easyJet: It's A Punt On The Success Of The Vaccine

Nov. 09, 2020 11:30 AM ETeasyJet plc (EJTTF)ESYJY

Summary

  • The big economic question is, well, when will the vaccine be ready? That's when travel and other things will be possible again, in volume.
  • It's difficult to invest in the vaccine directly as near all potential makers are insisting they'll make it available at or near cost.
  • Our opportunity therefore is to invest in those who will benefit from it, rather than those who make it.

It's a standard point in economics

Sure, the people who make things profit from having made them. Or, at least, can do, for we all know of loss making producers of this and that. However, it's a standard economic assumption that everyone else gains much more from the thing having been made than the maker gains from it.

The Model-T is credited with having changed courting habits, that back seat having introduced millions of couples to carnal delights. That's rather more than Ford got out of it, vastly rich though he became. Being slightly more serious about it that we get electricity is worth much more than the $100 or $200 a month we pay for it. One recent analysis (a proper, real one) estimated that the existence of search engines and email is worth $18,000 a year to each user, vastly more than the providers of such things gain. Even Facebook is said to be worth $800 a year to each user, more than even the revenue, let alone profit, made by the company.

The same is true about a vaccine for Covid. Sure, there will be some money made out of producing an effective one. But the people who will really gain are us out here, as we can go back to doing nice things when vaccinated. It's also true that near all the potential producers - and there are still well over 100 of them trying to get their version over the line - have said that they will be supplying at cost, or perhaps a small margin over it. Not having frequent lockdowns is going to be of more benefit to the economy as a whole than whatever those producers make.

This holds true of certain producers of other things out in the economy too. Watching Covid

This article was written by

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Tim Worstall is a wholesaler of rare earth metals and one of the global experts in the metal scandium. He is also a Fellow at the Adam Smith Inst in London and an writer for a number of media outlets, including The Times (London), Telegraph, The Register and even, very occasionally indeed, for the WSJ. This account is linked with that of Mohamad Machine-Chian: https://seekingalpha.com/user/52914142/comments

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