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Remember: If it had been legal to sell half of the first million doses of vaccine for $10,000 each, BioNTech could've easily gotten a $5 billion loan in April, and used that money to help scale up mRNA vaccine production to billions of doses. This is not the market outcome.
The bottleneck on the mRNA vaccines is the (new) encapsulation. There's a creative will to invest $5B in that exact step in March, that happens when there's a huge payout for getting that part right. "Do your job and get paid by the govt", not so much. https://twitter.com/brandonmcneice/status/1353212618274525187?s=20
The key phrase isn't "$5 billion", it's "and used the money to...", the incentive structure that would've paid & motivated BioNTech to make a lot of vaccine as early as possible. Govt carelessly set up an incentive structure to deliver X doses eventually. https://twitter.com/mattyglesias/status/1353392858288566272
Could more clever and altruistic and economically literate politicians, who weren't smarming voters by making a show of how much they were disgusted by dirty dirty profits, have set up a better govt contract with correct incentives? Sure! But that's the trouble with...
...trying to switch off the stuff that markets do automatically, and have politicians do it by hand; the politicians just don't understand what they're switching off, and how to replace it with careful detailed artificial structures. And have little motive to understand.
Govt: Writes time-insensitive contracts to pay a tiny fraction of what the vaccines are actually worth to us all.
Result: Too few vaccines, too late.
Econ illiterates: What could've possibly gone wrong? Maybe we should've paid less, to force Pfizer to make it up on volume?
Result: Too few vaccines, too late.
Econ illiterates: What could've possibly gone wrong? Maybe we should've paid less, to force Pfizer to make it up on volume?
Exam question #23: There is a SHORTAGE, a PRICE CONTROL, and a group of VOTERS yelling ANGRILY at anyone who suggests the two facts might be CORRELATED IN ANY WAY. Using your general knowledge of political history and economics, describe WHAT HAPPENED.
A very simplistic libertarian take, I know, I know. In reality, there's always a lot of details, a lot of additional theory, all kinds of extenuating circumstances... and... a SHORTAGE, a PRICE CONTROL, and people explaining why this is a TOTAL COINCIDENCE.
