For the past five years or so, Democrats led by Senator Bernie Sanders and “the Squad” in Congress have made a strong push to eliminate the profit motive from the health-care sector, which constitutes about a sixth of our entire economy. As expressed in bills such as the Medicare for All Act of 2019, which had the support of more than half of Democrats in the House and Senate,
there is a moral imperative to correct the massive deficiencies in our current health system and to eliminate profit from the provision of health care.
Economic historian Deirdre McCloskey disagrees. In her book, Bourgeois Equality, she writes, “The expropriation of profits would kill progress entirely. It has done so . . . historically.” The COVID-19 pandemic has added to that historical record.
Then–President Trump warned the public of the threat that the Medicare for All agenda posed to the private sector. I was part of the president’s economic team, documenting how the profit motive in health care saves lives, in large part by stimulating medical innovation and a timely delivery of health care to the population.
Indeed, we noted that when profit has been prohibited in agriculture, as it was historically in socialist countries, people were malnourished and starved. Prohibiting profit in health care would leave people suffering and dying from conditions that would have been alleviated or cured by private-sector innovation.
These are not matters to be mentioned in polite company, we quickly learned. CNN’s chief domestic correspondent falsely denied that progressives on Capitol Hill were attacking private enterprise in health care. Paul Krugman called us “amazingly dishonest” for looking back to the socialist past to learn about the consequences of prohibiting profit in an entire essential industry. Obama’s economist Austan Goolsbee mocked us for “contemplating Karl Marx.” Journalists covering the White House piled on to boot.
Yet the COVID pandemic has confirmed that “innovation” is not just a fancy bourgeois-apology word. President Trump’s economic team was the first to highlight the role of medical innovation in alleviating fatal diseases of the past. Although a global pandemic was merely a hypothetical at the time (2018 and 2019), we specifically analyzed vaccine innovation during pandemics and how the private sector would be essential in delivering relief to the public. President Trump issued a 2019 executive order emphasizing the private sector’s role in vaccine innovation, which would prove to be “the most effective defense.”
Now the United States is exiting a historic pandemic by vaccinating its population with products produced by Pfizer, Moderna, and Johnson & Johnson. Each is a for-profit company. Their cumulative profits from the vaccines, while impressive from a company perspective, may never reach the $34 billion value that the U.S. obtains from reaching the end of the pandemic just one day earlier. While the value of ending a pandemic months earlier reaches into the trillions of dollars, throngs of critics of capitalism will complain that companies are getting a dozen or two billion.
The European Union lags six weeks behind the U.S. and even more behind the U.K. and Israel, who also administer vaccines from for-profit companies. The E.U.’s slow pace is due to several factors, one of which was the time they wasted in maneuvers to try to prevent the vaccine companies from earning too much profit.
Although no European country fully eliminates private organizations from health care and health insurance the way Medicare for All would, many have taken steps in that direction and sparked jealousy among those on the left here at home. But Europeans are also taking vaccines from American companies. As Gary Kasparov put it back in 2017, “as long as Europe had America taking risks, investing ambitiously, attracting the world’s dreamers and entrepreneurs, and yes, being unequal, it could benefit from the results without making the same sacrifices.”
Perhaps the eloquent defenses of private enterprise coming from Kasparov and others with firsthand experience of socialism helped us maintain private enterprise in health care long enough to mitigate the great harms of COVID-19.