by Richard A. Easterlin (University of Southern California)
This blog is part G of the Economic History Society’s blog series: ‘The Long View on Epidemics, Disease and Public Health: Research from Economic History’. The full article from this blog is “How Beneficent Is the Market? A Look at the Modern History of Mortality.” European Review of Economic History 3, no. 3 (1999): 257-94. https://doi.org/10.1017/S1361491699000131.
Patrick Henry’s memorable plea for independence unintentionally also captured the long history of conflict between the free market and public health, evidenced in the current struggle of the United States with the coronavirus. Efforts to contain the virus have centered on measures to forestall transmission of the disease such as stay-at-home orders, social distancing, and avoiding large gatherings, each of which infringes on individual liberty. These measures have given birth to a resistance movement objecting to violations of one’s freedom.
My 1999 article posed the question “How Beneficent is the Market?” The answer, based on “A Look at the Modern History of Mortality” was straightforward: because of the ubiquity of market failure, public intervention was essential to achieve control of major infectious disease. This intervention centered on the creation of a public health system. “The functions of this system have included, in varying degrees, health education, regulation, compulsion, and the financing or direct provision of services.”
Regulation and compulsion, and the consequent infringement of individual liberties, have always been critical building blocks of the public health system. Even before formal establishment of public health agencies, regulation and compulsion were features of measures aimed at controlling the spread of infectious disease in mid-19th century Britain. The “sanitation revolution” led to the regulation of water supply and sewage disposal, and, in time to regulation of slum- building conditions. As my article notes, there was fierce opposition to these measures:
“The backbone of the opposition was made up of those whose vested interests were threatened: landlords, builders, water companies, proprietors of refuse heaps and dung hills, burial concerns, slaughterhouses, and the like … The opposition appealed to the preservation of civil liberties and sought to debunk the new knowledge cited by the public health advocates …”
The greatest achievement of public health was the eradication of smallpox, the one disease in the world that has been eliminated from the face of the earth. Smallpox was the scourge of humankind until William Jenner’s discovery of a vaccine in 1798. Throughout the 19th and 20th centuries, requirements for smallpox vaccination were fiercely opposed by anti-vaccinationists. In 1959 the World Health Organization embarked on a program to eradicate the disease. Over the ensuing two decades its efforts to persuade governments worldwide to require vaccination of infants were eventually successful, and in 1980 WHO officially declared the disease eradicated. Eventually public health triumphed over liberty. But It took almost two centuries to realize Jenner’s hope that vaccination would annihilate smallpox.
In the face of the coronavirus pandemic the U. S. market-based health care system has demonstrated once again the inability of the market to deal with infectious disease, and the need for forceful public intervention. The current health care system requires that:
“every player, from insurers to hospitals to the pharmaceutical industry to doctors, be financially self-sustaining, to have a profitable business model. It excels in expensive specialty care. But there’s no return on investment in being positioned for the possibility of a pandemic” (Rosenthal 2020).
Commercial and hospital labs have been slow to respond to the need for developing a test for the virus. Once tests became available, conducting them was handicapped by insufficient supplies of testing capacity — kits, chemical reagents, swabs, masks and other personal protective equipment. In hospitals, ventilators were also in short supply. These deficiencies reflected the lack of profitability in responding to these needs, and of a government reluctant to compensate for market failure.
At the current time, the halting efforts of federal public health authorities and state and local public officials to impose quarantine and “shelter at home” measures have been seriously handicapped by public protests over infringement of civil liberties, reminiscent of the dissidents of the 19th and 20th centuries and their current day heirs. States are opening for business well in advance of guidelines of the Center for Disease Control. The lesson of history regarding such actions is clear: The cost of liberty is sickness and death. But do we learn from history? Sadly, one is put in mind of Warren Buffet’s aphorism: “What we learn from history is that people don’t learn from history.”
Rosenthal, Elizabeth, “A Health System Set up to Fail”, New York Times, May 8, 2020, p.A29.
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