Recently, a survey came out that consumer confidence was rebounding in the United States, but was very pessimistic in Canada. In short, the difference was caused by Americans being able to obtain a vaccine and Canadians being unable to do so, because our nation is supply constrained. Naturally, this would impact consumer confidence, and general optimism among the public. Canada is currently suffering from a “third wave” of coronavirus at a time when the US is falling in cases. This is atypical. For most of the pandemic, Canada was outperforming the US on a cases per capita basis.
This has a far greater impact than on mere consumer confidence however, as delays in vaccines means that people who will suffer from the coronavirus and unfortunately, in some cases will die from the disease might otherwise have been avoided, had Canada been able to obtain the vaccine at a much earlier time frame. Other impacts could be a deeper level of damage to the economy, as many businesses struggling might have been able to return to normal a couple of months earlier, which in some cases could mean make or break for said businesses.
At time of this writing, Canada has the highest number of vaccine purchases per capita of any nation in the world. At vaccine clinics, apparently there are now websites for vaccine hunters who are desperately trying to get one of the limited supplies of vaccines that are depleting. In short, there is a clear sense of desperation among many people to end this devastating pandemic.
Nations will always prioritize themselves
Having all of those purchasing agreements is not as important as it seems. Nations will always have to prioritize their own interests ahead of other nations. During times of food scarcity for example, some nations will ban the export of food supplies to take care of their own nations.
This can happen even among allies. To give an example, the European Union stopped shipments of vaccine to Australia. The EU later denied that they were restricting access to Australia. The brutal truth is that many of the EU nations have been hit hard by the coronavirus pandemic and that they were saving what they can for themselves because of supply shortages. This has been covered all over the news.
Australia and the EU (as a collection of nations) are not on hostile terms with one another and are generally allies. Yet in times of desperation, the lesson here is that buying vaccines may not mean getting the supplies until later if the supplies are manufactured in nations that desperately need them as well. Vaccine nationalism was an inevitable effect when the pandemic is this serious. Any nation in such a dire situation will work to save themselves first and foremost – to do otherwise would be politically unpalatable.
It does not at all have to be this way. A nation like Canada has the technical ability to manufacture vaccines. It would also be a great way to employ Canadians. Anecdotally, I can tell you that many graduates in fields like biotechnology are often underemployed.
The government itself has acknowledged that it has the second best strategy and that it is completely reliant on other nations at this point.
It may surprise many Canadians, but we used to have a publicly owned vaccine manufacturer
It was not always this way. Canada used to have its own manufacturing and much more extensive R&D capabilities for making its own vaccines.
It was known as Connaught Laboratories and it was a part of the University of Toronto’s School of Hygiene and provided vaccines for many of Canada’s pandemics. In fact it even exported vaccines to the US and UK because it had the manufacturing capacity to do so.
Established around the time of WWI by Dr. John G. FitzGerald, as a lab, Connaught Labs was focused more on “blue skies research” than private businesses, which are more focused on short term profit to their shareholders. Dr. John FitzGerald at the time had been outraged at the high cost of treatment for contemporary diseases, which had only been truly affordable to the well off and sought to develop treatments that would be more widely affordable.
The Labs would serve other public benefits as well, of which is explored in an article that I would like to share.
Connaught provided vaccines and insulin to the public at cost and worked closely with local, provincial and national public health agencies. When required, the labs exported vaccines to other countries at a cost well below the prices charged by private pharmaceutical companies. Connaught and the school were doing major research and development long before research and development (R&D) existed as a corporate catchphrase. In its heyday, Connaught made Canada almost completely self-sufficient for its domestic vaccine needs.
Connaught’s key advantage was that it was based in a university, specifically in a school of public health. This made it very aware of, and responsive to, public health needs in Canada and beyond, driving the labs’ research agenda.
Tragically, this was not to last. Eventually in 1972, the labs were sold to the publicly owned Canada Development Corporation (CDC). Under the government of Prime Minister Brian Mulroney, the labs would be privatized entirely during the 1980s. The article then goes on:
Mandated to develop and maintain Canadian-controlled companies in the private sector, this sale brought in private investment and an increase in the price of the labs’ products, triggering allegations of mismanagement and deteriorating product quality. By 1986, the federal government’s ownership of Connaught had been completely sold to the private sector as the CDC was dismantled, part of the Mulroney government’s program of privatization.
This does not at all seem like a “win” for taxpayers at all. Whatever money that was raised from privatization is vastly overshadowed now by our nation’s desperate reliance on other nations.
