There is a good argument that vaccines should be subsidized and available free for children. Charities or associations could also bid up the price in order to obtain vaccines for the people they cater to. And nothing would forbid any less-than-average Jane to sell her TV set to get a dose, if she thinks the latter is more important than the former.
In any allocation system, of course, not more than what is available at any point in time can be consumed. But remember that as the price goes up, other producers, domestic and foreign, would be incited to jump in the market by inventing and producing a new vaccine. Furthermore, as more people are vaccinated, herd immunity would develop so that, in the end, even those who did not, directly or indirectly, pay to be vaccinated would be protected.
These ideas are not very original, at least for economists. You may find them in, say, Milton Friedman’s 1962 book Capitalism and Freedom—or, for that matter, in many if not most microeconomics textbooks. They have underlaid the whole classical liberal tradition. Yet, they seem to have disappeared from anywhere else in our socialist societies.
In a perfect socialist society, where there would presumably be a continuous redistribution of income from the above-average to the below-average individual, there would be no reason, from that point on, not to let each one be his own Jane and bid up prices. (Continuous redistribution: You wake up in the morning, look at your screen, and see that $100 have been debited from your bank account with the mention DIET, or “Daily Income Equalization Transaction.”) However, there would be few vaccine producers as one could live as comfortably doing anything one thinks is the easiest and most pleasant.
*****************************************************
P.S. (August 5, 2020): Among the many interesting comments below, Jens says that she doesn’t quite understand who Jane is. I replied to her comment, and here is an excerpt: “My main point is that using the government to decide who should have something and who should not is basically just like asking anybody on the street—say, Joe—to make this decision for everybody else. … Until a late draft of my post, I used “Joe” instead of “Jane”. I changed it to Jane to make sure that nobody would think I was referring to the presidential candidates who is not named Donald.”
READER COMMENTS
Thomas Hutcheson
Aug 3 2020 at 6:08pm
Presumably whoever subsidized the development and production of the vaccine would have a big say in how the distribution goes. And one criteria would be to people most likely to spread the infection to others, who contribute disproportionately to herd immunity.
BTW for this disease children would not be among those we should most want to subsidize.
Dave Smith
Aug 4 2020 at 9:49am
Presumably whoever subsidized the development and production of the vaccine would have a big say in how the distribution goes.
Why?
Pierre Lemieux
Aug 4 2020 at 10:50am
@Dave Smith: Because that’s where the incentives push. Even when Leviathan does not subsidize, he tells people what to do.
@Thomas Hutcheson: In a non-romantic political perspective (to borrow from James Buchanan), the criterion might also be wich state has a Republican governor or what will do the best photo-op.
Mark Brady
Aug 3 2020 at 7:53pm
“In a perfect socialist society, where there would presumably be a continuous redistribution of income from the above-average to the below-average individual, there would be no reason, from that point on, not to let each one be his own Jane and bid up prices.”
“In a perfect socialist society” there would be no markets and hence no prices, yes?
Pierre Lemieux
Aug 3 2020 at 9:52pm
@Mark: It depends on how you define a perfect or ideal socialist society. In “market socialism” doctrine (perhaps à la Lange-Lerner), once the redistribution is effected, and a fortiori the perfect and continuous redistribution I am playing with here, the perfectly competitive market can be let alone without intervention. I think it is E.J. Mishan that I recently read arguing that after income is properly redistributed, there would no need for subsidies to culture (because, of course, consumers are sovereign and people bidding prices according to their preferences would be sufficient to maximize welfare), but I can’t immediately find that. Anybody can help?
Thomas Hutcheson
Aug 4 2020 at 7:49am
Socialism, not even market socialism, would not in itself be either necessary or sufficient to achieve a “correct” distribution of income. Nor would it finance the right kind and amount of collective goods nor tax and subsidize externalities.
Tom DeMeo
Aug 4 2020 at 9:22am
I know you fully reject the decisions that led to the following circumstances, but we have evolved as a society that accepts most of the burden for paying for healthcare for the elderly, who just also happen to be by far the most vulnerable to the disease.
