Following up on information that Covid-19 vaccines were available there, I walked into the small Maine pharmacy. I saw nobody inside, not even at the cash register. I continued to the back of the store: nobody manned the two counters of the pharmacist’s hideout. I stood in front of one. After just a few minutes, an employee appeared on the other side.
“Could I see the pharmacist?” I asked.
The pharmacist came.
“I have been told that you have Covid vaccines,” I said.
“We have a waiting list,” she replied.
I asked to be put on it but she would not, or could not, tell me when they were likely to phone me for an appointment. I recognized something like the Canadian health system, under which I lived for decades.
“Is it a matter of days, weeks, months, or years,” I asked.
“Days. At least.”
That looked good, except for the last two words. In some of the on-line and mortar-and-brick places, there is not even a queue you can get at the back of.
At this stage, the actual vaccines don’t seem to be the problem. In the United States, the manufacturers have delivered twice as many vaccines as have been administered. According to the Wall Street Journal (Jared S. Hopkins and Arian Camp-Flores, “Demand for Covid-19 Vaccines Overwhelms State Health Providers,” February 8, 2021),
[a]lthough state officials often cite limited vaccine supply, manufacturers are producing largely on schedule. Pfizer Inc. and Moderna Inc. since December have supplied about 60 million doses, nearly one-third of the 200 million the companies together must deliver by the end of March.
State governments are supposed to distribute the vaccines that the federal government, after literally monopolizing the market, makes available to them. The length of the queues varies from place to place, perhaps depending partly on the success of whatever entrepreneurship can creep into what is basically a socialized distribution system. One Missouri hospital has a waiting list of 100,000 names and no vaccine left. Queues are not an efficient way to ration demand.
In the former Soviet Union, the government always had an excuse for shortages. The real problem was different: no private property, no market prices to signal scarcities, and no free entrepreneurship to respond to the signals.
In America, once the federal government has purchased them, the Covid vaccines are priced at zero, which implies that government allocation is required. At a zero price, demand is much larger than the quantity that bureaucrats can supply. The fee governments pay providers (hospitals, pharmacies, and such) for administering the vaccines may not be higher than the latter’s cost. For example, Medicare pays about $45 for administering the two doses of the currently available vaccines. In a flash of economic realism, Joe Biden has expressed some concern that this fee may not be sufficient.
It is no consolation that all governments in the “free” world have adopted similar policies. No “American exceptionalism” here.
For Soviet agricultural production, the weather was often the excuse. For Covid vaccines, we are told that “the supply chain” and logistics are the problem. The Wall Street Journal‘s Jennifer Smith reported (“Mass Vaccination Sites Will Mean Scaling Up Logistics Coordination,” January 30, 2021):
Other local health departments might need information technology help to cope with overwhelmed appointment systems, or assistance with planning and sourcing the labor, supplies and procedures needed to administer hundreds of shots a day. “People underestimate that this is a massive logistics operation,” Dr. Wen said. “That type of expertise is often missing in state and local public health.”
But except for governments—that is, political and bureaucratic processes—that should not be an unsurmountable logistics problem. Private businesses without central coordination produce and deliver the food, in innumerable configurations, for the three daily meals of 320 million Americans. Recall the Russian official who, shortly after the collapse of the Soviet Union, asked British economist Paul Seabright, “Who is in charge of the supply of bread to the population of London?”
In 2020, Amazon shipped 4.5 billion packages to American consumers—more than 12 million per day. The UPS hub in Louisville, Kentucky has a five-million-square-foot facility for sorting and treating more than 400,000 packages or documents per day. The hub sees 387 inbound or outbound flights daily from the company’s fleet of nearly 600 aircraft. What is more impressive is to think of the millions of individuals around the country and around the world who work in long and diverse supply chains to provide the equipment and inputs necessary for UPS’s operations. We are reminded of Leonard Read 1958 essay I, Pencil, which explains how the manufacture of a simple pencil requires the voluntary cooperation of a multitude of individuals producing, without a mastermind, the zinc, the copper, the graphite, and the equipment to make pencils out of that, and all the equipment for producing that equipment, and so on.
