Tuesday, November 3, 2009

The Swine Flu Arrived Just in Time!

The swine flu epidemic arrived just in time! What! How dare I say something so callous! Just in time for what? Well, just in time to provide an example of what government control of healthcare in America would look like. The Obama administration has attempted to sell its takeover of the healthcare industry by claiming that our admittedly imperfect system provides too little access at too high a price and, here’s the big pitch (drum roll, please), government can do better. The swine flu epidemic illustrates why government is wrong on both counts. Its control of this one, relatively small healthcare issue has demonstrated that its response is inadequate, expensive, and inhumane.

Like many unfortunate economic events, the restricted supply of the swine flu vaccine has its birth decades ago in government regulations that made it less profitable for domestic drug companies to produce vaccines of any kind. These regulations acted as forms of price controls and forced Americans to rely upon foreign suppliers, mainly in France and Australia. Now, there is nothing wrong with importing drugs that can be produced cheaper and/or more timely overseas—this would be just an example of the internationalization of the division of labor—except that the reason for this shift to overseas suppliers was neither cost nor timeliness of production. It was price controls by government that forced domestic drug companies out of the market.

Government did not limit itself to destroying the supply. Next it had to control demand, reinforcing the Austrian School of Economics’ rule that one market intervention causes unforeseen adverse consequences that lead to more market interventions until government, in desperation, takes over both supply and demand. Thusly, the federal government confiscated all the swine flu vaccine in the country and now distributes it through state health officials who, in turn, allocate it (according to their own, mysterious methods) to healthcare providers.

The healthcare providers have no control over how many doses of this vaccine they will receive. All they can do is order it from the government and take what they get, usually with no prior notification so as to plan its distribution. We have seen cases in which consumers stand in long lines on the rumor that vaccines have arrived. Armed police patrol the queue, chasing away those who they deem to be at less risk that others. Then, after hours of waiting, the armed police inform those still waiting that the supply has run out. I’ve seen this scenario first hand before--Moscow and Leningrad before the fall of Communism!—but seldom in the Land of the Free and the Home of the Brave. (Some of us remember the gas lines of the 1970s, another government-manufactured shortage caused by price controls.)

Government ineptitude is there for all to see. The details of who needs the shot and where these high risk groups reside is fairly well known, yet government sends too many doses to some areas and not enough to others. For example, university towns are shorted because the census data used by government officials does not take into account that students actually reside elsewhere than their official residence. This is even more frustrating this flu season, since young people are more vulnerable to the swine flu. Unlike older folks, they were not exposed to a similar virus decades ago. We older folks were exposed and, therefore, the vaccine does not offer us any increased immunity. This is opposite all previous flu outbreaks, where the elderly were most vulnerable. This twist adds to the public’s confusion and concern.

Nevertheless, we all seem to accept government ineptitude as par for the course and do not consider that this potentially life saving treatment could be produced and distributed any other way than by top down, bureaucratic fiat. We just assume that, although government does NOT control other necessities of life, the swine flu vaccine must be. Yet, this situation illustrates perfectly how diffusion of knowledge necessitates that we allow the free market to control vital supplies. The centralized, top down management style of government just cannot assimilate all the information that is needed to provide this product on a rational basis.

I believe that government’s confiscation of the swine flu vaccine was nothing more than grandstanding; in other words, government wanted to be seen to be doing something…anything!…about the swine flu. This is the unfortunate view of many in today’s society who have grown up under the heavy hand of the welfare state: we look to government for the answer to all of our problems. The mainstream media, who hold government responsible for all undesirable life events, reinforces this view. Government has brought this attitude upon its own head by sticking its long, bureaucratic nose into aspects of life that used to be the realm of private responsibility and initiative. Can anyone imagine that a government official would voice the opinion that the free market be left alone to ensure that an adequate supply of the swine flu vaccine was produced and distributed to those who most urgently needed it? Picture the press conference--people are dying of the swine flu and Mr. Representative proclaims that government should keep out of the way of the healthcare industry in its battle with the disease. It is hard to imagine that this scenario is possible in today’s political and media environment.

But, government does not ration food and we do not starve. We do not stand in line at government food stores while armed police walk up and down the aisles telling fat people that they don’t need food and that they should allow the skinny people to have first dibs on the limited supply. Yet this is exactly what has happened with the swine flu vaccine. Government must get completely out of healthcare or the swine flu debacle will be repeated on a daily basis for all of healthcare and all necessities of life, as it was in the Soviet Union.


  1. Number of H1N1 Swine Flu Pandemy cases grows (already more than 30,000 deaths worldwide) and you or one of your family could have this fatal disease. If you want to protect yourself and your family, friends, colleagues - bookmark the address - http://b23.ru/slfc - and send it to all who you know, may be so you save their lives. This is a list of social emergency medicines that can be used against Swine Flu H1N1.

  2. Great Analysis