The federal government has also taken on most of the financial burden for development and distribution of a vaccine. Speed has become so important that we are prepaying billions for several of the candidates to ramp up production before they even know whether their product will work.
We also have demanded unprecedented public accommodation from and for a class we call essential workers.
I know you believe in this stuff, but does it really help to produce an essay on the benefits of free market economics right now? Even if we all bought into every word, is there any conceivable way to apply such a template to this circumstance?
Pierre Lemieux
Aug 4 2020 at 10:26am
@Tom DeMeo: We could return the question. Does it help in the current difficult circumstances to invoke unicorns such as “we as a society,” even if one believes they really exist? Have a look at my “The Vacuity of the Political ‘We’“
Tom DeMeo
Aug 4 2020 at 11:12am
OK, that particular rhetorical shortcut bothers you, but it doesn’t change or answer the spirit of my question either.
But if I were to carefully replace my references (The U.S. Federal Medicare program pays most of the healthcare bills for the elderly U.S. citizens…, the U.S. HHS Operation Warp Speed program granted…) we would still be in the same place.
How do you interject the idea that free markets work best into the largest U.S. socialized burden sharing arrangement since WWII?
Craig
Aug 4 2020 at 12:26pm
I think Mr. DeMeo’s point Professor can lead to situations where people can genuinely be of ‘two minds’ — for instance, if I don’t believe in bailouts for GM, then I don’t believe the federal government should do that, but GIVEN that they do, then yes, they have the right to attach conditions to the receipt of those bailout funds. I don’t see one position as incongruent with the other. In other words, GIVEN certain sets of circumstances, THEN what?
And indeed as Mr. DeMeo points out, the federal government, for better or for worse, has laid (or lain?) out the money to pre-produce not quite yet approved vaccines. In other words, markets are an excellent foundation to allocate resources, but that still doesn’t answer the question of how to allocate collectively produced goods, right? (Or in this case some government/private mix)
To me this question even has a bit of the ‘Trolley Problem’ involved. No matter what you do, somebody dies on the queue as noted infra.
Pierre Lemieux
Aug 4 2020 at 2:48pm
Tom: “We” would indeed be at the same place but for different reasons. And I would still, a fortiori, challenge the place, its justifications, and the drift it has caused. Like Milton defending free speech, I would argue that it is especially important in an emergency situation not to grant all powers to Jane. Perhaps, realistically, nothing will happen in the short-run (and this might be the point you wanted to emphasize) except for an accelerated drift towards always more government allocation and more humongous errors (and more interventions to correct the errors popping up from one czar to another). But at least, I would hope that people living in these times will be better prepared to raise fundamental questions for the future.
Mark Z
Aug 4 2020 at 7:42pm
I don’t really understand your argument. ‘We already have the state distribute other kinds of healthcare, so we may as well have it distribute this kind of healthcare.’ Why? Just because other healthcare goods are handled a certain way doesn’t make it easier to more efficient to handle a new one the same way. Socializing 80% of the goods of a certain category doesn’t automatically alter the question of whether we ought to socialize the remaining 20%. As for how a market for vaccines would work, I don’t see what’s so outlandish or implausible about it. There is a potential market failure – that much of the benefit is external – which is best remedied through subsidies, not centralized distribution.
Craig
Aug 4 2020 at 9:43am
No matter how its done, no matter how you slice it, this is the uncomfortable truth. Vaccines will be allocated — somebody WILL die waiting for a vaccine. Guaranteed, gonna happen.
Pierre Lemieux
Aug 4 2020 at 10:38am
Craig: Yes, as I admitted in my post–just as people have already died waiting for tests and PPE (despite the PPE “czar”). The caveat I also proposed is that if it is some czar who decides who will live and die, more will die because (1) more urgent demands will be ignored and (2) fewer vaccines will be produced.
nobody.really
Aug 4 2020 at 10:23am
Have they really underlaid that tradition? Or have they <I>underlain</i> that tradition?
Pierre Lemieux
Aug 4 2020 at 10:33am
nobody.really: Somebody more knowledgeable than I in such English matters told me that “underlaid” (or “undergird”) was the correct term. I wouldn’t fight to the death about this, though. I was after the past tense of “underlie” in American English. You don’t think that is right?
