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Friday, October 22, 2004

Libertarians on the Flu Snafu

I've come across a lot of libertarians blogging about the flu. The best libertarian flu post, by the way, is on Cafe Hayek, mocking the multiple explanations offered for the shortage. Marginal Revolution has a good post too, discussing why drugs offer manufacturers a better opportunity to price discriminate than vaccines.

In general, though, there are two basic problems with the libertarian posts. First, they want to claim that there are price controls or something similar on flu vaccine, though this isn't true (see libertarian one, two, three, four) . Second, although many of them discuss vaccines in general, none of them make the obvious libertarian argument against mandatory vaccination.

Let's take mandatory vaccination first. The government requires vaccination for many childhood diseases (though not the flu), which is enforced by keeping unvaccinated children out of school. The obvious reason for this is that these diseases can be transmitted from child to child, so an unvaccinated child may catch the disease and spread it to others. Hence, vaccinations have positive externalities and ought to be subsidized, which the government approximates by requiring them and providing cheap vaccination shots to children.

One implication is that, for most vaccines, the government is strongly intervening to increase demand, presumably to the benefit of vaccine manufacturers. And yet we've had several recent shortages of childhood vaccines, just as we've had shortages of flu vaccine.

From a libertarian point of view, one would think that mandatory vaccinations are a blow to liberty. Even if libertarians don't think young children should be able to make their own decisions about vaccines, you'd think they would object to parents being forced to vaccinate their children. So why aren't the libertarians screaming about "forced vaccinations" or "vaccination slavery" or at least decrying this reduction in our freedom to go unvaccinated? I'm just wondering.

Second, libertarians and others want to claim that there are price controls on flu vaccines. The strongest counterargument is that the price of flu vaccine has gone up by almost a factor of five since 1996. Many conflate price gouging laws with price controls. But price gouging laws apply to all products, not just flu vaccine. So if these laws are so important, why do they cause shortages only of vaccines, and not other products?

Others conflate large government purchases with price controls. The government does make large purchases of many vaccines, often buying half the supply, which it does by putting contracts out for bid. However, it does not do this for the flu vaccine, despite many claims to the contrary. (Alex Tabarrok initially implied that the government is a major purchase of flu vaccine, but to his credit, has since corrected it). According to the GAO:
"Most influenza vaccine distribution and administration are accomplished within the private sector, with relatively small amounts of vaccine purchased and distributed by CDC or by state and local health departments."
However, even for the childhood vaccines, where the government is a large purchaser, it is not at all obvious that government action, taken as a whole, reduces the demand for vaccines. To repeat the obvious: the government makes childhood vaccination mandatory. Surely this offsets at least some of the price reduction caused by the government's large purchases.


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