Vaccines: Billions in Costs, Trillions in Benefits

Bloomberg: As sections of the global economy tip-toe toward reopening, it’s becoming clearer that a full recovery from the worst slump since the 1930s will be impossible until a vaccine or treatment is found for the deadly coronavirus.

Consumers will stay on edge and companies will be held back as temperature checks and distancing rules are set to remain in workplaces, restaurants, schools, airports, sports stadiums and more.

China — the first major economy consumed by the virus and the first to emerge on the other side — has been able to revive production but not demand. The lesson for other economies: it’ll be a stop-start path back toward normal.

There’s also the risk of new flare-ups. Some 108 million people in China’s northeast region have been put back under varying degrees of lockdown amid a new cluster of infections. Doctors there are also seeing the coronavirus manifest differently, suggesting that it may be changing in unknown ways.
In South Korea – where the virus was controlled without a hard lockdown – consumer spending remains weak as infections continue to pop up.

…Harvard University professor Carmen Reinhart, who is the incoming chief economist of the World Bank, had a similar message. “We’re not going to have something akin to full normalization unless we (a) have a vaccine and (b) — and this is a big if — that vaccine is accessible to the global population at large,” she told the Harvard Gazette.

The virus is being beaten back and there are reasons for optimism but I agree with Reinhart that we won’t get full normalization without a vaccine. The world economy is on the order of $90 trillion and the IMF is projecting a 3% decline instead of an expected 3.3% increase so a loss to the world economy of around $6 trillion in 2020. Growth will probably return in 2021 and there will be some catchup but the IMF projects a cumulative loss of 9 trillion. Ending the pandemic early could generate hundreds of billions, even trillions, in output–that’s why Susan Athey, Nobel laureate Michael Kremer, Chris Snyder and myself advocate for going big on vaccines. It’s billions in costs and trillions in benefits. Warp speed ahead!


Clear-eyed view, and clear course of action. Bravo!

Not one word about taxes.

Classic free lunch economics.

Talk of benefits without any costs.

I grew up when Keynes ruled and economies were understood as zero sum. Costs must equal benefits.

We now live in free lunch, non-zero sum economic times.

Get rid of all the burdens of government, especially the requirement workers be paid, but then the demand deliver benefits which can only be provided by paying workers.

December 2, 2014, Obama called for the Congress to fund vaccine research and production to be prepared for a deadly airborne disease in December 2019, but the GOP, McConnell, refused.

The GOP hates paying workers. Paying workers costs too much, according to the GOP, and the high costs of paying workers kills jobs.

Instead, the GOP and their free lunch economists argue only profits, the money not paid to workers, can create jobs.

Ironically, the GOP wrote the regulation that prohibits profits creating jobs: the 13th amendment.

> but then the demand deliver benefits which can only be provided by paying workers.

The working poor in Europe paying crushing taxes all considered. Something approaching 33% of their income. In the US, the working poor EARN money from the tax code. If you want benefits like the EU, then you need to charge taxes like the EU. The US working poor have far more disposable income than their EU counterparts, even when health care is considered.

> The GOP hates paying workers.

No, the GOP hates paying workers in excess of their value because it causes the economy to slow which eventually results in those very workers being laid off. But still, both the working poor and middle class in the US have far more disposable income--even after health care--than their EU counterparts.

> December 2, 2014, Obama called for the Congress to fund vaccine research and production to be prepared for a deadly airborne disease in December 2019, but the GOP, McConnell, refused.

Not true. Obama asked for hundreds of millions IN ADDITION to the $6.2B secured for Ebola. Adn the money went strait to the CDC. In other words, they got 96% of what they asked for.

Now, if you think the CDC having a few hundred million on top of their $150B in funding over the last decade would have made a difference, you are wrong. In that same time, they've spent 250,000 staff years. And the CDC, with massive buckets of money and manpower opted to study things like misgendering, bullying and vaping. Just admit it: The CDC prioritized wrong. They really have just a few jobs, and they skipped the hard stuff and focused instead on the easy stuff.

PS. In 2005, House Democrats whacked Bush's request for $7B in pandemic research in half. So, a pessimist might argue that 50% whack in 2005 hurt our footing today far more than the Obama effort.

Alex, Reinhart's speculations are contradicted by your next post

It's time to think about the possibility that the COVID-19 pandemic has been a fraud much greater than Madoff's.

Ya those 100K dead are faking it

The underlying assumption to justify lockdowns was the prospect that otherwise millions of people would die. Read

Indeed, I don't blame the virus. Governments are responsible --and in the U.S. state governors and mayors are responsible for lockdowns (in Chile, where I live, the President, a Harvard Ph.D. in Economics, is responsible).

