Vaccine passports: a free market and plentiful pubs mean they won’t work in the UK

As the country emerges slowly from lockdown, the debate over so-called vaccine passports gathers pace.

Yesterday, Matt Hancock confirmed Britain was looking into the proposition for international travel.

Countries such as Greece and Spain have a strong incentive to develop a system with us. Each attracts large numbers of British tourists in a normal year.

Whatever the details of the system might be, they would be monitored and enforced by officials at borders.  Despite potential bureaucratic inefficiencies and delays, it would work.

Could the idea be applied with the UK itself?

The Israelis are opening up their economy with vaccine passports.  But already almost half the population has been jabbed

Last spring, the idea of allowing the young to move about freely gained some traction at a high level in the UK.  Then, the argument was that there is very little health risk to them from the virus.  A key reason it was dropped was the obvious discrimination against older people.

The reverse argument applies now.  Younger people would feel justifiably aggrieved if regulations prevented them from enjoying freedom of movement granted to older, vaccinated people.

Mass testing, which the government is keen on, appears to resolve this age-related problem.  Freedom could be granted to anyone with either proof of vaccination or of a recent negative test.

The problem here is that the tests would have to be done so frequently that many would soon come to see them as an imposition.

Perhaps, as we move through the year and the vaccination numbers rise, the free market will do the job of regulation.

Already, some leisure and retail outlets are raising the idea of barring those without proof of negative status. This would give an incentive to bear the inconvenience of frequent testing and avoid being discriminated against in this way.

However, Milton Friedman argued many years ago that the free market would prevent this from working.

Quite simply, he thought that companies which discriminate impose avoidable costs upon themselves. As a result they will be driven out of business by their competitors.

As ever in economics, the strength of the argument depends upon how well its assumptions correspond to reality.  The key one here is of a “competitive market”, one with many companies, none of which can exercise any real power over the market as a whole.

Expensive restaurants in affluent areas do not need to put in their adverts, as Basil Fawlty once memorably did in Fawlty Towers, “no riff-raff”. They do have a degree of localised monopoly power over a specialised part of the market.  Discrimination would work here.

But for many hospitality and leisure outlets in towns and cities, Friedman’s assumption seems reasonable.  If a pub keeps you out because of a lack of certification, there is another reasonable one not far away.  The situation is not quite the same in rural areas.

But why leave it to either the regulators or the pubs themselves to say who can and cannot go into a pub?

Just let individuals decide for themselves which outlets to use, like they have always done.  That will be true normality.

Paul Ormerod
As published in City AM Wednesday 24th February 2021
Image: Restaurant via Pixabay

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ELLIE EVANS

Partner

e: eevans@volterra.co.uk
t: +44 020 8878 6333

Ellie is a partner at Volterra, specialising in the economic impact of developments and proposals, and manages many of the company’s projects on economic impact, regeneration, transport and development.

With thirteen years experience at Volterra delivering high quality projects to clients across the public and private sector, Ellie has expertise in developing methods of estimating economic impact where complex issues exist with regards to deadweight, displacement and additionality.

Ellie has significant experience in estimating the economic impact across all types of property development including residential, leisure, office and mixed use schemes.

Project management of recent high profile schemes include the luxury hotel London Peninsula, Battersea Power Station and the Nova scheme at London Victoria. Ellie has also led studies across the country estimating the economic and regeneration impact of proposed transport investments, including studies on HS2 and Crossrail.

Ellie holds a degree in Mathematics and Economics from the University of Cambridge.