Flu Follies: New Crisis, Old Story

This is how it goes. The government bungles its distribution scheme for flu vaccines, causing an unanticipated supply shock, and suppliers face an upward pressure on prices. If the high price is charged, then your anal neighbor, who regularly receives flu shots even though he is in a low-risk category for catching the flu, decides to forego the shot this year, leaving a shot for someone who needs it more. The high price also signals to suppliers to get into the vaccine or vaccine substitute business, which they most certainly would in a less regulated environment. But the government then threatens to throw suppliers in jail for responding to the upward price pressure, so they don't. People like your anal neighbor (who also showers twice a day) still get them. The government, assuming the task that otherwise would have been performed by the price system, tries to allocate flu doses to parties that value them most, on the margin, with the same success that the Soviets enjoyed. Meanwhile, it bemoans the evil of gouging, a few weeks before election day. It's an old story, and one that is guaranteed to persist, until a free market in medicine is demanded.