Craig
Aug 4 2020 at 10:55am
Personally I would likely have used ‘underpin’ in that situation, but there apparently is a subtle distinction between underlie and underlay
https://wikidiff.com/underlay/underlie#:~:text=As%20verbs%20the%20difference%20between,in%20a%20position%20directly%20beneath.
Underlie has a sense of: ”
To serve as a basis of; form the foundation of.
a doctrine underlying a theory’
That goes to underlain…..
I think! 😉
Pierre Lemieux
Aug 4 2020 at 2:35pm
Dear Craig and nobody.really: I am moving in your direction, and shall reach the decision soon.
Jose Pablo
Aug 4 2020 at 3:38pm
Despite thinking that Friedman is the most enjoyable economist to read (or listen to), even today, I don´t know if “free market” is the best solution to maximize utility in this case.
“Externality” is a concept that tends to be (very much) abused; but it does apply in some (very few) cases. CO2 emissions is one of them and Covid19 vaccines another one (I think).
The market will allocate the vaccines to the individuals that value the vaccine the most but, since there are individuals that increase other people “covid-19 related utility” more than the “regular Jane” (healthcare workers, bar tenders, supermarket and restaurants employees …) it is very likey that a higher “global utility” can be achieved thru a mechamism that can identify this individuals and “subsidizie” their vaccines.
Whether this “mechanism” can be designed or not is another topic for discussion, but it will not be the “free market” in the covid-19 vaccine case.
Jon Murphy
Aug 4 2020 at 4:46pm
Of course, the typical public choice problems arise, Jose: will the government distribute the vaccine such that utility will be maximized? Is utility (which is subjective and unquantifiable) the desirable metric to be maximized? How will government determine utility given each individual has incentive to lie about their utility from a vaccine?
As it stands, the government currently decides who gets PPE because of the Defense Production Act. Their behavior in that field is not making me confident of their ability to distribute a vaccine.
Mark Z
Aug 4 2020 at 7:47pm
This just warrants a Pigouvian subsidy to account for positive externalities, not wholesale abandonment of market allocation. Inasmuch as an optimal subsidy is impossible, so is optimal centralized distribution, because you don’t just have to identify the people who spread it the most to subsidize them, you have to identify them to give them vaccines as a central planner as well. That lack of knowledge impedes optimal distribution by the state at least as much as it impedes an optimal subsidization regime.
Jose Pablo
Aug 5 2020 at 12:05pm
So Jon, Mark, we are moving to a “second best” scenario when choosing “free market” as the best “available way” for distributing the vaccine.
I fully agree with the idea but it is, in fact, equivalent to admit that there are better ways of distributing the vaccine, but since:
a) we don´t have a “clear metric” to discuss the “better” concept (“Utility” is a very nice concept … until you try to do something practical with it) (Jon)
b) even if we do (at a theoretical level) we don´t have a practical way (meaning “a define set of actions and procedures”) of optimizing (in the real transactional world) this “global theoretical metric”. (Marc)
c) “not doing harm” is probably the best principle in this situation (Taleb)
we fall back to the “second best option”: markets.
But, there will always be individuals with the best opinion on themselves that do not behave by c) and with the power to do so (after all, “the worst get on top”)
and there will always be “central thinkers” with the best opinion on their theories that will provide the intelectual excuse and the “pseudo practical” ways for the “power seekers” to fulfill their very strong “action bias”.
That will always put the “free market” solution on a very bad position in the “real world” … as we can see.
Is that the best we can do even on the shoulders of Friedman? … frustrating.
Jon Murphy
Aug 5 2020 at 12:58pm
Jose-
I am a little unclear what your point is.
Jose Pablo
Aug 5 2020 at 5:49pm
Neither do I. It is an epistemological reflexion, I guess.
If there are better ways of allocate the vaccine than “the market” (because of the externalities), but we (just) dont know how to design and implement these ways, it will always be a significant support for the “trying harder to find out” solution among politicians, researchers and voters.
