Some of the clearest comments I’ve seen on vaccine development and employment have come from the economist John Cochrane of Stanford University’s Hoover Institution and formerly of the University of Chicago. Someday, when people compile the definitive documents about the Covid-19 pandemic, I hope his work gets a special place—particularly his post “Free Market Vaccines,” which was later revised and published by National Review (I have previously used Cochrane’s post here and here). As luck would have it, Cochrane also discusses the pandemic on a recent episode of EconTalk.
Economics professors teaching about externalities in an introductory economics course would be hard-pressed to find a better example of a good that produces uncompensated spillover benefits for others than a Covid vaccine. Every person who gets the shot creates a spillover benefit for other people by making it less likely that they get the disease. Since shots are inconvenient and painful and since it is hard to compensate them for vaccination, market forces alone are unlikely to make it so that every Covid shot for which the benefit to society exceeds the cost to society gets produced.
The vaccine’s rapid development is a breathtaking scientific triumph. The vaccine’s botched political deployment is a breathtaking policy failure that adds another sad chapter to the biggest public policy debacle of my lifetime.
As we approach the second year of the two-week flattening of the infection curve, the simple points Cochrane makes should take center stage. As he argues, the pandemic checks all the boxes one would wish to check in order to construct a clear argument for government intervention, and yet the lion’s share of the vaccination discussion has emphasized the distribution of private benefits when reducing the disease’s reproduction rate is the only thing that matters.
Predictably, replacing commercial distribution—Cochrane believes, as I do, that the humane thing to do is to let market prices decide—with political distribution means political interest groups jockeying for priority. Even for all the market failures acknowledged above, combining market forces with vaccine vouchers for the poorest would be far more effective than the mess we are in now.
An example makes this concrete. I got my hair cut not long after getting an email saying I was eligible for the vaccine. When I sat down in my stylist’s chair—he is not a “barber” because he doesn’t have the right license, but that’s another matter entirely, as an example from Arkansas shows us—I mentioned that I was getting an appointment for a Covid shot and asking if he was eligible.
He replied that he is not. If the vaccine is supposed to be distributed so as to slow the disease’s spread, this makes very little sense. As a professor, it’s pretty easy to stay six feet from my students. I have what my coauthor and AIER colleague Phil Magness calls “Zoom Privilege.” Compared to a lot of other jobs, mine is pretty easy to do online, and with respect to reducing my Covid exposure and that of the people around me right now, “staying home more” is a pretty good substitute for “getting vaccinated.” Someone who depends on touching a bunch of heads every day doesn’t have the same luxury. In a saner world, I would have been able to sell him or give him my spot in the vaccine line.
If nothing else, the Covid pandemic will create dissertation topics for generations of Ph.D. students across the humanities and social sciences. Someone looking to write the definitive history of the pandemic could get a head start by considering some of Cochrane’s commentary.
This article was first published by the AIER, and can be found here.
Chart of the Day
Feb. 1 (Bloomberg) — “Bloomberg Game Changers” profiles Amazon.com Inc. founder Jeff Bezos. This program explores the story behind the founder of Amazon.com, the world’s most successful online retailer and examines key moments in his life. (Source: Bloomberg)