Why Is the Vaccine Distribution So Difficult?

Imagine if food were allocated and distributed by the government. Wouldn’t this prevent hunger and famines, which have certainly killed more people than epidemics in the history of mankind? Most students of economics should have a ready answer. The opposite approach—that government allocation is more efficient than the anarchy of the market—is illustrated by the story of the Russian official who, shortly after the collapse of the Soviet Union, asked British economist Paul Seabright, “Who is in charge of the supply of bread to the population of London?” (recalled by Philip Coggan in his recent book More).

There is somebody in charge of the supply of Covid-19 vaccines in the United States, and that is precisely the problem. (That both the federal government and states government are involved is not the basic problem; on the contrary, decentralization prevents the centralization of error and improves the Soviet-inspired distribution system, if only by permitting experimentation.) A Wall Street Journal story sounded the alarm (again) on the dramatic inefficiency of the current distribution system (Elizabeth Findell, Jared S. Hopkins, and Dan Frosh, “Covid-19 Vaccines Are Getting Stuck at the Last Step,” January 17, 2021):

In South Texas, a man slept in his car for two nights straight so he wouldn’t lose his place in a line of hundreds of people at a mass-vaccination event. In Western Kentucky, residents registered for vaccination slots online, only to find when they arrived that their doses had been taken by walk-ins. In New Mexico, state officials scrambled to hire more people to staff a vaccination hotline after it was overwhelmed with callers. …

“It’s crazy that people have to call around to see what different providers have the vaccine, rather than having a central place,” [Texas state REp. Vikky Goodwin Goodwin] said. “People are thinking that we had months and months to prepare for this.”

Isn’t it tragic that such things happen and the same failed government interventions are proposed (like by Ms. Goodwin above) after nearly three centuries of modern economic analysis? When prices don’t clear the market, people wait in line and those at the end of the queue don’t even know if they will get anything when their turn comes. In this respect, the United States is not worse than other regulated countries but it is often not better either.

We should not exaggerate the Sovietization of the American economy. Looking at the throve entrepreneurship deployed by American private businesses during the pandemic suggests that the economy is more resilient than many would have thought. Yet, the trend of the past few decades is unmistakable. Sometimes, it even looks like military Sovietization, from the retired army officer running Operation Warp Speed to president Biden considering deploying the National Guard to set up Covid-19 vaccination clinics.

Even if government intervention is judged necessary in a pandemic, less Sovietized and more efficient ways would be more productive. The federal government could buy enough Covid-19 vaccines from the manufacturers by bidding up prices to obtain enough for the whole population—that is, by bidding high enough to divert enough economic resources to manufacturing and shipping these vaccines. It could then offer the vaccines for free to interested health providers and pay the shipping by Fedex and UPS. Even better,  the government (at the federal or state levels) could offer vouchers to anybody who wants the vaccine and let Amazon (or any retailer) buy the vaccines and sell them in exchange for the vouchers or for ordinary cash from those who are willing to pay. With tens of thousands of intermediaries with incentives to deliver the vaccines because it pays to do so, the distribution would proceed like for food or computer equipment.

The trick is to allow the market to clear as fast as possible. Even the government’s preferred clientèles would be better served by a liberalization of entrepreneurship and a large measure of economic freedom.

It would go less smoothly in states, such as New York State, that have set up their own Soviet-style allocation of vaccines, but individuals could at least cross state lines to buy a vaccine if they want. And competition would, to a certain extent, push state governments not to hamper private distribution.

If ordinary economic markets are not allowed to clear, expect the political market to clear with the help of patronage, random access, and waste. We have seen much of that since the beginning of the pandemic. It would not be surprising if, as recently reported, a large number of vaccines are trashed because not enough government-prioritized recipients are available at any given time or place. (See also Scott Sumner, “Regulation and Vaccines: It’s Much Worse Than You Think,” Econlog, January 17, 2021, who correctly defends a free market in vaccines.)