The action bias among politicians, the antimarket bias among the voters and the “science-provide-all-the-answers” bias among researchers (all of them very real), will always guarantee that “the market” is not the solution of choice for the vaccine distribution … and maybe they are right, since a better solution does exist (despite the fact that we dont know how to find it … ¿just yet?)
Pajser
Aug 4 2020 at 4:33pm
There are better and worse distributions of vaccines, otherwise, we wouldn’t have a need to discuss it. Then, there is (one or many) optimal distribution of vaccines. For instance, the distribution of vaccines that maximizes the saved years of life might be a good first approximation.
The market distribution of vaccines would be biased toward lives of wealthy people, even if they are very old. It cannot be an optimal distribution.
Jane can apply the optimal distribution of vaccines. It may be difficult to know optimal distribution, but there is little reason for claim that optimal distribution cannot be known or approximated.
The government can fail; the market cannot succeed.
Jon Murphy
Aug 4 2020 at 4:49pm
Why do you assume that?
Why do you assume that?
There are countless reasons, not the least of which won a Nobel Prize in 1973.
If the market cannot succeed, why could the government do any better? They would be in no better position than the market.
Jens
Aug 5 2020 at 3:50am
Hmm, but isn’t it the case that governments were the first in the global market to offer vaccine manufacturers large sums for the development and supply of certain quantities of vaccine and are now simply asserting that claim? (As a citizen, I can have a little bit of control over how the government does it; maybe I’m still not entirely satisfied with it. That’s life).
Jon Murphy
Aug 5 2020 at 10:18am
Not at all. It was private development long before governments (Bill Gates has been giving money for vaccine development for years)
Jon Murphy
Aug 5 2020 at 10:42am
Also, as point of fact, the claim in question is stated by pajser as “The government can fail [in optimizing the distribution of the vaccine]; the market cannot succeed [in optimizing the distribution of the vaccine].” That has nothing to do with who funded the vaccine; distribution is different from production.
Rather, the point I am making is without market-developed information, government cannot know where the vaccine must go optimally. If the marketplace cannot generate such information, government is no better an alternative.
Mark Z
Aug 4 2020 at 7:54pm
Forget optimality, what matters is better vs. worse. Markets prioritze allocation according to willingness to pay. That of course includes ability to pay, so rich people will have an easier time affording a vaccine and be more likely to get it, but also people who need the vaccine the most will be most willing to pay for it, controlling for wealth. If the market is better at allocating according to need than the state by a wide enough margin (I think it is) then it will outweigh the cost (in utility) of also allocating according to ability to pay. Simply noting that a market allocates, in part, according to wealth does not prove that the market is less optimal than a state that ignores wealth in its allocation.
Pajser
Aug 5 2020 at 11:23am
Forget optimality, what matters is better vs. worse. …. If the market is better at allocating according to need than the state by a wide enough margin (I think it is) then it will outweigh the cost (in utility) of also allocating according to ability to pay.
You are right. But I will not forget optimality as it is important for the understanding of my argument. If the market cannot distribute vaccines optimally, maybe government can distribute better. Maybe it cannot. We don’t know. Therefore, the researchers should invest reasonable effort in search of better government distribution.
The simplest situation: there are enough vaccines for half of the population; those and only those who get vaccines survive. The market will give the vaccines (more or less) to the wealthier half of the population. Can the government improve over that? Yes, easily: it is sufficient to give vaccines to the younger half of the population.
Pierre Lemieux
Aug 5 2020 at 12:23pm
@Pajser: This amounts to giving the vaccine to the most criminal and violent half of the population. See https://stageeconlib.wpengine.com/archives/2018/02/a_simplistic_mo.html. Another Jane would give it to the poorer half or to the more married half or to the more Christian half or to the more deserving half or to the wiser half or to the less woke half… This is a further illustration that state decisions on the basis of maximizing welfare are purely arbitrary: see my response to your other post.
Mark Z
Aug 5 2020 at 7:35pm
“The market will give the vaccines (more or less) to the wealthier half of the population. Can the government improve over that? Yes, easily: it is sufficient to give vaccines to the younger half of the population.”
