Back in 2008, many pundits claimed that the Great Recession showed the fallacy of a deregulated financial system. When all of the dust had settled, however, several points became clear:

1. The US banking system has always been highly regulated.

2. Much of the regulation has the effect of making the banking system more unstable.

3. The actual cause of the Great Recession was not free market ideology; it was a tight money policy that caused NGDP growth to fall 8% below trend during 2008-09.

Back in 2020, many pundits claimed that Covid showed the folly of laissez-faire ideology.  To be sure, the free market doesn’t work perfectly when there are negative externalities, such as during the spread of an infectious disease.  But today, it looks like the net effect of government intervention was to make the problem much worse.

Alex Tabarrok directed me to a study suggesting that various delays in vaccine implementation may have cost hundreds of thousands of lives in the US:

Adherence to tradition, deontological commission bias, and democracy’s exclusive enforcement of Type I error led public health authorities to reject human challenge trials. Any reasonable moral calculus sees this as a tragedy. The stated reason for the rejection of human challenge trials was risk to the participants. It is of course true that volunteering to be deliberately injected with Covid-19 is volunteering for a small risk of death, but this risk is required for both HCTs and traditional trials. Traditional trials rely on hundreds of people to being infected with Covid, volunteers or not. Frontline healthcare workers also volunteer for increased risk of infection and we applaud because their sacrifice saves many more lives than it risks. Given that the public health authorities have already revealed their willingness to make these tradeoffs with human lives, the human challenge trial tradeoff is attractive. Say we run a human challenge trial with a thousand participants. Even if 10% of the thousand volunteers who receive a placebo die from their deliberate infection, a massive overestimate given Covid’s fatality rate of less than one percent, we would still save thousands of lives on net. In the weeks leading up to the FDA’s approval of the vaccines in December, more than two thousand people were dying from Covid every single day. Our estimates in section I and II predict that tens of thousands of lives could be saved if vaccine approval were accelerated by a few weeks. The four months of acceleration that human challenge trials offered would have saved hundreds of thousands of lives.

Readers of this blog know that I am a frequent critic of deontological moral reasoning.

I see three interrelated problems with government regulations:

1.  Delays due to regulation by the FDA.

2.  Reduced incentive to create new vaccines due to implicit or explicit price controls.  (By implicit I mean things like political threats to go after “price gougers”.)

3.  Inability to reduce liability risk by having early adopters sign away the right to sue if the vaccine produces negative side effects.

Only a few people were able to evade these regulations—those scientists with enough skill to produce vaccine for themselves.