Friday, March 26, 2021

What if the Market for Vaccines Were Free?

What are the benefits of a free market for vaccines? While such a market is unrealistic in the current political environment, it is important to understand how the free market could improve the development, production, sale and distribution of vaccines.

The libertarian cannot describe accurately the particular consequences in the long term of a market liberalization. The nature of the free market - its plurality, its decentralization - makes it difficult to make that kind of prediction. However, it is possible to make more general observations concerning a particular market, based on the principles of Austrian School of Economics.

The idea is to look at how supply and demand would be different if they were not artificially doped or bridled by the many State interventions that exist today. It is also necessary to look at what would encourage private players to naturally fill the supposedly irreplaceable functions of the State. In the case of the vaccine market, it is possible to identify a multitude of State obstacles to the free market.

Without the existence of corporatism, i.e., the close political and financial relationships that exist between major vaccine manufacturers and States, there would be many more potential vaccine producers. Instead of always seeing the same big names finally selected - Pfizer, AstraZeneca - it would be possible in a free market to avoid the risks of corruption and to see smaller companies offer vaccines to the market. These companies would not have to spend resources in order to establish links with superfluous, if not harmful, public institutions, as the EMA and the FDA.

Geopolitics is perhaps the area where the interests of the State are furthest away from the interests of the people. In the field of vaccines, this translates into a significant reduction in supply. In fact, geopolitical considerations are today blocking access to Russian and Chinese vaccines against Covid-19. It is possible to mention, as an example, the European bureaucrat who recently wondered whether the Russian vaccine is a “serious vaccine", when it is considered by The Lancet to be “safe and effective", and when it has already been chosen by 50 countries, but mainly outside the West. How many deaths and how much economic despair could have been avoided by Western countries if they had, with the European Union, disregarded geopolitics and considered the interest of the people?    

The supply of vaccines would also be very different without the possibility of filing patents. In fact, as has been brilliantly argued in Against Intellectual Property by Stephan Kinsella, IP law allows a monopoly privilege to be granted to a company, and establishes a redistributive and unjust tax in the form of royalties. In addition, this system slows down innovation and development of the market in question, thus reducing supply. A recent analysis of the London School of Economics arrives at exactly this conclusion, finding that “once the invention is created, the patent in effect generates an artificial scarcity allowing the value of the vaccine or drug to be maintained, managed, and even increased." In short, intellectual property has no place in a free market because it is not possible to own an idea.     

The availability of vaccines is also hampered by the fact that the public authorities are handling the negotiations directly with pharmaceutical companies. The mismanagement of vaccination against the 19-Covid by many authorities around the world will go down in history as failure of epic proportions. Of course, the inefficiency of the public sector is not specific to vaccines; it is a permanent issue for reasons that are well known: bureaucratic red tape, lack of personal interest on the part of the civil servants, and the difficulty of computing prices. 

This last point is fundamental. Putting a vaccine on the market requires the harmonious cooperation, in the long term, of various professions; from entrepreneurs, business leaders, scientists, laboratory workers, factory workers and logistics managers. This vaccine structure of production can only be optimal if there economic calculation is possible at each factor of production. This economic calculation is impossible under a regime socialist, as demonstrated by Ludwig von Mises, i.e. when the State intervenes in the process and prevents natural price formations.

The Statist considers that the vaccination policy is a matter of public health. This is the position that only the widespread (and mandatory) application of vaccines under the control of the State, to a large portion (if not all) of the population can ensure national protection. However, it is necessary to careful with this kind of conclusion. The history of the eradication of childhood diseases in the twentieth century shows not only that vaccines played a lesser role than capitalism, but also that the harm caused by vaccines can sometimes outweigh their benefits.

Although the vaccines are essential to limit the impact of epidemics or pandemics, it is necessary to avoid putting vaccines into the hands of governments that want to apply them without discrimination.

The Statist thinks that it is not possible to liberalize the vaccine market because the customer, or end-user, does not have enough interest in being vaccinated, as is always as a preventive measure. It is true that many people feel a certain apprehension of being vaccinated, certainly due to the fact that the principle of vaccination is to “fight fire with fire» and that zero risk does not exist.  

In a free vaccine market, the demand for vaccines would obviously come from individuals keen to protect themselves. But it's clear the end-user is mainly not the customer in this case. The more significant demand for vaccines would especially come from private actors that have economic and legal interests to prevent the spread of disease among their customers. This is the case typically of insurance companies, but also GPs, hospitals, and schools (all private, of course). These economic agents have an interest in that their customers are not contaminated and would therefore require vaccination, when it is deemed necessary, as a condition for access to their services.

More generally, in the free market, in other words a society without the monopolistic Social State, the role of insurers would become more important than in today's societies, in order to protect individuals against the vagaries of life.

The elements presented here lead to the conclusion that the vaccine market, like the entire health sector for that matter, is too important to remain under the control of public authorities. It is necessary therefore to promote all initiatives that can gradually bring the free market for vaccines closer to reality.


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