Tim Harford has a (fairly) new podcast series called “50 Things That Made The Modern Economy“. One of the January episodes was on Antibiotics. And when you think about it, antibiotics really did make the modern economy. Our ability to combat disease has given us longer lives and longer-term horizons. It’s why we need pensions and long-term investments. It’s why we can plan for next year, and for a decade down the line, and many decades away – because we have a reasonable prospect of longevity. And the failure of antibiotics might just mean the breakdown of the modern economy. And more concerningly, the failure of antibiotics might just be inevitable. And it will become a future cautionary tale of the Tragedy of the Commons.

Here’s a horrifying thing

This is an extract from the CDC’s Morbidity and Mortality Weekly Report (the 13 January 2017 edition):

On August 25, 2016, the Washoe County Health District in Reno, Nevada, was notified of a patient at an acute care hospital with carbapenem-resistant Enterobacteriaceae (CRE) that was resistant to all available antimicrobial drugs.

Or, as Forbes puts it:

Welcome to the future…a bad future. In September 2016, a female in her 70s died from an infection caused by carbapenem-resistant Enterobacteriaceae (CRE), bacteria that was resistant to all available antibiotics. Yes, resistant to all available antibiotics. Yes, doctors could do nothing to stop her infection. Yes, a bad infection from such bacteria can kill you no matter how rich or famous you are, what apps you have on your phone or social media sites you frequent, what kind of walls you build, how many nuclear weapons you have or how many other medications, procedures, herbs, supplements, chiropractic adjustments, face lifts, cupping sessions, urine drinks, leech treatments, cryotherapy sessions or massages you get. This is the first appearance in the U.S. of such an uber-resistant bacteria (meaning resistant to all antibiotics and not to drivers and cars for hire.) Yes, more and more will appear in the future. No, this is not trending on Twitter or Facebook. No, this is not getting nearly as much attention as the seemingly science-resistant anti-vaccine talk. Why, then, aren’t more people taking this seriously and making the urgent changes needed?

The question: why are we at this point?

The answer: because we’re not winners, and we don’t know when to stop. And/or: the tragedy of the commons.

The Tragedy of the Commons: The Background

The idea behind the tragedy of the commons was first documented in 1833 by English economist William Forster Lloyd. At the time, English villages shared common grazing ground for their livestock (the ‘commons’). And Lloyd observed that:

1. Each individual farmer would be better off if he added more cows to his herd. That is: it was in his rational self interest to grow his herd.
2. But if every farmer did that, then there would be overgrazing.
3. At which point: no farmer would be able to keep cows, and they would all be worse off.

So the conclusion for someone on the left: there are economic situations where the allowing individual to operate unregulated can result in the society losing as a whole.

And the conclusion for someone on the right: the artificial creation of a ‘common area’, through the disavowal of private property rights, leads to market inefficiencies which can then result in bad outcomes.

Also, here’s my own (slightly moralistic) take: people tend to act in their own short-term self-interest to the detriment of their own long-term self-interest. Because YOLO.

But whatever the cause, the outcome is bad.

And the antibiotic situation that we find ourselves in is no different.

The Tragedy of the Commons: Antibiotic Resistance

Let’s say that you’re feeling unwell, with a bit of a sniffle and a scratchy throat. Do you:

1. take an antibiotic in case it’s a bacterial infection, in which case, you’d recover quicker? Or
2. continue to get sicker until it becomes more clear whether it’s a virus or a bacterial infection?

Perhaps you’re a stalwart, and you choose the latter. But now let’s pretend that you’re the doctor. Do you:

1. risk your patient getting sicker, and then suing you for not prescribing antibiotics? Or
2. prescribe the antibiotics just in case?

Now let’s pretend that you’re a farmer, raising pigs. Do you:

1. inject your pigs with antibiotics as a precaution against them getting sick? Or
2. just leave them to possibly get sick and die and/or need to be destroyed.

The individual economic incentives (of the patient, doctor and farmer) are stacked against the conservation of the common resource (the antibiotics).

And because people are lazy and forgetful and over-cautious, the world’s microbes are constantly being subjected to a steady training regime. A regime which is turning them from potential pests into comic-book-style villains.

And so we get superbugs beating our superdrugs.

But in the interim, we should definitely argue about whether this is the result of unregulated drug-use and the fear-mongering of the pharmaceutical industry in order to drive up their sales, or the result of the over-regulation of pharmaceutical companies which is preventing them from discovering new antibiotics.

Seems like the sensible thing to do.

Rolling Alpha posts opinions on finance, economics, and sometimes things that are only loosely related. Follow me on Twitter @RollingAlpha, and/or please like the Rolling Alpha facebook page at www.facebook.com/rollingalpha.