The sale and privatization of Connaught was a strategic error. Why did it even happen? Connaught’s penchant for always driving prices down did not endear it to the major pharma companies. With the sale, the Canadian government lost an important capability. In Connaught’s history the Canadian government had called upon it to provide assistance in urgent situations of national health. Canada lost a world-class vaccine-making facility and the research expertise and critical mass that came with it.
Connaught invested a much higher proportion of its revenues in R&D than private firms did. During much of this time this research funding was particularly important as this was before the establishment of government-funded research councils such as the Medical Research Council (a precursor to the Canadian Institutes of Health Research).
Today what remains of the labs is part of the Connaught campus of Sanofi Pasteur, a large French pharmaceutical company. The campus today remains a major player in the biotechnology space in Canada, and the Canadian government is even investing a considerable amount of money in it to boost vaccine self-sufficiency, but it is not the same as a state owned and controlled enterprise. We do not have the level of control we would as a society if the state owned the laboratories. If there is ever a conflict between maximizing corporate profits for a small number of wealthy shareholders versus the public interest, as a corporation, it will choose to maximize the profits of its shareholders.
The article previously linked concludes advocating for the formation of a new state-owned and university run version of Connaught Laboratories, and that the current path pursued by the Trudeau government is far from adequate to protect the Canadian people from future pandemics.
Some physicians have gone ever further, calling for outright nationalization, akin to wartime measures acts. For those unaware, during “total” wars, governments are legally permitted to seize private means of production and re-allocate it for the purposes of winning the military conflict as they see fit.
Why was Connaught Labs even sold in the first place? An ideology known as neoliberalism.
Ultimately, the privatization that occurred happened in the 1980s, during a time when an ideology known as neoliberalism came about.
Neoliberalism, in simplified terms, is an ideology that believes that the government should remain outside of the domain of areas dominated by the private sector. It is most associated with economists Milton Friedman and Friedrich Hayek along with the Chicago school of economics at the University of Chicago.
In 1980s, around the time Connaught was being privatized, the Canadian Prime Minister, Brian Mulroney, alongside British Prime Minister Margaret Thatcher and US President Ronald Reagan were spearheading an effort to reduce the amount of involvement the government had in the economy. That was the heyday of neoliberalism.
The idea behind privatizing Connaught Labs was that this as something that the government, according to neoliberal ideology, should not be involved in, and that this type of activity is best left to the private sector.
Here are the basic goals of the ideology:
(1) “Free” markets do not occur naturally. They must be actively constructed through political organizing.
(2) “The market” is an information processor, and the most efficient one possible—more efficient than any government or any single human ever could be. Truth can only be validated by the market.
(3) Market society is, and therefore should be, the natural and inexorable state of humankind.
(4) The political goal of neoliberals is not to destroy the state, but to take control of it, and to redefine its structure and function, in order to create and maintain the market-friendly culture.
(5) There is no contradiction between public/politics/citizen and private/market/entrepreneur-consumer—because the latter does and should eclipse the former.
(6) The most important virtue—more important than justice, or anything else—is freedom, defined “negatively” as “freedom to choose,” and most importantly, defined as the freedom to acquiesce to the imperatives of the market.
(7) Capital has a natural right to flow freely across national boundaries.
(8) Inequality—of resources, income, wealth, and even political rights—is a good thing; it prompts productivity, because people envy the rich and emulate them; people who complain about inequality are either sore losers or old fogies, who need to get hip to the way things work nowadays.
(9) Corporations can do no wrong—by definition. Competition will take care of all problems, including any tendency to monopoly.
(10) The market, engineered and promoted by neoliberal experts, can always provide solutions to problems seemingly caused by the market in the first place: there’s always “an app for that.”
(11) There is no difference between is and should be: “free” markets both should be (normatively) and are (positively) the most efficient economic system, and the most just way of doing politics, and the most empirically true description of human behavior, and the most ethical and moral way to live—which in turn explains, and justifies, why their versions of “free” markets should be and, as neoliberals build more and more power, increasingly are universal.12
Shortly before the pandemic, particularly with the rise of Donald Trump in the United States, there was a great deal of hand-wringing about whether or not neoliberalism had run its course and if the ideology was itself in terminal decline. Even Establishment magazines had become highly skeptical of the ideology.
Generally, those on the centre-left have been very skeptical about neoliberalism and have at times called it bad economics. The environmentalist George Monbiot has gone as far as to call it the ideology at the root of all of our problems.
Neoliberalism has been blamed (rightfully in my opinion) for the 2008 financial crisis, soaring economic inequality, and a declining living standard for those who are affected (often working class workers in the developed world, whose employment opportunities have been outsourced to the developing world).
This was a major failure in public policy
The failures of our public policy in privatizing Connaught Laboratories have been enormous. It has cost our economy and worse, in lives.
