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Biden’s Vaccine Challenge

In confronting the COVID-19 crisis, US President Joe Biden will avoid many of his predecessor’s mistakes, not least by heeding the advice of scientific experts. But, unless Biden also enlists adequate management, operations, and logistics expertise, even his best-laid plans may go awry.

US President Joe Biden’s plan for ending the COVID-19 pandemic and hastening the economic recovery is well designed and comprehensive, with clear objectives and priorities. But implementing it will not be easy, not least because it depends on rapid vaccine deployment.

The damage the pandemic has wrought has been far-reaching. In October, Lawrence H. Summers and David M. Cutler estimated that its cumulative financial costs (including lost output and health reduction) in the United States exceed $16 trillion – about 90% of annual GDP. For a family of four, the estimated loss – including income and the costs of a shorter and less healthy life – amounts to nearly $200,000.
But these costs are not being borne equally. Those in the bottom 50% of the income and wealth distribution have suffered the most, exacerbating already-high economic inequality.

Moreover, the pandemic has produced a major shock to education, especially for the very young. It is not yet possible to know the long-term consequences of school closures and remote learning for young people’s cognitive and social development. But it is safe to assume that the longer the disruption continues, the more serious they are likely to be.

Fortunately, Biden’s plan recognizes all of this. It also recognizes that the only way to achieve a full economic recovery (and get students back in school) is to get COVID-19 under control – and fast.
Many of the sectors most vulnerable to plummeting demand during the COVID-19 crisis – including travel, tourism, hospitality, sports, museums, and live entertainment – are labor-intensive. As long as they are struggling, employment cannot recover. And they will stop struggling only when public-health measures can be safely rolled back.

The good news is that, judging by the experience of the Asian economies that have managed to contain the virus, once economic activity can resume fully, the rebound will be sharp. As Biden’s plan also recognizes, well-targeted fiscal programs that limit additional damage to household and business finances will reinforce this outcome.
If one views containing and eliminating COVID-19 as an investment in economic recovery, the rate of return is huge. The OECD’s high-frequency data tracking suggests that, in the US, the recovery has stalled at a contracted level of close to 8-10% of GDP, or $1.9 trillion per year. But rapid vaccine deployment (within 6-9 months) would bring economic benefits worth at least $1 trillion. In other words, an effective vaccination program that costs the federal government $500 billion would have an annual rate of return of 100% (not counting the lives saved and other benefits).
And make no mistake: large-scale vaccine deployment is the only way the US can credibly hope to contain the COVID-19 outbreak. That much has become clear over the past year, as the vast majority of countries (with a few exceptions in Asia) have failed to bring the coronavirus under control by other means.
Will Biden’s vaccination plan work? Although the plan has been shaped by scientific experts, rapid vaccine deployment poses massive implementation challenges. Meeting them will require Biden to approach the COVID-19 pandemic much as he would a war.

In wartime, civilian leaders set military objectives, and identify what is needed – in terms of materiel, manufacturing, and logistics – to meet them. Then the economy’s resources are redeployed accordingly, even if it causes disruptions and shortages in affected sectors. Rationing is instituted, with price controls ensuring that supply constraints don’t fuel inflation.

In many ways, the US is at war against COVID-19. But the existing systems – both public and private – for delivering what is needed to win are weak, fragmented, and, especially, uncoordinated. The Biden administration has inherited a chaotic, disorganized, and decentralized mess. They will rely on expansive and authoritative federal leadership, backed by public funding, to overcome these shortcomings. That is a good start. But the outcome will depend on how federal leadership is exercised.

For starters, Biden must enlist the help of managers with experience in operations, logistics, and service delivery, and who can work with private-sector partners to create the right incentives. This is not typically government’s strong suit. The military, however, is adept in this area; its expertise should be tapped.

With the help of such experts, the federal government must secure adequate supply to meet ambitious vaccination targets. It may also need to establish new distribution channels to supplement existing ones.
At the same time, the federal government must decide how to prioritize access to the vaccine, and ensure that the system is consistent at all levels. Otherwise, states, municipalities, and health-care providers will continue to act independently – with economically (and morally) perverse consequences. For example, conflicting policies among various levels of government and other participants have already led to unused doses being thrown away, while others struggle to meet the demand.

Moreover, different prioritization schemes undermine perceptions of fairness and lead to a disorderly scramble to get vaccinated sooner. Vaccine tourism is already reported to be in full swing. The last thing a deeply divided and unequal US needs is for secondary markets to emerge, enabling people to buy their way to the front of the line.

In fact, the Biden administration should ensure that all vaccine doses are provided free of charge. And its strategy must address the impact of lack of universal health insurance, as well as local residency requirements, on people’s ability to get vaccinated.

Finally, the government must ensure that vaccine-administration systems are reliable, regardless of how many users flock to them. We cannot continue to repeat the experience of last spring, when many state unemployment systems proved unable to handle the sudden surge in applications.

The crises that Biden confronts as he begins his presidency are not of his making. And he has already promised to avoid many of his predecessor’s mistakes – beginning by building his pandemic strategy on scientific expertise, and restoring the federal government’s central role. But now the government needs to mount a massive delivery program, enlisting adequate management and operations expertise. Without that, even Biden’s best-laid plans may go awry.

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