Failures of the Marketplace

Econo-Girl was discussing the issue of flu vaccines related to a previous post. The 'shortage' of flu vaccines is another example of the failures of a purely market-driven system of resource distribution. There was not economic incentive to produce enough vaccine for everyone. So enough was not created. That's what you call efficient?

Econo-Girl said it once, and will say it again:

Sometimes the Invisible Hand of the marketplace needs a slap from a ruler.


Anonymous said...

I'm not so sure the Invisible Hand needs a slap so much...

I believe that the government should allow private corporations and the like to make these vaccines. Now, granted, they couldn't very well sell them to the public and expect to do well when the government is willing to provide them freely. However, the government could buy them from the corporations. It would keep money circulating, vaccines being made available by the government (so no worrys there for the government officials); It would just cost money, which is being used up a couple hundred thousand an hour anyway, this would be a 'sound'* investment.

*'sound' depending on who you talk to. Personally, this post is a bit socialist for me, though a degree of socialism may be needed. I believe that private corporations should be able to make them and sell them directly to the doctors, who sell them to the patients. However, since I don't see this happening, I simply threw in my opinion while sticking to the 'necessities' of modern America (which is not as capitalist as it likes to think, I believe)

Econo-Girl said...

Interesting, you calling this post socialist. Econo-Girl won't dispute the label although she considers herself a liberal Democrat only.

She just likes to point out the weaknesses in a pure market-driven economy and the real effects that would take place. In a true market-driven economy, only the richest would get the vaccine. And when there was a global pandemic, the price of that vaccine would skyrocket, possibly into the thousands.

What would be the social effects of that? It would be intolerable. So in the end, Econo-Girl agrees with you that the US is not as capitalist as we would like to think.

Anonymous said...

Yes, I realize that only the rich could obtain the vaccines. I recognize that the effects of everybody not getting the vaccine would be disastrous. That is the reason I suggest that the corporations be allowed to sell to the American government.

I don't believe this is pure socialism. No, rather, this has just a shred of socialism in it; I'm certainly not fully opposed to it (although I'm a conservative libertarian...). But I just think the companies should be able to sell it to the government to disperse; the government is already spending millions on it.

The Lazy Iguana said...

The invisible hand is crap. Do you want to know what would happen if the neo-con wet dream of no government regulation happenes?

Read your history book. Concentrate on the period of time AFTER the Civil War and DURING the time of Teddy Roosevelt.

A handfull of rich men ran the planet. One rich guy controled ALL the oil in the USA (Standard Oil). Another rich guy owned ALL the steel production. Another rich guy owned ALL the means of transportation (ships and railroads). A fourth guy owned ALL the banks.

Comeptition? HA! There was none. If you needed to borrow money, you had to go to J.P. Morgan. Need steel? Talk to Carnagie.

Capitalism was dead in its tracks. The barriers to marketplace were too high to overcome. Business had more power than the congress. Wages were low, there were no weekends, there was no sick leave, and workplace safety was unknown.

Enter Teddy. He used anti-trust laws to restore competition. Unions gave the working people days off and a safe place to work.

Adam Smith was right about some things, and dead wrong on other things. The invivible hand, left un-regulated, allows a system where one rich guy runs an entire industry. Consumer choice is gone. Prices are set by the whim of the rich (white) guy, not by any mythical market.

The Lazy One choose a life of civil service for this reason. Big business is pure evil. Left to its own devices, we would ALL be slaves to some corporation, and all our production would go to making someone else rich.

If this makes me a socialist, so be it. Labels are meaningless to me anyway. I know I am a REALIST.

Anonymous said...

Yes, I guess one might accuse me of being an idealist, and they would probably be correct.

Be that as it may, I do not think that monopolies are necessarily bad. However, I assume that honest, capitalist men with high moral values run these monopolies. I do realize this, in reality, is not true. I do think the invisible hand would work to near perfection if the playing field were leveled, as if the start of a race, and then the competitors were off. If the consumers picked their choice by quality, not by the maker.

I do realize this is a bit idealistic, but a man is a reflection of his environment and experiments; as said before, my favorite author is Ayn Rand.