It must tear your guts up every flu season learning that the Influenza A vaccine is no more than 40 - 60% effective, with up to 80,000 deaths per year.

Fraud or people doing their best in an uncertain cituation and erring on the side of cation?
And an IFR 3x the flu but able to spread wider fast due no immunity is still very bad.

Cuomo now says "we all failed". No. Cuomo didn't fail. Reading this column

I wonder if Cuomo's response to the pandemic (the one endorsed by many Dems) should be regarded as an act of malicious opportunism a la Olivier Williamson or as a crime of passion a la Joshua Dressler.

Private industry is not interested - "The world’s largest pharmaceutical companies rejected an EU proposal three years ago to work on fast-tracking vaccines for pathogens like coronavirus to allow them to be developed before an outbreak, the Guardian can reveal.

The plan to speed up the development and approval of vaccines was put forward by European commission representatives sitting on the Innovative Medicines Initiative (IMI) – a public-private partnership whose function is to back cutting-edge research in Europe – but it was rejected by industry partners on the body.

The commission’s argument had been that the research could “facilitate the development and regulatory approval of vaccines against priority pathogens, to the extent possible before an actual outbreak occurs”. The pharmaceutical companies on the IMI, however, did not take up the idea.

The revelation is contained in a report published by the Corporate Observatory Europe (COE), a Brussels-based research centre, examining decisions made by the IMI, which has a budget of €5bn (£4.5bn), made up of EU funding and in-kind contributions from private and other bodies.

The IMI’s governing board is made up of commission officials and representatives of the European Federation of Pharmaceutical Industries (EFPIA), whose members include some of the biggest names in the sector, among them GlaxoSmithKline, Novartis, Pfizer, Lilly and Johnson & Johnson.

A global lack of preparedness for the coronavirus pandemic has already led to accusations in recent weeks that the pharmaceutical industry has failed to prioritise treatments for infectious diseases because they are less profitable than chronic medical conditions."

Surely prior thinks there’s a point to this copy and paste, since he’s spamming threads with it

Prior likes to write hate letters to Big Business and especially to the proprietors of this blog.

One would expect vaccines for possible outbreaks to have lower expected returns, but now that the Coronavirus exists, the calculation has surely changed.

Warp speed ahead!
Yes, Alex, go ahead you are still young. Pick up the $6T bill. Ignore the idiots that refuse to do it. It's all yours, or not?

"The virus is being beaten back and .."

Not everywhere, and the bad SciCom on this will lead to even worse outcomes.

If there is one thing I could wish for right now it would be that people understand and tie their behavior to *local* COVID growth rates.

Check your state here:

My state, very sadly, has a hospitalization plateau, rather than a decline. This even as the man on the street loosens up his behavior because "it's over."

A random pessimist predicted hospitals full in July. I hope not, but if it's possible, it should be prevented.

It's not like the virus has suddenly changed it's ways. Give it a church service, and it will jump.

“Some people are saying”

Based on the data provided, it's not out of the question, you idiot.

While we're at it:

"More coronavirus infections have been tied to two Mother’s Day church services in Mendocino and Butte counties, officials announced this week.

That disclosure comes as Gov. Gavin Newsom is poised to provide plans for reopening California churches amid mounting pressure to allow in-person religious services both from protesters and President Trump, who is demanding that governors take action immediately."

That is the problem in a nutshell. We should know it's bad, but people want to open anyway.

Meanwhile Skeptical thinks his great contribution to humankind is to say "some people say."

If there is one thing I could wish for right now it would be that people understand and tie their behavior to *local* COVID growth rates.

It would perhaps be easier if people in some areas hadn't been exposed to relatively shotgun broad-scale lockdowns too early (if any form of lockdowns were even needed, compared to advice, at all).

Whether those were really good or bad might also shape current growth rates.

As I've mentioned I divide my time between Los Angeles and Orange Counties. I would say both those areas actually benefited from a statewide lockdown which in turn was driven by Bay Area caseload.

Possibly that lockdown was a shade too late for Los Angeles, and a shade too early for Orange County.

Even so Orange County cases are not wonderful:

States like California would do much more to prevent deaths if they focused their feeble efforts on minimizing outbreaks in nursing homes:

"But as of Monday, county officials had managed to test everyone at only 141 skilled nursing facilities, health officials acknowledged. That’s about a third of the nearly 400 facilities in the county. All of the facilities where everyone has been tested have had outbreaks, according to county officials."

Some people say being skeptical is a fate worse than death.