Although working under no central direction, these innumerable people who contribute to the production of pencils or UPS’s equipment and supplies are coordinated by markets (supply and demand) and the prices that signal what is needed where.
Compare this to the federal government’s “centralized system to order, distribute, and track COVID-19 vaccines” in which “all vaccines will be ordered through the CDC” (see the description by Anthony Fauci’s shop: COVID-19 Vaccine Questions and Answers, accessed February 10, 2021), the price for the final consumer is zero, and providers are paid fees determined by bureaucrats. No wonder the distribution runs into problems. The contrary would be surprising.
Note that the vaccine could still be free for the final customer if the federal government had simply subsidized consumers for their vaccine purchases (with vouchers, for example) and had let markets, entrepreneurship, competition, and prices distribute the stuff. And it wouldn’t take ages, luck, and some humility to put one’s hands on the thing—or one’s arm under the syringe.
The consumer who wants a vaccine gets a small taste of what French philosopher Raymond Ruyer, in his 1969 book Éloge de la société de consommation (In Praise of the Consumer Society), described as the difference between a market economy, where the consumer is sovereign, and a planned economy, where the producer runs the show (under government’s control):
In a market economy, demand is imperious and supply is supplicant . . . In a planned economy, supply is imperious and demand is supplicant.
Dans l’économie de marché, la demande est impérieuse, et l’offre suppliante . . . Dans l’économie planifiée, l’offre est impérieuse, et la demande suppliante.
READER COMMENTS
Craig
Feb 10 2021 at 2:11pm
My dad (71) experienced similar in Central FL today except in his circumstance it was a drive up service. When he got there a cone blocked entry. Going around the cone he saw another car exiting and they spoke window to window briefly where he asked if my dad had received first dose yet? My dad had not and he said at this point he was just wasting his time. Only 2nd dose administered.
Pierre Lemieux
Feb 10 2021 at 2:48pm
Craig: This suggests an epistemological follow-up! People who espouse (implicitly or explicitly) the theory that social interaction can only be regulated by a strong central authority and who observe a persistent queue will interpret it as confirming that the right people are not in power. “If only our good king knew!” People who espouse the theory that social autoregulation (the spontaneous order) is efficient will interpret the same queue as indicating that some political authority is interfering with interindividual trade. The question is, which theory better explains everything (queues and other things) we see in society and in history?
Matthias
Feb 11 2021 at 7:51am
Just for completeness sake: queues aren’t always a sign of government interference.
Some restaurants like to have queues as a sort of advertisement.
Similar Apple and Nintendo probably also like to get some articles in the press about how people queued for three days to be first to get their new gadget. (Instead of eg auctioning off the first batch of new iPhones.)
Pierre Lemieux
Feb 11 2021 at 10:53am
Matthias: You’re right. I should have left room for this exception. Note however that it doesn’t apply to very standardized goods like a vaccine or a bag of chips. No pharmacy uses potato chips lines as an advertisement!
Alan Goldhammer
Feb 10 2021 at 4:35pm
It is awful in our county right outside of DC. Anne Applebaum covers the roll out quite well in this Atlantic piece. Right now we are on three wait lists and the closes vaccine site is a supermarket pharmacy about 2 miles up the road. They are vaccinating our age group (>65) but only can do 40 shots a day. Good luck with that.
I have two good friends who live not far from me. Both are non-practicing MDs but that group gets priority as long as you can show your license. They went across the river to a hospital in Virginia and got vaccinated. Our local hospital will only vaccinate you if you belong to Johns Hopkins health which we do not.
Craig
Feb 10 2021 at 7:23pm
Wishing you a short wait and good health, sir.
robc
Feb 11 2021 at 9:52am
My sister is a teacher in a MD county south of DC.
