I have been harping on the fact that it is very likely China will be mass producing and distributing a vaccine at least a month, and quite possibly several months, before the United States. This should make people very angry.
Even a month's delay is likely to mean tens of thousands of avoidable deaths and hundreds of thousands of avoidable infections. And, it adds a month to the time period before we can get back to living normal lives. Of course, the delay could end up being many months, since we still have no idea how the clinical trials will turn out for the leading U.S. contenders.
We are in the situation where we can be waiting several months for a vaccine, after one has already been demonstrated to be safe and effective, because the Trump administration opted to pursue a route of patent monopoly research, as opposed to open-source collaborative research. If Trump had gone the latter route, as soon as China, or anyone, had a vaccine, everyone would have a vaccine, or at least everyone able to manufacture it.
Patent Monopoly Financing Versus Open Source
Since people seem to find the alternative to Trump's patent monopoly approach confusing, let me outline it simply, so that people can see what is at issue. As it turned out, Trump quite explicitly turned the development of a vaccine into a race. He created "Operation Warp Speed," to which he committed more than $10 billion of public funds. This effort is supposed to develop both vaccines and treatments for the coronavirus.
The funding takes a variety of forms. Several companies received some upfront funding, but are relying primarily on advance purchase agreements for an effective vaccine. For example, Pfizer signed a contract that commits the government to buying 100 million doses for $1.95 billion ($19.50 per shot), if it has a successful vaccine.
By contrast, Moderna relied largely on upfront funding, getting $483 million for its pre-clinical research and phase 1 and 2 trials, and then another $472 million to cover the cost of its phase 3 trials. Incredibly, after largely picking up Moderna's development costs, the government is also allowing Moderna to have a patent monopoly on its vaccine. This means it will effectively be paying Moderna twice, first with the direct funding then a second time by allowing it to charge monopoly prices on its vaccine.
This nationalistic patent monopoly route was the one Trump choose to pursue. It should be mentioned there was little visible opposition from leading Democrats in Congress.
But, we could have taken a different route. We could have looked to pool research, not just nationally, but internationally. This would mean that all research findings would be posted on the web as soon as practical and that any patents would be placed in the public domain so that everyone could take advantage of them.
We were actually seeing this sort of cooperation in the early days of the pandemic, which allowed scientists to gain an understanding of the virus more quickly than if we had followed the path of patent monopoly supported research. This path of cooperation could have continued, if Operation Warp Speed had been structured differently. Instead of paying for the research costs of a company like Moderna, and then telling them they could get a patent monopoly so that they could charge whatever they want, we could have made the condition of the funding that all its findings would be fully public and patents would be in the public domain.
Since some folks have a hard time understanding what incentive Moderna would have if they weren't getting a patent monopoly, let me explain: they would be getting paid.
Just as most of us work for money, not patent monopolies, Moderna and other drug companies developing vaccines or treatments would be getting paid directly for their research. Their incentive would be that they presumably want to continue to get paid. If they went two or three months and had nothing to show, then they would not continue to get paid.
This is the idea of working for money. I thought that most economists were familiar with it, but when it comes to financing drug research, they seem to view it as an alien concept.[1]
Anyhow, if we committed $10 billion for open research, presumably we would want comparable commitments (adjusted for size and wealth) from other countries. For example, Germany, which has an economy that is roughly one fifth the size of the U.S. economy, would be expected to commit to paying $2 billion to support open research. China would also be expected to make a commitment that was comparable relative to its GDP, although as a much poorer country (on a per person basis), perhaps the commitment would only be half as large relative to its economy.
If we had leadership in the United States that was committed to pursuing a path of open research, then presumably it would be possible to quickly work out a deal that countries were reasonably satisfied with. It doesn't matter that a deal may not make everyone perfectly happy. Lots of things are happening in the pandemic and the response that are far from perfectly fair. Such is life.
Anyhow, in this world of open research, if it turned out that China's vaccines were showing more promise earlier than the ones developed by Pfizer and Moderna and other U.S. companies, we would be able to manufacture and mass distribute their vaccines, as soon as the Food and Drug Administration (FDA) approved them. No one would need permission from China since the research was open, anyone could manufacture the vaccines who had the capability.
