Here’s Alex Tabarrok, reacting to news that Operation Warp Speed was more like Operation Warped Values:
In our discussions, we were talking about at least a $70 billion dollar program and optimally double that and we continually faced the sticker shock problem. Investing in unapproved vaccines seemed risky to many people despite the fact that the government was spending trillions on relief and our model showed that spending on vaccines easily paid for itself (the mother of multipliers!). I argued that this was the world’s easiest cost benefit calculation since Trillions>>Billions. But it was hard to motivate more spending—not just in the United States but anywhere in the world. For reasons I still don’t understand anything out of the ordinary–big spending on at-risk vaccines, spending on testing and tracing, challenge trials–was met with a kind of apathy and defeatism. As I said in July:
“Multiple people [in Congress] have told me that things move slowly, no one is stepping up to the plate, leadership is absent. “Who is John Galt?,” they sigh. Ok, they don’t literally say that, but that sigh of resignation is what it feels like in the United States today at the highest levels of government.”
(The entire post is excellent. Tyler’s post is also highly recommend.)
This all seems so familiar. During late 2008, I kept thinking that for reasons I still don’t understand, the Fed remains strangely passive in response to the Great Recession. Why haven’t rates been cut to zero? Why don’t they adopt level targeting, an idea that Bernanke had previously recommended for the Japanese? Why not a “whatever it takes” approach to QE? How about negative interest on reserves? There was this strange passivity that was completely incommensurate with the scale of the disaster.
In retrospect, I suspect the problem is that big bureaucracies cannot turn on a dime. The only way to make this work is to have the system in place before the disaster strikes. Average inflation targeting is a small but important step toward being more proactive. I hope the Fed doesn’t stop there; we’ll know much more 12 months from now. Indeed I suspect the next 12 months will determine whether Powell’s tenure will be a success or a failure.
PS. Should the Pfizer vaccine be given in one dose or two? Please answer the question from a utilitarian perspective.