Regarding the Public Interest: Free Markets Do Not Perform Well

The applicable rule of thumb here: The business of business is business, but the business of government is service to the public interest.

A fascinating New York Times article focuses on why the US is doing better than Europe in terms of vaccine rollouts. It boils down to what one might think: Risk and profits. The NYT writes: 

The calls began in December, as the United States prepared to administer its first batches of Covid-19 vaccine. Even then, it was clear that the European Union was a few weeks behind, and its leaders wanted to know what they could learn from their American counterparts.

The questions were the same, from President Emmanuel Macron of France, President Ursula von der Leyen of the European Commission, and Alexander De Croo, the prime minister of Belgium.

“How did you do it?” Dr. Moncef Slaoui, the United States vaccine czar, recalled them asking on the calls. “And what do you think we missed?”

There is no single culprit. Rather, a cascade of small decisions have led to increasingly long delays. The bloc was comparatively slow to negotiate contracts with drugmakers. Its regulators were cautious and deliberative in approving some vaccines. Europe also bet on vaccines that did not pan out or, significantly, had supply disruptions. And national governments snarled local efforts in red tape.

But the biggest explanation, the one that has haunted the bloc for months, is as much philosophical as it was operational. European governments are often seen in the United States as free-spending, liberal bastions, but this time it was Washington that threw billions at drugmakers and cosseted their business.

Brussels, by comparison, took a conservative, budget-conscious approach that left the open market largely untouched. And it has paid for it.

In short, the answer today is the same as it was in December, said Dr. Slaoui. The bloc shopped for vaccines like a customer. The United States basically went into business with the drugmakers, spending much more heavily to accelerate vaccine development, testing and production.  

The United States made the negotiations easy — its critics say far too easy — by signing away any right to intellectual property and absolving the drug companies of any liability if the vaccines disappointed. Washington paid for the development and the trials; the companies had essentially nothing to lose. (emphasis added)

Vaccine companies did not treat customers or the public interest well unless government intervened with money. They did not want to take the risk of acting without payment and liability protection to protect and defend the public interest. 

The lesson here is not new or subtle. Most companies operate only for profit. They do not operate to make the world a better place or to serve the public interest, protect the environment or anything else related to a social conscience. Profit is what they are there for. That is the only moral imperative for most businesses. 

The ex-president allowed the US to intervene by taking the risk that the new vaccines could fail. The exception was Pfizer, which developed its vaccine at risk, but with a large pre-negotiated supply order from the US government if it succeeded. In that regard, he did this right in relation to the pandemic. He arguably acted too slowly but at least he acted, unlike the European bloc.

With any luck, some lessons are being learned not just in the US and EU, but also in all countries capable of making vaccines. Covid-19 is probably not going to be the last pandemic threat that humans will face. Maybe next time our defenses will be better.