Just to be clear, using a Chinese vaccine does not mean accepting China's safety standards. The FDA would make its own determination of a vaccine's safety and effectiveness based on the data from the clinical trials. If it could not be confident that the data supported approval, then it would not be granted, just as is the case with any domestic vaccine or drug.
If we had gone this route, if the Chinese vaccines are shown to be safe and effective before the vaccines developed by U.S. companies, we would not be left waiting. If China, or any other country had a vaccine, we would as well. This system still leaves a problem for developing countries who lack manufacturing capabilities, but at least intellectual property concerns would not be preventing people from getting a vaccine or treatment.
Open Research and Inequality
It is hard to understand how, not just mainstream Democrats, but even progressive leaders like Senators Bernie Sanders, Elizabeth Warren, and Representative Alexandra Ocasio-Cortez, were not pushing for an open research response to the pandemic. This almost certainly would have given us a vaccine more quickly.
However, an open research approach to the pandemic also could have been a very important model for biomedical research more generally. If we went a route of financing research upfront and putting all patents in the public domain, it could save us $400 billion a year on prescription drug spending. This comes to more than $3,000 per household. It is more than twice the size of the Trump tax cut. This is real money.
Patent monopolies also have a lot to do with inequality. We are often told that technology is a big part of the story of upward redistribution over the last four decades. While this story is frequently exaggerated, insofar as it is true, it is because we have designed patent and copyright laws so that some people can get very rich at the expense of everyone else. Bill Gates would still be working for a living if the government did not give Microsoft patent and copyright monopolies on its software.
It is more than a bit bizarre that political figures who devote so much effort to combatting inequality look the other way when we design a pandemic health care research plan that both slows research progress and gives more money to those at the top.
It's fine to have progressive taxes, but it is even better to structure the market so that we don't have so much inequality in the first place. If the minimum wage had kept pace with productivity since its 1968 peak, it would be $24 an hour today. That would be a hugely different world.
While it would be great if we could raise the minimum wage to $24 an hour, we can't do that without changing many of the rules that allow so much income to be redistributed upward. The current system of patents and copyrights is a really big part of that story. In the case of the pandemic, it is not just leading to inequality, it is also costing people's health and their lives. Progressives should be paying attention.
[1] I discuss in chapter 5 of Rigged how this sort of system can be structured in a more systematic way (it's free). But in the context of dealing with the pandemic emergency, the arrangements would have to be somewhat ad hoc, as is already the case with Operation Warp Speed.
The post Waiting for a Vaccine: Killing for Inequality appeared first on Center for Economic and Policy Research.
Can we use literature to learn more about inequality? Yes, I think we can, and, as some of my readers know, I did exactly that in "The haves and the have-nots" which open with the discussion of Jane Austen's "Pride and Prejudice" (in terms of the monetary advantage for Elizabeth to marry Mr. Darcy) and of Tolstoy's "Anna Karenina". Piketty has used later the same idea in his "Capital in the 21st century" adding Balzac—who by the way was cited by Marx for precisely the same reason: as an extraordinary chronicler of life in a bourgeois society.
Recently, Dan Shaviro published "Literature and inequality", a book in which he looked at the social structures of England and France (in the 19th century) and the United States (in the 19th and 20th) as revealed by nine books, beginning with the inevitable Jane Austen, going through Balzac, Stendhal, Dickens, Trollope, EM Forster, Mark Twain, Dudley Warner, Edith Wharton and Theodore Dreiser. I have reviewed the first part of the book here and the second part here. On October 15, Dan is planning an online book vernissage to which I am very much looking forward.
As the luck would have it, I took from my shelf a couple of days ago John Lukacs's "The future of history", a nice little book of essays about history written by one of foremost US historians of the World War II. I read it when it was published, almost ten years ago, and I planned to read (for the reasons entirely unrelated to the topic I am discussing here) my book notes and comments only. But what attracted my attention was Lukacs's discussion of the relationship between history and literature. He asks the same question as the one I asked in the beginning of this post: can we learn something about history of a given era by reading good literature?
Lukacs's answer is, "yes". Not only can we learn about how people might have felt about a historical event, whether they even knew they were participants or witnesses to such an event, but good literature, as Lukacs writes, is like good history. When you read it you are not supposed to feel that you know the outcome; it has to be open-ended, to always keep the full breadth of possibilities that exist in the present, but which we, looking at what used to be present, know did not materialize. Thus, Lukacs writes, literature and history are symbiotic. This is very much the point that I think all of us who hold that you can learn about societies and their inequality from novels would agree.
