“The Market” Can Deliver Pho and Spring Rolls. It Can Deliver Vaccines.
“Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that. When an animal wants to obtain something either of a man or of another animal, it has no other means of persuasion but to gain the favour of those whose service it requires. A puppy fawns upon its dam, and a spaniel endeavours by a thousand attractions to engage the attention of its master who is at dinner, when it wants to be fed by him. Man sometimes uses the same arts with his brethren, and when he has no other means of engaging them to act according to his inclinations, endeavours by every servile and fawning attention to obtain their good will. He has not time, however, to do this upon every occasion. In civilized society he stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons.”
Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations, Book I, Chapter II
The Covid-19 vaccine rollout redefines “debacle.” The Bureaucratic Deal made a mess of things and showed how vaccine production and distribution are too important to be left to the men and women of system or a National Supply Commander. It reminds me of something William Easterly discussed in his excellent 2006 book The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good. For-profit firms can deliver millions of copies of a new Harry Potter book seemingly effortlessly. Nonprofit organizations have trouble moving medications that cost pennies a dose. Channeling his inner Adam Smith, Easterly identifies and explains what he would later call The Tyranny of Experts. The statespeople who think themselves fit to tell private people how to deploy their capitals (or their vaccines or other medications) are saddling themselves with a most unnecessary attention in a fit of folly and presumption.
In Book I, Chapter II of the Wealth of Nations, Smith explores the differences between people and other creatures, noting a distinctly human “propensity to truck, barter, and exchange” that allows us to use others’ labor, talents, and knowledge by letting them use ours. We survive as a species of talkers and traders, able to thrive because exchange engages for us “the cooperation and assistance of great multitudes.”
The problem, Smith points out, is that we have limited abilities to know and help. Your “whole life is scarce sufficient to gain the friendship of a few persons”– people who have the wherewithal to love you as they love themselves. If all we had to rely on were our friends and neighbors’ kindness, life would be solitary, nasty, poor, brutish, and short. We can’t depend on the kindness of strangers, either. We have limitless occasions for the help of our brethren, and it’s hard not to drown in the flood of news about others’ needs and wants. Smith asks, “How do we get the butcher, the baker, and the brewer to help us when they could be doing something else?”
Just think about the barrage of exhortations you get from pulpits, the press corps, and social media. You need to live a life dedicated to others, but you also need to take care of yourself. You should save prudently, but you should give generously. You should help other people in need and serve your community, but you should also make sure you spend plenty of time alone with God or reading great literature. You should work diligently, and you should also pick up a few hobbies. As something my wife and I read when our children were young, new mothers should take care of themselves: “Sleep when the baby sleeps. Clean when the baby cleans.”
You have infinite options but finite time and energy. Enter markets as coordinators of the division of labor and the division of knowledge. We cooperate to mutual advantage and deploy for our purposes expertise and skills we don’t have for purposes other people may not understand. Among other things, exchange collapses the incomprehensibly complex into simple bids and offers whereby people decide whether or not they want and are willing to pay for what is on offer at the requested price.
Our dinner on New Year’s Day illustrates nicely. I had planned to cook that evening and order takeout the next night, but there was a small complication. My beloved Alabama Crimson Tide would be playing the Notre Dame Fighting Irish, and I didn’t want to be busy with meal prep during the game. We decided to switch and do takeout that night and cook the next night, but even then, I didn’t want to have to go and get the food during such an important game. It brings into play the cooperation and assistance of great multitudes who made it happen after a seemingly-simple set of operations.
I pulled out my phone and opened a food delivery app called Waitr. A few flicks of my thumb later, I had scheduled delivery from Saigon Noodle House and paid for everything. At around 6:15, the game was winding down while we were sitting down to a lovely meal of chicken pho and spring rolls.
Think about all the hands and minds involved. Someone had to program the app and make sure it was compatible with Apple’s iOS operating system. Someone in a marketing department somewhere had to bring the app to the attention of the general public. Someone else in a strategy meeting somewhere said something like, “Let’s offer promotional free delivery for New Year’s.” Someone else is in charge of coordinating Waitr’s relationships with the businesses they serve. Others are in charge of payment processing, which is anything but simple. Waitr has to make sure the restaurant gets paid. My credit card company has to make sure Waitr gets paid. My bank has to make sure the credit card company gets paid. Software developers have to keep things running so that the auto-draft from my bank account works. Others make sure transactions are secure. Platoons of lawyers help everyone navigate an ever-changing regulatory environment. The food has to be prepared and then delivered promptly. That doesn’t even begin to get into secondary and tertiary relationships like the restaurant’s relationships with landlords and suppliers. If I’m not satisfied with Waitr, their competitors (Grubhub, DoorDash, Uber Eats, and others) are just a couple of phone taps away.
Thus do I enlist the cooperation and assistance of great multitudes: not by referring to my very exalted status as a noble lord or what have you but by offering the fruit of my labor (reflected in money) in exchange for the fruit of theirs. The winners? Everyone with a right to be consulted. The losers? No one. Exchange is mutual caring for even without mutual caring about. In a decentralized market where people pursue their interests (which might be selfish or benevolent), we can help one another get more of the things we want.
If we can trust the market to deliver relatively unimportant things like pho and spring rolls, we can trust the market to deliver important things like Covid vaccines. As John Cochrane has pointed out, the standard “externality” argument for government involvement is a nonstarter because so much of the debate has been about who deserves to get vaccinated first rather than market failures in pandemic mitigation–who should get the private benefit. As he has argued more recently, “Nothing Matters but the Reproduction Rate.” And yet actual mitigation seems not to be that important, at least politically.
I doubt we would be in this mess if we had left vaccine production and distribution to Walmart, Amazon, Grubhub, and Chick-fil-A. In the middle of a global pandemic, it’s too important not to.