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Comment by bufferoverflow | Hacker News Reader

I care. Just like about the bailouts. Socializing the funding/losses and privatizing the profits is just pure corruption.

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This is not corrupt. It’s money well spent. The benefits to us all are most likely more valuable than anything we’ve spent on vaccine research. Government balance sheets also probably come out ahead on that investment given that the alternative is an economy with a raging pandemic and resulting lower tax base.

Then there is the logistical effort of manufacturing the vaccine at the scale and speed required. There are huge capital investments and risks associated with doing that. If a company wants to do that and seek the profits from that, great. Literally everyone comes out ahead. You, me, the government, the manufacturer, distributor, and every other business or person in the economy.

What is the alternative? We create a government agency that specializes in manufacturing and distributing pharma products?

Not when it's a monopoly. That means the company gets to exploit the results of the research for their own profit, without any competition to keep prices reasonable. Non-exclusive deals are fine. Exclusive ones are not.

Look, I understand the frustration but they're not going to set this price. This thing is way bigger than this company and even the entire pharmaceutical industry. This is a global crisis.

Many governments have proven that they will put the public's need over these companies need. They've broken patents and pressured companies before and they will obviously do it again.

There are more governments in the world than the American one.

For now speed is of the essence and this it's wonderful news they've set another step.

I'm not a public policy, legal, or economics expert, but I certainly favor treating this as a one-off. If a legal monopoly is the most expedient way to get us back to normal, so be it, and if fears of price gouging are a concern let congress or the executive or whomever cap the price. Once things get back to normal we can litigate the monopoly issue.

That’s a fair point. I guess my underlying assumption would be the government funding the research would retain rights to the research as well. Thanks for pointing that out.

> What is the alternative? We create a government agency that specializes in manufacturing and distributing pharma products?

Yes. Why don't you think that would work?

It's laughable that you're getting downvoted. Socialist. /S

Because the government hasn't been able to do anything right for 270 years, why do you think they're suddenly gonna wake up a figure out mass manufacturing?

We can't educate our kids at an acceptable level without billions of dollars being donated on top of all the tax collected, we can't figure out how to make medicare work responsibly despite literally being able to control costs, what do you think makes drug manufacturing any different?

In the US, one party has dedicated itself to making sure the government is dysfunctional for a _long_ time so that it can run on the platform that government doesn’t work and we should privatize everything. This is not a fact of nature, it’s a willful decision. For example, the US used to be a leader in education. The thing that changed since then is one party started defunding education and moving that money to private prisons and defense.

If we as a people collectively agreed that we are as smart as other countries, there’s no reason we can’t have a functional government that can handle public education and vaccine efforts and keep us safe and maintain our infrastructure and everything else we expect our government to do for us.

If your statement was true, Chicago and California would be bastions of government efficiency and capability. Instead we see both Republican and Democratic cities do terribly on most measures, and those cities that generally prosper have very little to do with who is in control other than it not being a single party and they have the right conditions for job growth.

School funding happens at the state level too, not just the federal grants.

It's funny you bring that up, because my comment originally even included a bit about how a lot of our current problems can be traced back to Reagan's presidency. He was previously governor of California. Guess when California stopped offering free higher education?

Chicago is in Illinois, which has had a lot of flip-flopping between red and blue governors and has an infamous history of governors going to jail for corruption.

Also I'm not claiming that Democrats haven't done shitty things. Daley bankrupted Chicago and privatized a lot of our public services while running as a Democrat and some of those jailed governors were democrats, but I do think the GOP is more homogeneous in its efforts to break down the government. I mean privatizing everything is a platform they openly campaign on!

If your claim that prosperity has nothing to do with who is in charge were true, we wouldn't see a pattern of blue states outperforming red states economically or a national pattern of economic growth after a democrat president and decline after a republican president.

Coincidentally, I live in Chicago and used to live in California. People love to use both places as punching bags when talking about national problems, despite one being a state and the other a city! It's different types/scales of problems.

> He was previously governor of California. Guess when California stopped offering free higher education?

And why hasn’t California added free public education or expanded housing in the last 20-30 years then?

Many cities have and are. It's worth pointing out that there are literally millions of Trump supporters here, and plenty of Republican politicians to boot. It's not like California is pure blue.

Plus, democrats are conservatives, so, it's not like they're automatically leftists just because they're blue.

> Many cities have and are

No, there is not free public education anymore so in California than Texas.

> It's worth pointing out that there are literally millions of Trump supporters here

Don’t try to blame them. They have no power at the state and even the extremely Trump-devoid Bay Area (iirc <10% support) has failed to offer anything approximating a solution to housing or good education. The answer to shitty schools in the bay was a lottery to make sure everyone got to suffer the shit, rather than you know... fixing the shitty schools.

