Wednesday, November 03, 2004
Government solutions to government-created problems
[David R. Henderson, "Cure for vaccine supply is not more government," The Wichita Eagle, 3 November 2004.]
Hoover Institution research fellow David Henderson confirms comments highlighted here earlier that the vacine shortage is not a problem of too little government intervention, but too much:
No one person or agency is in charge of making sure the United States has an adequate supply of bread. Do you line up for hours for bread? No one is in charge of making sure we have an adequate supply of VCRs, TVs or computers, yet anyone willing to pay the price can get one easily.
The reason markets work so well is precisely that no one is in charge. Instead, thousands of producers and millions of customers make decisions that mesh. Vaccines aren't special. It's true that flu vaccine not used this year must be thrown out. But bread not used this week must be thrown out, and there's no shortage of bread.
Indeed, the countries in the world that have done the worst are those in which one person or agency is in charge. In the Soviet Union, one agency was in charge of making sure people had an adequate supply of bread. The result was that bread lines were common. And lesser attempts at central planning, such as government-set price controls, have also caused shortages. Richard Nixon's price controls on gasoline in 1973 and Jimmy Carter's in 1979, for example, caused long lines for gasoline.
One result of price control programs and liability laws has been that the number of vaccine producers has fallen in 30 years from 25 to five. For some vaccines, there is only one producer.
The vaccine business is already a high-risk one, due to a limited product shelf life, uncertain demand and lawsuits. Do threats of price controls make being in the vaccine business more attractive?
The solution to our vaccine problems is not to put one agency in charge but, instead, to reduce the role of government so that the vaccine market acts more like the U.S. bread market and less like the Soviet one.
[See the archived entry, "Lessons from the flu vaccine shortage," The Flint Hills Center, 27 October 2004.]
[David R. Henderson, "Cure for vaccine supply is not more government," The Wichita Eagle, 3 November 2004.]
Hoover Institution research fellow David Henderson confirms comments highlighted here earlier that the vacine shortage is not a problem of too little government intervention, but too much:
No one person or agency is in charge of making sure the United States has an adequate supply of bread. Do you line up for hours for bread? No one is in charge of making sure we have an adequate supply of VCRs, TVs or computers, yet anyone willing to pay the price can get one easily.
The reason markets work so well is precisely that no one is in charge. Instead, thousands of producers and millions of customers make decisions that mesh. Vaccines aren't special. It's true that flu vaccine not used this year must be thrown out. But bread not used this week must be thrown out, and there's no shortage of bread.
Indeed, the countries in the world that have done the worst are those in which one person or agency is in charge. In the Soviet Union, one agency was in charge of making sure people had an adequate supply of bread. The result was that bread lines were common. And lesser attempts at central planning, such as government-set price controls, have also caused shortages. Richard Nixon's price controls on gasoline in 1973 and Jimmy Carter's in 1979, for example, caused long lines for gasoline.
One result of price control programs and liability laws has been that the number of vaccine producers has fallen in 30 years from 25 to five. For some vaccines, there is only one producer.
The vaccine business is already a high-risk one, due to a limited product shelf life, uncertain demand and lawsuits. Do threats of price controls make being in the vaccine business more attractive?
The solution to our vaccine problems is not to put one agency in charge but, instead, to reduce the role of government so that the vaccine market acts more like the U.S. bread market and less like the Soviet one.
[See the archived entry, "Lessons from the flu vaccine shortage," The Flint Hills Center, 27 October 2004.]
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