Medical Supplies Are Too Important to Leave to a National Supply Commander

By Art Carden.

"I did a double-take when I saw the Reason.com headline “Biden Has a Plan for a New National ‘Supply Commander.'” Biden’s plan advises President Trump to appoint a National “Supply Commander” to control medical supplies’ production and distribution. I can only assume he would give the same advice to himself once he takes office. On the surface, the call for a National Supply Commander seems bold and maybe even inspiring. We’re in the middle of a global pandemic. It’s not the time to screw around. Someone needs to step in, take charge, and “coordinate production and delivery…in a timely and efficient manner.” I’m a big fan of timely, efficient, well-coordinated production and delivery of vital goods and services. Markets already do a pretty good job with that, and Biden’s bold and beautiful plan would not work as well as he thinks.

When Joe Biden thinks one man can run an entire system, it should remind you of a passage in Adam Smith’s The Theory of Moral Sentiments. Here is Smith:

“The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.” (Adam Smith, The Theory of Moral Sentiments VI.II.41)

The idea of a National Supply Commander suggests Biden thinks managing the medical supply chain is not that different from arranging chess pieces or Lego bricks. It might involve a lot of math, but someone has to be up to the task. As Smith points out–and as James Otteson explains in his discussion of “Adam Smith and the Great Mind Fallacy“–the Great Mind that would solve these problems isn’t out there. It’s especially important to remember this during a pandemic. Chess has simple rules but practically infinite possibilities. Lego sets come with remarkably easy-to-follow picture-based instructions. People, on the other hand, have laws of motion all of their own. Unlike chess pieces and Lego bricks, they are renegotiating them all the time as part of a great social and commercial conversation.

Biden says we are in trouble because we have relied too heavily on the private sector. However, the problems he wants a National Supply Commander to solve are there because the government wouldn’t leave the private sector alone. As many economists have written, prices are like signal flares. They tell people who want resources most urgently, and they do it with a specificity that goes beyond vague generalizations like “Hospitals need more masks.”

Consider the fabric market. A significant increase in mask prices would pull fabric into mask production and out of other uses. Supply disruptions would not have been nearly as severe if governments had left prices alone. “Capitalism” didn’t empty store shelves in the early weeks of the pandemic. Price controls did. The President saying “We hit 3M hard” in response to the company’s mask exports and other government bullying certainly didn’t help.

If the private sector isn’t getting the job done, what is stopping them? Does Biden think they’re leaving money on the table by not doing their jobs? Amazon, for example, has to be very diligent about its shipping because it’s pretty easy to switch to Target or Walmart. I doubt that a Supply Commander and a group of state-level Supply Leads will succeed where the market “failed.”

Except the market didn’t fail. Regulators did. Tyler Cowen points out that “The FDA’s vaccine advisory committee will meet Dec 8-10.” The comments say they’re just following the rules, but it seems like they should have a greater sense of urgency about this. We still don’t have the regulatory infrastructure that would allow Amazon and others to operate the drone delivery fleets that the FAA finally approved in late September. If Amazon, UPS, Wing, and other firms didn’t have to jump through hoops, real contactless delivery might be here already.

Most people will ask, “What about the poor?” It’s a good question, but if there is a right government response to poverty, it is income redistribution rather than price controls and central planning. Many regulations keep people from living and working where their labor is most valuable. They need to go.

Real-world medical supply lines overseen by a National Supply Commander will differ from those in Biden’s dreams. It is no secret that the politically powerful use that political power to punish their enemies, reward their friends, and otherwise make people get with the program. The chance to use the National Supply Commander’s office for political purposes will be too tempting to pass up.

The man of system reappears in The Wealth of Nations, this time as a statesman. This passage, I think, indicates what Adam Smith might say were he asked to testify in Congress about a National Supply Commander: 

“The statesman who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.” (An Inquiry into the Nature and Causes of the Wealth of Nations, IV.2.10)

We might make it the responsibility of someone we call a commander, a president, a king, or a dictator. Regardless, managing medical supply production and distribution is a most unnecessary attention for a central planner. As Smith points out, it is nowhere so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it."