Economics and Government

Russell Roberts comments on an article in the Wall Street Journal. The article was examining the making of vaccines in the United States and apparently asked the following question:

"How is it that the U.S., known for its prowess in producing lifesaving drugs and boasting an industry with a stock-market value in the hundreds of billions of dollars, doesn't have the medicine necessary to protect itself from these public-health threats?"

Russell Roberts provides the answer:

"So government purchases and pricing has destroyed the profitability of making vaccines. Government policy reduced the incentive to be in the vaccine business. Wyeth's decision to stop producing vaccines wasn't caused by market forces. It was caused by the interruption of market forces."

Yes, indeed.

I've often suggested that when you hear about a "shortage" of something, you should first suspect not that the invisible hand in involved, but rather that the HEAVY HAND of government in involved.