No, it won’t. Again, markets don’t just allocate based on wealth. It is a multivalitate process. You’re making the mistake of jumping from ‘wealth affects allocation’ to ‘wealth completely determines allocation’. It also allocates based on want/need. A high risk person who makes 50k a year may be more likely to buy a vaccine than a low risk person who makes 100k a year.
The market can simultaneously consider wealth (if we anthropomorphize the market) and utility, and still do a better job of allocating according to utility than the government simply because the government is less able to identify who wants/needs (gets the most utility from) the virus than the market, even, explicitly, the government only intends to consider utility. Suppose we have linear functions y1 = f(x, z) + e1 and y2 = f(x) + e2, where e1 and e2 are error terms, and x and z are independent. Can we assume that because y1 depends on z as well as z, that it will be less well correlated with x? No, the error term is also relevant. If e2 is sufficiently larger than e1, y1 will be better correlated with x. Think of x as utility, z as wealth, and y1 and y2 as the probability of getting a vaccine from the market vs. from the government, respectively. Even if the government purports to only consider utility, interference of other factors – and just relative ineptitude at assessing utility – can make it less efficient than a process that takes into account utility and another variable.
Mark Z
Aug 5 2020 at 7:37pm
Oh, also, giving vaccines to the youngest half of the population is in no way clearly better than giving it to the wealthier half, even in terms of life-years saved. Younger people are at much lower risk of dying, so prioritizing youth is decidedly not optimal.
Pierre Lemieux
Aug 5 2020 at 12:02pm
@Pajser: Why would the “saved years of life” be a good approximation of optimality? Imagine that A is 50, an alcoholic and a bum, had one child that he abandoned 30 years ago and does not what he or she became, and has a life expectancy of 15 years. Now imagine that B is 80, suffers from many of old people’s diseases, has a life expectancy of 5 years at most, and he intends to spend all his remaining time caring for his 3-year-old orphan granddaughter. For that reason, he is willing to bid quite high to get one of the first Covid-19 vaccines. Why in heaven would A (even if he is a friend of the governor) have a right to a Covid-19 vaccine first?
The more general answer is that of, or very close to, Anthony de Jasay’s:
If you have an economic background and you like to work hard in your head while others are socially-distancing on the beach, I would strongly recommend de Jasay’s The State as vacation reading. Trigger warning: if you understand the book, it’s likely to change forever how you look at these issues.
Craig
Aug 5 2020 at 1:40pm
In this case here though you need to be ready for the social unrest of letting monied upper middle class remote workers who are simply going to outbid every working class stiff in a corona-risk position.
And for sure, in the abstract this is actually a very pertinent topic to discuss, but it must necessarily revert to emotionalism, right? I mean, look, you speak sensibly of course, but you know me well enough to know that with respect to my kids, I’m not sensible. Who goes first? My daughter.
Not quite a vaccine, but they kind’ve made a movie on this…..
https://en.wikipedia.org/wiki/John_Q.
Do it anyway you want to do it — as long as my daughter is first. I can be last, but my daughter must be first.
Pierre Lemieux
Aug 5 2020 at 2:02pm
@Craig: Don’t forget that other people have daughters. Do you want Jane to decide if it will be yours or another’s? As for the moneyed upper middle class (you must mean upper middle-income individuals) outbidding the poorer individuals, is this what happens for phones, TV sets, guns, and food? It must happen in North Korea, though. What’s the lesson?
Pierre Lemieux
Aug 5 2020 at 2:05pm
As for movies, there is a good one about government allocation of medical care: https://en.wikipedia.org/wiki/The_Decline_of_the_American_Empire.
Jens
Aug 5 2020 at 2:38am
There are some points in the reasoning that I don’t understand.
Why is “Jane” treated linguistically like a person? (I have noticed that the author has a preference for linguistic subtleties) So I still understand halfway why “Jane” is considered a single bidder (but then of course every other bidding community should be given a personal name). But a group of bidders, and even more so the government, should agree on a set of rules for distribution after acquisition (whether it does is a different question). This catalog of rules may then cause problems in particular and in general. But as soon as the decision based on this catalog is one that several people can accept (ex ante) and understand (ex post) halfway, it is actually no longer a personal decision but a rule based interactional procedure (with admittedly own problems) and there is no vindication for a personal name as a placeholder.