She got her first shot. However, her county has apparently shipped part of their vaccines to PG county, so she may not be able to get her 2nd dose.
Pierre Lemieux
Feb 11 2021 at 11:01am
Alan: There is also a private clinic just a few miles from my home that, for some mysterious reasons, has vaccines but they only give Covid-vaccine appointments to their customers (“patients,” we say without irony). It’s like if you went to your local Ford dealer and they said, “Sorry, we can’t sell you a car because you’re not already a customer!” Shortages create funny situations.
Phil H
Feb 11 2021 at 9:38am
While I understand the sentiment, this still seems like terrible economics to me. Where’s the comparison of like with like?
Because my experience of the free market is that when a new, high-demand good appears, there are often stock-outs and shortages. The obvious example is new smartphones. Is it actually easier to get hold of a new iPhone than a vaccine? I honestly don’t know the answer to that question, and nothing in this post makes me think the author has made a serious attempt to find out.
Jon Murphy
Feb 11 2021 at 10:38am
Did you read beyond the first sentence? The entire post is the comparison of like with like.
Pierre Lemieux
Feb 11 2021 at 11:17am
Yes, Jon. We have the benefit of theory, economic theory in this case, which helps us find out what is like and what is not like.
Pierre Lemieux
Feb 11 2021 at 11:11am
Phil: See the comment of Mathias above and my reply. The exception you mention–with one good–is interesting because it is exceptional. (The fashionable restaurant case is the standard economic example.) Except if the government buys the whole supply, a vaccine is a very standardized good: you can’t distinguish one Pfizer from another Pfizer. Sellers don’t advertise their Christmas-tree huts–a Christmas tree takes seven or eight years to grow–by generating queues. Car dealers try to move cars out of the lot, not create queues. Etc. And, by the way, the 10-year queue to buy a car in the former USSR was not designed for publicity purposes.
Phil H
Feb 12 2021 at 6:06am
Sorry, PL, but I find your theoretical comparisons pointless. You know they wouldn’t pass peer review, so why write them here? I feel like you’re dumbing down for an apparently dumber audience… only, I’m not dumber.
I’m not asking for a lot of rigour, just a basic comparison of some good that a private sector company wants to roll out very quickly, versus this vaccine that the government is trying to roll out. You mention Amazon shipping as a relevant comparator – great. If you could work that up in to some vaguely equivalent comparison, I would be genuinely interested.
At the moment, I’m not seeing anything that supports your case. You talk about Christmas trees, but have you ever bought one? The last time I went to buy a Christmas tree (a long time ago!), I had to queue.
Jon Murphy
Feb 11 2021 at 10:37am
I wonder if these vaccine stories will be remembered as my generation’s gasoline lines?
Pierre Lemieux
Feb 11 2021 at 12:48pm
Jon: I think it depends on how long the shortage lasts, which in turn depends on how long the federal and state governments cling to the idea that government allocation is better than market allocation. Or perhaps Leviathan is powerful enough to, instead, like in wartime, grab, say, 10% of GDP (10% of all what people produce, earn, and consume) and allocate it to distributing the vaccine. Despite what would be a cost several times what it would be on the market, it could probably solve the problem relatively quickly—at the cost, of course, of 10% less consumption of other goods and services.
Jens
Feb 12 2021 at 8:41am
Does Israel use the 10% or the market to distribute the vaccine ? They seem to do quite well.
Pierre Lemieux
Feb 14 2021 at 1:28pm
Jens: That’s a valid question whose answer I would like to know. What does the Israeli government do to distribute the vaccine? How much of the people’s GDP does it grab and use to do so? I don’t know. Note that exceptions happen by happenstance–or with the “visible fist” (to use Rothbard’s expression) of the state. Recall that the USSR government was the first one to put a man in orbit. And that the French government was the first one to make a computer terminal and network available to everybody (Minitel, which led the French to miss the World Web revolution by a decade or two!).
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