December 2, 2020 7:08PM

What’s the Libertarian Position on How to Distribute Vaccines?

The federal Advisory Committee on Immunization Practices (ACIP) has voted to recommend that the Centers for Disease Control recommend state governments give the new COVID-19 vaccines to certain groups before others. “If we had vaccine for every person in the United States, it would be an easy decision,” ACIP chairman Jose Romero said. “But we don’t, and that’s why we have to make a prioritization scheme for the initial set of vaccines.” The committee voted to prioritize health care workers and nursing‐​home residents and staff. But not without some uncertainty. The Washington Post reports, “several panel members say[] there was insufficient vaccine safety and efficacy data to support immunizing [nursing‐​home residents] right away.” The Post continues:

The advisory committee has expressed support for, but not yet voted on, the likely order for three groups who should get the shots next: essential workers (about 87 million people, not including health‐​care personnel) in Phase 1b, and people 65 and older (about 53 million) and adults with underlying medical conditions that put them at higher risk of getting very sick with covid‐​19 (about 100 million) in Phase 1c.

Among those ACIP considers “essential workers” are “people who work in meatpacking plants and other food‐​processing facilities; police and firefighters; teachers; and the transportation industry.”

Who should get the vaccines first? There are no easy answers to the question, nor does there appear to be a libertarian answer.

Consider the facts at hand.

At first, the demand for a COVID-19 vaccine will vastly outstrip the supply. If this were a typical private good—even an essential good amid an emergency, like bottled water after a hurricane—libertarians would say the government should let private actors decide where the available resources should go, and not intervene through “price gouging” laws or other means of rationing. Letting market forces ration the available stock would do the best (not perfect, just best) job of putting those resources to their highest‐​valued use and would expand the stock of that resource. As consumers bid up the price, more producers would enter the market.

A vaccine is not a pure private good, however. It has positive externalities, which means that because consumers do not capture all the benefits of using vaccines, market forces alone might not produce the socially optimal quantity. Vaccines are even more interesting because their positive externalities come from eliminating the negative externalities of other activities. Since the negative externalities a vaccine eliminates are literally violent physical assaults with a deadly pathogen, there’s a stronger argument for government playing a role in the allocation of vaccines than bottled water or even many other goods with positive externalities (e.g., fireworks displays).

If the government leaves allocation of vaccines to market forces, vaccines could go to the highest bidders rather than to the highest‐​value recipients—i.e., those whose vaccination will do the most to save lives/​block further violent assaults. If the government could allocate vaccines in a way that gets more of them to the highest‐​value recipients than market forces would, then that would be a case of government doing what even libertarians want it to do: using its coercive power to stop individuals from violently (if unintentionally) assaulting each other.

The prospect of government outperforming market forces here is a bigger “if” than most people recognize. Leaving vaccine allocation to market forces does not automatically mean the rich would get it first. The patent‐​holding pharmaceutical companies care both about their reputations and about saving lives. They will engage in a non‐​zero number of strategies to allocate vaccines to the highest‐​value recipients as opposed to those with the highest willingness to pay.

To improve on market forces, government must:

  1. actually know who the highest‐​value recipients are, a difficult question on which many people disagree;
  2. actually be able to allocate vaccines on that basis, rather than on the basis of politics;
  3. not detract from whatever good market forces would do on their own, or at least produce enough additional benefit to make up for any such “crowd out”; and
  4. not diminish the incentives for pharmaceutical companies to boost production.

I don’t worry about (4), but I do worry about (1) and (2), and even somewhat about (3).

Regarding (1), does the government (or anyone) actually know who the highest‐​value recipients are? One’s first impulse might be to prioritize the elderly and health professionals. But if most transmissions occur through young adults, one could make a strong argument that they are the highest‐​value use of vaccines and should therefore get vaccines first. I don’t know the answer. I suspect government officials don’t either.

Regarding (2), suppose for the sake of argument that vaccinating young adults first would save the most lives. Do we expect governments would give young adults the vaccine first? Or do we suspect government might give seniors the vaccine first—even if doing so cost more lives—simply because seniors vote in greater numbers, and entrepreneurial politicians would reliably demagogue any decision to vaccinate young adults first?

Regarding (3), given those challenges, are we really confident asserting that government allocation of vaccines would produce net benefits relative to allocation by market forces? It is not sufficient to say, “The government must intervene because the benefits of getting the economy moving again are so great.” That’s begging the question. It assumes the government knows how to improve on a situation where the government does nothing.

The fact that governments are themselves purchasing vaccines is why I don’t worry about (4). Subsidies juice demand and increase the quantity supplied. (Government could increase production even more by paying for other manufacturers to license the relevant patents—a proposal similar offering “prizes” for pharmaceutical innovation, which my Cato colleagues Charlie Silver and David Hyman discuss in their book Overcharged.) But while government purchasing means the question of how government should allocate vaccines is unavoidable—government has already bought them—it doesn’t do anything to solve problems (1) and (2), and maybe not even (3).

Once governments have purchased vaccines, it’s not clear libertarian principles have anything useful to say about how they should distribute them. The question of how then to maximize social welfare—or alternatively, to reduce violent assaults—is an empirical one. It’s a fascinating question. But I’m not sure anyone knows the answer.

In such situations, it is best not to offer one answer, but to let different governments offer different answers, so we can see which were correct.