The second point is that I don’t see why the action of “Jane” (I’ll stick with the bad name and put it in quotation marks) prevents others from getting the attention of vaccine providers. It may be that “Jane” has an earlier agreement with vaccine providers and is therefore preferred. But this is just an expression of pacta sunt servanda and does not mean that “Jane” prohibits others from drawing the attention of vaccine providers (e.g. through money and the exclusion of claims for damages and liability).
The third point concerns the positive externalities. As some commentators have noted, there is good reason to expect that immunizing others will have positive effects for me. You can approach this fact objectively and subjectively. If you look at it objectively, some seem to think that “Jane” has no way of assessing this objective benefit. That doesn’t immediately make sense to me, because coronaviruses in general and SARS-CoV-2 in particular are viruses that are transmitted nosocomially. There is a lot of evidence for this. It does not seem entirely absurd that primary access to vaccines is therefore given to people working in the healthcare sector. And even if I switch to the subjective level and try to clarify for myself whether I prefer a primary distribution through “Jane” or a decentralized process, I am not sure why I should prefer the decentralized process in this case. I am not an opponent of vaccination, but I do not rate the risk for myself as particularly high either. I personally don’t care whether anyone gets the vaccine because he wants it or not. The greatest subjective benefit for me is that the vaccine objectively lowers the reproductive rate of the virus as quickly as possible. Probably by first reaching people who are potentially able to spread the virus as often as possible. There is no hedonism in vaccination, there is hedonism after vaccination. I actually have no reason to believe that “Jane” could not contribute to this. But maybe that also depends on the fact that my “Jane” is not called “Jane”.
Pierre Lemieux
Aug 5 2020 at 11:44am
@Jens: Thanks for these good questions—which make me regret using “Jane”. I will try to rapidly answer your three questions/arguments.
1) My main point is that using the government to decide who should have something and who should not is basically just like asking anybody on the street—say, Joe—to make this decision for everybody else. The government, as it is in reality and not in glowing democratic-speak, has no way to know who needs the things more and is often incompetent in allocating the things so that these persons get them. (It does have a way, though, to roughly make sure its supporters be served first: remember PPE seized from governors by federal agencies.) Until a late draft of my post, I used Joe instead of Jane. I changed it to Jane to make sure that nobody would think I was referring to the presidential candidates who is not named Donald. I realize from your question that this just made everything confusing. So Jane is the government “czar” or the committee who makes the decision for “the government.” The government is ironically called “bidder-in-chief” because it is a 1,000 times billionaire (and because it is always tempted to put its other hat of commander-in-chief and coercively prevent the other auction participants to bid against it).
2) If it is the government that allocates vaccines, without allowing individual bidders (the ordinary Janes and Joes of this world) to bid AGAINST the government, you get all the problems of government allocation as opposed to market allocation. Imagine that cars have not been invented and that the government subsidizes GM (“Government Motors”) to produce them, and, one way or another (price controls and shortages, or simply the Defense Production Act), keeps the allocation decision for itself: you have an imitation of Soviet allocation and certainly nothing like a free market.
3) Your last paragraph contains many different arguments and I will only deal with what I think is the main one. (I have a paper coming at the Reason Foundation that may answer other arguments of yours.) From what I understand, you are saying that you are not sure the government should not allocate the vaccines because there is an externality or a public good involved in herd immunity. (In passing, ask yourself what is the difference between externalities and public goods: you might have surprises.) Look at what happened with testing and PPE in the current crisis, with the equipment czar and the allocation czar in the administration, and your trust in the government’s capacity should drop not very far to zero. I accept that what the government could do would be to bid as a bidder equal to any other (besides its trillions of dollars to spare) for the vaccines that it wants to distribute to what it (“Jane” who works for the government) thinks are important clientèles. But any ordinary Joe or Jane could bid against the government, just as they do now when they want guns or cars: that is the crucial point.
Comments are closed.