> Because the government hasn't been able to do anything right for 270 years, why do you think they're suddenly gonna wake up a figure out mass manufacturing?

worked just fine for penicillin during world war 2

The nominal world economy 'GDP' was $90T in 2019 [0]. An economic contraction of 5% because of the pandemic would mean a loss of $4500B. If a vaccine helps to avoid that, even a cost of dozens of billion dollars for it would be peanuts in comparison. This is only the economic cost avoided let alone the human tragedies.

Edit: german Wikipedia suggest that the contraction is only expected to be 3% but because of the numbers involved even that doesn't really matter for the argument.

[0] https://en.wikipedia.org/wiki/World_economy

This is also how criminal mobs operate, in terms of protection money, extortion, ransom, etc. The underlying economic principle is the same ("gee, sure would be a shame if this expensive thing X were to break..."). Beware of relying on this as the only reason to justify the cost.

Hopefully there is some other significant differentiating characteristic or attribute to justify this state of affairs between society and big pharma, that would distinguish it from the same analysis you would use to pay a ransom or protection fee.

This is not a good argument.

We are talking about a company providing a service. They might not have invented the vaccine but they are providing the means to bring it from proof of concept into mass production. The commenter seemed to think that this isn't worth money.

I argue that you get quite a bang for the buck.

It's not an "argument" per se, as in whether we should or shouldn't pay the pharma companies. Of course we should pay pharma for this for COVID, and of course it is "worth it." There is no argument (from me at least) about that tactical decision.

My larger point is that for-profit pharma/healthcare is not a healthy marketplace (... or at best, it's an immature one). In the not-so-distant past (in America, up until the Civil War or thereabouts), firefighting was mostly privatized (meaning not government-run) [0], and brigades would compete (literally sometimes fighting in the streets, covering the hydrant to impede rival brigades, etc.) to claim the prize of the insurance payout for saving a building [1], which doesn't really serve the interests of the victims of fires.

I think the incentives of for-profit firefighters are not all that dissimilar from the incentives of modern pharma companies today (i.e. pay us to save your building from this fire, vs pay us to research this vaccine), and I would hope to evolve this pharma industry and this marketplace (of "demand" for life/health, vs "supply" of pharma research and resources) into something more mature and with fewer perverse incentives in the long-run.

---

[0] https://en.wikipedia.org/wiki/History_of_firefighting#United...

[1] https://en.wikipedia.org/wiki/History_of_firefighting#Modern...

I was not familiar with the history of firefighting until now and this is pretty wild. Thank you for clarifying what you meant with your earlier comment. I agree that for-profit healthcare and pharma is a huge problem, exactly because of the misaligned incentives for companies and patients.

The question is not if it’s valuable, the question is if it’s subsided. Farmers producing corn add some value to the process, but in western countries ~100% of their profits are from government subsidies. This does incentivize them to be more efficient, but it also means their constantly looking for a larger handout.

In the case of farm subsidies it’s grown to the point of being actively unhealthy both in economic terms and the actual root cause of the obesity epidemic. Without sufficient calories you can’t have an obese population due to physics. Medical subsidies have resulted in a host of related problems not just in economic costs, but also in what research gets done and how efficient that is.

The cost of Medical studies in the US has grown wildly out of proportion because their a profit center. This perversely slows down the rate of medical research, even in the case of emergencies like covid 19.

> Without sufficient calories you can’t have an obese population due to physics.

Sure you can, you just have starving poor people too.

You don’t get a significant percentage of the population to obese in a famine. Simply maintaining obesity across over 40% of the population takes a lot of energy, let alone morbid obesity numbers.

Yes you certainly can. Famines are not spread equally. The people that can afford to have food shipped in (i.e. anyone who can afford to order things on Amazon) could comfortably remain fat while the entire lower class in their local area suffered from a famine.

Having food shipped in still requires it to be created somewhere to be shipped out.

It’s very possible for some percentage of the population to starve even during a food surplus, but starving people will bid up the cost of food to the point where you can’t get a 40% of the population to have a surplus in a famine in any society that we know about.

Here is the official definition for the minimum to qualify as a famine:

“At least 20% of households in an area face extreme food shortages with a limited ability to cope The prevalence of acute malnutrition in children exceeds 30% The death rate exceeds two people per 10,000 people per day“

That’s killing off over 7% of the population per year.

https://en.wikipedia.org/wiki/2017_South_Sudan_famine

56% overweight or obese: https://www.sciencedirect.com/science/article/abs/pii/S18714...

citation? That seems very unlikely. US farmers constantly look for greater efficiencies. They are also among the most conservative about land policy i.e. erosion, chemical application etc because it costs them money.

Citation for what?

