Prices are how a market economy organizes itself. Without real prices arrived at by freely operating individuals, you have chaos. As P.J. O’Rourke long ago quipped, tragically designed Bulgarian blue jeans brought down communism. Under communism, all the wrong information is transmitted to producers.
What doesn’t work in total most certainly doesn’t work in limited fashion. This is why all the worrying about the CCP’s subsidy of Chinese industry is so overdone. These subsidies, these allegedly easy loans, blind their recipients to market realities. They slow their progress. They weaken them.
We have U.S.-based evidence to support this claim. Consider Canadian technology company RIM Blackberry. In 2016 the U.S. Senate announced that it was making a switch from Blackberry phones to Android and iPhone versions. An article in USA Today laughingly commented that the Senate’s change was one “most of us made years ago.”
So while it’s possible former market leader Blackberry was headed for obsolescence either way, it’s not unreasonable to suggest that government spending blinded it to market realities. More realistically, such a supposition is logical. Absent the size buyer that was the federal government, Blackberry would have had to evolve “years ago” just as “most of us” did.
Which brings us to Operation Warp Speed. As most know, this was the collaboration between private pharmaceutical companies and the federal government in pursuit of coronavirus vaccinations. The feds provided billions while drug companies provided expertise. A recent editorial in the Wall Street Journal billed this public/private partnership a “great success” that is now making possible “a return to relatively normal life as early as the spring.” That’s surely one way of looking at it, but arguably not the correct way.
Imagine, on the other hand, if the feds had done nothing given their desire to avoid weakening corporations with false signals. Just how many pharmaceutical companies would have gone to work to create a vaccine if the feds weren’t spending money not their own? It’s hard to imagine too many of them would have.
And the reason for this is that as the Journal’s own Holman Jenkins has made plain over the past year, somewhere north of 80 percent of those who contract Covid-19 either don’t know they have it, or aren’t unwell enough to bother finding out. After which the more alarmist New York Times has long indicated that at least in a lethal sense, the virus has proven most challenging to very old people who were already suffering from other maladies of the life-threatening kind.
It all raises a basic question: assuming the feds had once again done nothing with the money of others in pursuit of a vaccine, how many Americans would be sweating? As in what percentage of Americans would still be in self-quarantine absent the rollout of vaccines? It’s not unreasonable to speculate that the percentage would be pretty small. Information has a way of traveling fast, particularly in the age of the internet, and the reality is that most are wise to what’s known about threats presented by the virus.
But wait, some will say, the vaccine’s rollout has enabled the end of lockdowns. Since it has, it’s too pessimistic by many miles to throw cold water on this essential collaboration between the wise men of government and private industry.
OK, but such a response is yet another reminder that as opposed to a “great success,” the collaboration between the federal government and Big Pharma is not much more than a political mugging: absent vaccinations that aren’t crucial for the vast majority, lockdowns and limits on business/life activity will have a forever quality. And oh by the way, we’ll be reaching into your pockets to get the funds to pay Big Pharma to produce that which would have little market purpose absent lockdowns foisted on the citizenry by politicians on the local and state level, and subsidized on the national level.
Again, please ask yourself how many pharmaceutical companies would have spent and worked at “warp speed” to produce a prophylactic against a virus that most either don’t know they have, or don’t feel lousy enough to know if they have it? A virus that spread around the world for months without the vast majority of the world’s inhabitants knowing? The questions answer themselves, at which point the unseen is worth considering.
The feds threw billions at Big Pharma to produce vaccines, but in the real world every action taken is a tradeoff. Looked at through the lens of drug development, what progress was not made against – for instance – intensely lethal pancreatic cancer or heart disease so that the feds could mobilize some of the U.S.’s great scientific minds to find a cure for the coronavirus?
More broadly, are there pharmaceutical companies that aren’t U.S. based, and that didn’t have billions thrown at them by politicians, that are feverishly traveling down more market-informed avenues in pursuit of advances that the real marketplace will support? In short, were U.S. pharmaceutical firms blinded by government spending in the way that RIM Blackberry and others have been in the past?
These are questions worth asking amid all the back slapping taking place over the creation of corona-vaccines. Conservatives in particular normally think of tradeoffs, of the unseen, and of the dangers presented by partnerships between politicians and private businesses. Not now, however, which should have readers wondering if even bigger bills for political panic over the virus await.
Reprinted from RealClearMarkets