It's starting to look like there will not be a need for a vaccine, it's just a nice to have. Japan just ended it's state of emergency, the CDC's reported CFR mean is 0.4 with 35% asymptomatic rate which means what everyone has suspected is now official: see to your duties and get back to work and school.

What everyone has suspected is now official - 1000 Americans a day dying from covid is no reason not to get back to work and school.

If schools can be reopened without endangering staff, it seems like a good idea, as the harms to the kids from being out of school outweigh whatever (minimal) risk the kids face being at school. The real risk would be something like a measles or mumps or something like that outbreak from kids behind on their vaccines.

>we won’t get full normalization without a vaccine.

Utter bullshit.

The Election Year Virus is about as lethal as the flu... for which there ALREADY IS A VACCINE.

I didn't hear you screaming to throw 30 million out of work in November 2019.

What could possibly be different about November 2020?

This is the thing that has not dawned on Trump and fans. The death rate is what it is, with extreme measures.

What happens when you lift those extreme measures?

Do you think the nature of the virus magically changes too?

> What happens when you lift those extreme measures?

But extreme measures have been lifted in some places, and what the experts said would happen did not. Florida has relaxed things over the last few weeks, their trend is declining. CA has continued tightening and their numbers are rising.

Everyone will listen to experts as long as the experts predictions are coming true. For those setting public policy, you have 2-3 weeks during which people will follow your orders absent a track record. After that, good luck. If you want them to keep listening, your prognostications better be 90% accurate.

The states that are continuing with draconian policies overwhelmingly have horrid financials that have been decades in the making. They are hoping to completely screw their economy and force the federal gov to bail them out. You can already see this in Newsom's words.

"we won’t get full normalization without a vaccine"

I hope you're wrong on this one - there's no guarantee there will ever be a vaccine. We should work on protecting high-risk groups instead of waiting for something that may never happen. Also, our focus should be on preventing as many premature deaths as possible, not as many coronavirus deaths as possible. Between the spike in suicides, the explosive increase in alcohol (and most likely drug) use, and other factors like the shutdown of "non-essential" medical care (most of which is actually essential care that can be scheduled ahead of time), there's a significant likelihood the lockdown is killing more people than the virus is. Human culture isn't set up to operate like this. The lockdown, maybe even including "social distancing", needs to end.

Actually the loss of output is total responsability of the panic reinforced by authorities.
We should create a placebo so people have peace of mind, and there's no output loss. Like a spell, a blessing by the Pope, something that can get the reigns of the paranoia.
0 cost, TRILLIONS of gain.

>so a loss to the world economy of around $6 trillion in 2020

That sounds low... between the PPP and multiple fed bailouts, we've spent $5 trillion in the U.S. alone. On top of a still-unknown decrease in economic activity...

Has everyone given up on anti-virals, improved case management, and infection control? Have the clinical trials for treatment with already existing interferons already concluded that they don’t improve patient outcomes or reduce mortality? The remdesivir trial reduced mortality, but the finding wasn’t statistically significant. But it did shorten hospital stays. What are the odds that if it is a standard part of treatment it won’t reduce mortality? What are the odds that none of the drugs already tested for safety are effective at reducing mortality from the virus?

I guess that I don’t see why everyone is convinced that a vaccine is the only way forward. The IFR is likely around .5%, depending on the underlying health and age structure of the population. So you knock that IFR down a little bit, and it seems like the risks versus rewards of resuming normal activity seem to shift dramatically.

The Bloomberg quote above says that doctors in China are seeing the virus manifest differently and that it could be changing in unknown ways

Does anybody know any further details about this? I'd like to know more.

Yes, the only way back to something approaching normal is with a reasonably effective vaccine. The CoV-SARS-2 virus will soon be endemic, and we'll likely be seeing flare ups regularly and for years to come.

It's not just asymptomatic/presymptomatic humans that are the problem. It's known to also infect cats, ferrets, minks, rabbits, and hamsters. In the Netherlands, human to mink, mink to mink, and mink to human transmission has been documented. I don't know if cat to human transmission has been shown, but it appears that a variety of animals, both wild and domesticated, get the virus, and spread the virus. And they don't just shed live virus in with their breath and secretions, but in their feces (also true of humans, but a less important mechanism of spread than in animals).

We're slowly getting a grip on the fact that for every person who dies from Covid-19, several get extremely ill and often with permanent disabilities. Wearing masks and reasonable social distancing and emphasizing WFH and banning large gathering are useful, and are necessary stop-gap measures, but an effective vaccine is going to be worth almost any cost.

We're in a slight lull right now in most countries. The next wave if forming up off shore. Warp speed ahead, indeed.

Here's a link to the Dutch info on the mink farm infections:

Comments for this post are closed