I wonder what might have happened if Canada had still had a publicly owned laboratory that focused on basic research and that focused on providing affordable medication for Canadians, along with everyone else in the world. It is not too fanciful to think that Canada might have been a leader in vaccination development, that the Canadian people might have been the first in the world to achieve a level of herd immunity through vaccination by now, and that we would be helping other nations, some of whom are struggling right now at time of this writing, by exporting vaccines at below cost to address their pandemic crisis.
Although far more limited in its capacity to develop vaccines, Canada does have the National Microbiology Laboratory, which developed an effective Ebola vaccine.
In fact, there is even a paper published that suggests that the private sector may very well have hindered the progress of the Ebola vaccine’s development:
It is an open secret that the public sector has long contributed substantially—in terms of scientific labor, know-how, and direct financing—to the development of many important drugs and vaccines1. These contributions often only come to light after the fact, once a publicly developed drug is priced exorbitantly under the control of a private company2. Acting on the theory that only the private sector can successfully commercialize a drug or vaccine, government laboratories and universities risk achieving the opposite: delays, increased prices, and decreased access.
The academic literature contains a substantial critique of this standard approach to commercialization,3 but concrete examples are needed to motivate policy change. In this analysis, we provide an in-depth examination of the development of a promising experimental Ebola vaccine, rVSV-ZEBOV, showing how the private sector was not only unnecessary to its development, but also likely slowed it down.
If you read the study in full, it suggests that most of the technical work was done by government employees. That doesn’t mean that the private sector adds no value to society, but in the context of that particular vaccine, it appears to have been more of a hindrance than a help. As a society, we should use what works. Where the private sector does it better, let the private sector take over, but where the public sector can provide a better product, there is the clear need for a “big government” invest in medicine.
Neoliberal ideological dogma, reminiscent of that of a fundamentalist religion, trumped the brutal reality on the ground. The Ebola vaccine nearly didn’t happen as a result of this ideology.
To me, all of this suggests that if the government had funded something like Connaught Laboratories, there is a very high probability that we would be in a far better situation than we are today, desperately reliant on other nations for vaccines.
All of this could have been predicted. In fact, public officials have been warning the government about this for a very long time.
The threat that the decline in domestic manufacturing capacity posed to vaccine supply in Canada did not go unnoticed in the clinical community. On at least five separate occasions, the federal government was warned by high-level bodies that domestic vaccine supply in the face of future pandemics was fragile.
The HIV / AIDs pandemic, in 1999 by provincial health ministers, in 2002 the then Premier of Saskatchewan, in 2003 after the SARS outbreak, and finally around 2010 due to the H1N1 Swine Flu outbreak.
Public labs are not always politically popular. They lose money and require taxes. Large pharmaceutical companies often lobby for their privatization. Yet one of the defining lessons of this pandemic is that it is far cheaper to have them than to have a raging pandemic go on even longer than it needs to. For the good of the nation though, it has to happen.
To conclude, I will end this editorial with a person who wrote that the privatization of Connaught Laboratories was the biggest mistake that the Canadian government ever made.
I used to think that scuttling the Avro Arrow project in 1959 by Prime Minister John Diefenbaker was the worst decision ever made by a Canadian federal government. Built by A. V. Roe Canada Ltd. and designed by the Royal Canadian Air Force, this unique supersonic jet was capable of flying at a speed of 1,307 miles per hour and at a height of 60,000 feet.
As a result of the termination, many of Canada’s best scientists and engineers would leave Canada, for the US, where they would work on the American lunar landings. Canada lost its ability to be a leader in the world of aviation. The article would argue that the privatization of Connaught Laboratories was an even bigger mistake.
So, much like the Avro Arrow, Canada once possessed a world-class, phenomenal industry that, had it been nurtured and properly financed, would right now be saving Canadian lives, saving Canadian taxpayers billions and billions of dollars and exempting this country from the ugly and embarrassing global battle of “horse trading” in pandemic vaccines.
Alas, due to the neoliberal ideology that has pervaded our world, the decisions made by the government of Prime Minister Brian Mulroney, this was not to be. I hope that this incident represents a permanent decline of the influence of neoliberalism and the Chicago school of economics.
As a nation, it is imperative that we right this wrong. This will not be the last pandemic nor the last disease that will require vaccinations. We must create another publicly owned Connaught Laboratories.
A failure to do so, due to neoliberal ideology, will cost Canadians lives, do untold economic damage, and prolong a future pandemic. If we succeed, it may put Canada back in the leadership spot as far as vaccine development. We learned the hard way this time. We should do everything possible to make sure that in the future, we are in a strong position to respond far more effectively.