On average your looking at ~90B in net profits from farming, the subsidies however are much harder to track down. Ethanol subsides for example are often excluded as are insurance, tariffs etc.

So, just talking thru the hat were we? As you say, you can't point to support for that statement about '100% of profits'.

Ahh, no it simply wasn’t clear what you where asking about.

There are a lot of ways to slice this up. “Overall agricultural subsidies in 2010 were estimated at $172 billion by a European agricultural industry association; however, the majority of this estimate consists of food stamps and other consumer subsidies, so it is not comparable to the 2005 estimate.” https://en.wikipedia.org/wiki/Agricultural_subsidy#United_St...

One example of this is Americans for example pay 3 billion dollars more for sugar than international market rates. But, only a fraction of that directly ends up in farmers pockets. You can either take the full 3 billion as a government subsidy or exclude most of it. Similarly, propaganda and what’s allowed in food lunch programs gets tricky.

So, I am not endorsing any specific estimate, just saying the total industry profits are approximately the same as the total subsidy. Add up just direct federal subsidies gets you lower numbers especially if you try an exclude state, ethanol, R&D, loans, Education, tax breaks, and other less obvious handouts.

PS: Silly me, I forgot about all the little exceptions in environmental, immigration, labor laws, use of federal lands, etc.

You missed the point that we already paid for the development of this vaccine by paying taxes. We should now only pay for the production, not for the intellectual property rights.

OR we could look at it as if the pandemic has already cost us 4.5T based on your figures, and that's enough. We come together and defeat the virus without anyone profiting - we all lose, we've all lost already, ffs, let's let people profit off of the death, because why not?

If "we" gave you $20B to move a vaccine from proof-of-concept to production, could you do it? I know I couldn't... That's a service, it's worth money, it's worth paying for.

Edit: people don't seem to understand that there are several stages in pharma development... (1) research, (2) trials, (3) scaling production. It sounds to me that even if (1) and (2) are "paid for" (with public money), (3) is still non-trivial and therefore expensive.

You’re being overly reductionist and dismissive.

No one is claiming otherwise. And back to normal is still a long ways off.

If you’re admitting we’re giving them money for a thing, it’s paid for. I don’t know why you quote it like that, transfer payments of public money to private institutions is a thing, is it up for debate it happens?

Also cost is emotional. Does it have to be 20 billion or is the government handing out cheddar for consulting jobs later?

There’s more too it than high school capitalist theory. Just because you can’t for $20 billion doesn’t mean someone else couldn’t for $5.

But we hide the work in private accounts. Humanities work, built towards by countless hands and minds.

Yeah ok we get it, Murray Rothbard; You’re only 1 in 7 billion. Why does your theory matter? Roll up them sleeves. What? He’s dead? In the bin with it, no need to carry water for a dead man.

> it's worth paying for

And "we" are already paying for it. Let's not let them double-dip.

No, we're only paying for part of 'it'. The cure isn't just research, it's also logistics and there does not exist a capable non-profit to do the logistics part of it in such a short time. Also you underestimate how much it costs to build such a supply chain capable of producing and shipping that many vaccines around the world. Hint: the research costs are just a fraction of the logistics cost, you just don't see that up front because it's also used to ship other stuff besides vaccines.

These things cost money, and you assume your taxes are covering them in full. They don't.

I think the key desire is that the intellectual property, built from publicly funded research, should not be owned by a single corporation. Production and distribution are of tremendous value and these companies should be rewarded for providing that value. But the vaccine itself? Why not let others invest capital and try to produce & distribute the vaccine?

especially to the shareholders ... holding shares and getting dividends (and no, for a 100 year old company these people didn't invest at all in the business case. They invested in a financial product.)

You don't get it. Developing vaccines is nothing like making cars. Our understanding of how the human body works is comical compared to our understanding of materials science and engineering, design and other aspects of making cars.

Developing vaccines is a long, treacherous journey on a narrow ledge with cliffs on either side from start to finish. Infectious diseases research has seen a sharp decline in funding and commercial interest in general. Because of how little we know about the body, most research doesn't generate results that can be turned into money. The only way to continue to support research is via public funds and grants. The public funding of science has been a major contributing factor for our advancements in this kind of research.

How is this any different than a government bond program meant to finance the projects? Whether the profit is derived via increased stock price, or derived from interest paid by the government directly through taxes, how is it fundamentally different? The government can't typically just print money (to keep the economy okay). It has to either derive tax to get the funds, or borrow, which again privatizes the profit (in the form of interest).

Would you rather hold on to your anti-corporate principles or have a safe and effective vaccine to protect the most vulnerable in the world? These public-private partnerships aren't ideal, but there hasn't been any other way in history to develop safe vaccines on such short timeline.

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