But then Lukacs makes an additional intriguing point. Noticing that the birth of the novel was in the mid-18th century, contemporaneously with the Industrial Revolution, and that its peak was probably in the 19th century Europe, and noticing also that the type of society-revealing novel that both he and economists have in mind, has become much rarer now, Lukacs asks: has novel died at the same time as the bourgeois class-compartmentalized society dissolved?
He uses the fact noticed by many that around the turn of the 20th century, novels became much more focused on individual experiences which did not necessarily have much to do with the surrounding society. It is not that Julien Sorel or Emma Bovary were not focused on themselves. But that self was described as it navigated and struggled in the world riven with greed, arrivisme, social mimicry, and class divisions. So the self was seen against the background of society. At times that background moved even upfront, became the real topic of the book (which may be the case with Dickens, for example). But in the novels of the early 20th century and increasingly afterwards, Lukacs writes, the societal background recedes: what we see is mostly an individual with his issues, family, friends, sex, love, depression. Grand societal themes raised by the past literature are gone.
This is indeed what I noticed when, emboldened by the success of using Jane Austen and Tolstoy to throw light on English and Russian society of the early 19th century, I started looking around, and asking my friends and students, to find similar novels in other settings and languages. The results were disappointing. Societies that were less developed and commercialized than the 19th century Europe did not (understandably) produce such novels: if monetization is quasi non-existent, how can you quantify social positions, incomes, wealth? Novelists are not going to impute incomes the way that economists impute the value of own produced goods to farmers in household surveys. On the other hand, Western societies of the mid-20th century and later did not seem, for the reasons Lukacs mentions, to care much for that kind of literature either.
I have not followed contemporary literature (contemporary meaning, written in the past 30 years) partly for that very reason, so I relied more on the judgment of others. But they too seemed at a loss of finding novels from which one could glean social inequality, or even more generally social issues linked with inheritance, position in society, class distinctions, and even money. So we ended with a very meager yield.
Lukacs provides an answer to that dearth. In his view, the dissolution of classes and of typical bourgeois societies made novels of the type that I was looking for irrelevant. Society decomposed into individuals, not in classes. The subject matter of literature became individual issues, not class issues.
Now, one further element (never thought of by Lukacs, I am sure) lends credence to his explanation. Political economy stopped looking at social inequality through the lens of class, which it did from Quesnay through Adam Smith and Ricardo all the way to Marx. It did so precisely around the same time as classical novel disappeared. It was Pareto at the turn of the 20th century who introduced for the first time, studying fiscal data from a number of German and Italian cities and states, interpersonal income inequality. From Pareto onward, we ceased to deal with capitalists, workers, and landlords; we began to deal with individuals, some rich, others poor. The class analysis was definitely pushed out, so much so that in the second half of the 20th century, especially in the United States, even the mention of class in an economic paper would immediately classify you as an unreconstructed Marxist.
It dawned on me that this was not a coincidence: the death of the classical novel, the dissolution of the class structure of the bourgeois society, and the end of a political economy where the subjects were classes in favor of "agents" might have all been related.
But now as the importance of capital incomes increases, and capitalist societies grow increasingly stratified, with the rich attempting to confer and transmit all the advantages to their offspring, may not both the class analysis in economics and the classical novel make a comeback
The scary word is not the obstacle, IMO. Socialism gets currency as the more reactionary order crumbles from its own irreconcilable fault lines, and simply cannot continue in the old way. We are seeing that here, and now. People do not go to the immense and expensive trouble to make structural changes to their societies, except under duress. The forces mandating the vast accumulations of wealth in the 70's and afterwards, overwhelmed even the highly skilled, liberal and cautionary efforts of Carter, Clinton, and Obama. The decay of an imperial culture, including its lifelong infections of slavery and its legacy of racism, native genocide, and the moral damage inflicted by imperial wars, has been devastating to our karma. Even in the Left, the damage leaves its imprint in the form of endless anarchisms (under many names) and factional labors. Trump is teaching us that is a luxury with which we will have to part. If not, we may, like German social democrats and communists, have to wait for an alliance of foreign armies to save us.
Lipstick on a pig
jcase
There will be no stimulus bill until the first quarter of 2021. And even that depends on Biden being elected. Trump decided yesterday to abandon the stimulus talks between Mnuchin and Pelosi. But he was really putting "lipstick on a pig", as a Bloomberg commentator termed it. The neo-fascist Republican block in the House and Senate were always opposed to any "stimulus" other than a tax cut for themselves. For the public, these turds advocate the the old Jesse Helms contempt for the working class -- "the hungry dog hunts harder." The most you will get out of Trump may be an extension of unemployment if he wins -- but who knows what that level of derangement will really produce!
And Trump's actions prove he agrees with "the people are dogs", despite his daily gaslighting ("a specific type of manipulation where the manipulator is trying to get someone else (or a group of people) to question their own reality, memory or perceptions"), and catfishing ( "a deceptive activity where a person creates a sockpuppet presence or fake identity on a social networking service, usually targeting a specific victim for abuse or fraud").
Democrats, especially progressives, want in the order of 6 Trillion: frontloaded to fight the virus and extend UI and PPP benefits, and rescue state and local governments; backloaded to focus on infrastructure of the kind outlined in the Thrive agenda, a revised green new deal enhanced with addressing inequality, racism and reformed labor relations It has been endorsed by a rising number of unions. It will take winning the House, Senate and the presidency. Biden will have to go bold and big. I am sure he knows this since literally EVERYONE in the advising business is telling him their version of "go big". But doing it will require both skill and hardball tactics against the ultra right, neo-fascist menace.
It helps to have an outline of the actual future, instead of lots of posturing. But between now and the hoped-for first quarter of 2021 Bob Dylan's Desolation Row, and its tragedies, will rule. Communities will have little protection other than themselves. The dangers are high. Outcomes are being driven by both lunacy in high places, AND, grave externalities from climate change, grave social contradictions and conflicts in the US, and many Western nations, and rising global instability as many states fail in the face of the combined pandemic/depression. It could take 10 years, and world wars, to get to the hoped-for 2021, if externalities deepen the crisis, and its associated horrors.
Last week, the Bureau of Labor Statistics (BLS) reported that, as of the middle of September, the economy was still 10.7 million jobs below where it was in February. Job growth slowed considerably over the last few months and the jobs deficit in September was easily over 12 millionfrom where we would have been if the economy had continued adding jobs at the pre-pandemic pace. Today's BLS Job Openings and Labor Turnover Survey (JOLTS) reports job openings softened from 6.7 million in July to 6.5 million in August while layoffs and quits both dropped. While the slowdown in layoffs is promising, the drop in quits is a concern. Hiring in August was on par with what we experienced in July. The U.S. economy is seeing a significantly slower pace of hiring than we experienced in May or June—hiring is roughly where it was before the recession, which is a big problem given that we have more than 12 million jobs to make up. No matter how it is measured, the U.S. economy is facing a huge job shortfall.
One of the most striking indicators from today's report is the job seekers ratio, that is, the ratio of unemployed workers (averaged for mid-August and mid-September) to job openings (at the end of August). On average, there were 13.1 million unemployed workers while there were only 6.5 million job openings. This translates into a job seeker ratio of two unemployed workers to every job opening. Another way to think about this: for every 20 workers who were officially counted as unemployed, there were only available jobs for 10 of them. That means, no matter what they did, there were no jobs for 6.6 million unemployed workers. And this misses the fact that many more weren't counted among the unemployed. Without congressional action to stimulate the economy, we are facing a slow, painful recovery.
As winter approaches and many families face eviction and hunger, it is essential that Congress provide relief to all of those unemployed workers who have no hope for employment and are desperately trying to make ends meet. The first dose of austerity exhibited by the loss to the vital enhanced unemployment insurance benefit in August is already taking a toll on job creation. At this slowing pace of job growth, it will take years to return to the pre-pandemic labor market.
It didn't have to be this way. With additional aid to state and local governments as well as reinstituting the $600 weekly boost to unemployment insurance (UI), it is likely that job growth could be over 10 million jobs higher through the next year (5.3 million for state and local aid plus 5.1 million for UI extensions). Unfortunately, continued federal inaction will make it far harder in coming months to claw back the jobs lost during the pandemic.
