Market economies driven by profit may not always be the best answer to problems.

The vaccine, called CimaVax, has been researched in Cuba for 25 years and became available for free to the Cuban public in 2011. The country’s Center for Molecular Immunology signed an agreement last month with Roswell Park Cancer Institute in Buffalo, New York to import CimaVax and begin clinical trials in the United States.    The vaccine is reported to cost about $1.  For every American to receive a vaccination is worth about $320 million.    According to Dr. Kelvin Lee, Jacobs Family Chair in Immunology and co-leader of the Tumor Immunology and Immunotherapy Program at Roswell Park: 

The cost of cancer care in the U.S. is about $125 billion per year.  Drug costs are probably less than half but definitely a significant part of that.  If you compare $320 million one time  with tens of billions each year for drugs to treat cancer it is clear why a market based economy doesn’t want the vaccine.  The value to the economy does not compute in the drug company’s incentivization.  How much money they can make is the incentive.  When you consider that the total economic cost of cancer each year is $894 billion, the immense cost of the pharma profit motivation is evident. 

Mariana Mazzucato writes:  The global agreement reached in Paris last week is actually the third climate agreement reached in the past month. The first happened at the end of November, when a group of billionaires led by Bill Gates, Mark Zuckerberg, and Jeff Bezos announced the creation of a $20 billion fund to back clean-energy research. On the same day, a group of 20 countries agreed to double their investment in green energy, to a total of $20 billion a year.

Of the two pre-Paris announcements, it was that of the Breakthrough Energy Coalition (BEC) grabbed the headlines.  If a technological breakthrough is needed in the fight against climate change, whom should we expect to provide it, if not the wizards of Silicon Valley and other hubs of free-market innovation?

On its own, the free market will not develop new sources of energy fast enough. The payoff is still too uncertain. Just as in previous technological revolutions, rapid advances in clean energy will require the intervention of a courageous, entrepreneurial state, providing patient, long-term finance that shifts the private sector’s incentives. Governments must make bold policy choices that not only level the playing field, but also tilt it toward environmental sustainability.

Advances in clean energy will require the involvement of both the public and the private sector. Because we do not yet know which innovations will be the most important in decarbonizing the economy, investment must be allocated to a wide array of choices. Long-term, patient finance must also be available to help companies minimize uncertainty and bridge the so-called “Valley of Death” between basic research and commercialization.

The BEC’s argument – that the “new model will be a public-private partnership between governments, research institutions, and investors” – shines a welcome spotlight on the relationship. Unfortunately, however, aside from Gates and his colleagues, there are few signs that the private sector can be counted on to lead the way.

The energy sector has become over-financialized; it is spending more on share buybacks than on research and development in low-carbon innovation. The energy giants ExxonMobil and General Electric are the first and tenth largest corporate buyers of their own shares. Meanwhile, according to the International Energy Agency, just 16% of investment in the US energy sector was spent on renewable or nuclear energy. Left to their own devices, oil companies seem to prefer extracting hydrocarbons from the deepest confines of the earth to channeling their profits into clean-energy alternatives.

Meanwhile, government R&D budgets have been declining in recent years – a trend driven partly by under-appreciation of the state’s role in fostering innovation and growth, and more recently by austerity in the wake of the 2008 financial crisis.

The main public-sector bodies playing a leading role in promoting the diffusion of green-energy technologies are state development banks. Indeed, Germany’s KfW, the China Development Bank, the European Investment Bank, and Brazil’s BNDES are four of the top ten investors in renewable energy, amounting to 15% of total asset finance.

The public sector can – and should – do much more. For example, subsidies received by energy corporations could be made conditional on a greater percentage of profits being invested in low-carbon innovations.

While charitable donations by billionaires certainly should be welcomed, companies should also be made to pay a reasonable amount of taxes. After all, as the BEC’s manifesto points out, “current governmental funding levels for clean energy are simply insufficient to meet the challenges before us.” And yet, in the UK, for example, Facebook paid just £4,327 in tax in 2014, far less than many individual taxpayers.

The willingness of Gates and other business leaders to commit themselves and their money to the promotion of clean energy is admirable. The Paris deal is also good news. But they are not enough.

Liu Mengkang writes:   Last month, China’s leaders revealed details of the 13th Five-Year Plan, which will guide the economy’s trajectory until 2020. Gone are the directives to expand industrial production at a breakneck pace that characterized previous five-year plans. Now, the focus is on achieving sustainable long-term growth, underpinned by domestic consumption, a stronger services sector, entrepreneurship, and innovation.

The Internet – which already has more than 680 million active users in China – will play a key role in facilitating this shift. In particular, online peer-to-peer (P2P) lending, a streamlined approach to credit allocation, may hold the key to expanding and deepening China’s financial sector, enabling firms to grow and innovate, and bolstering domestic consumption.   P2P Lending in China

The Rocky Road to Globalization

About 50 American businesses came to Havana for a trade expo, many of them intrigued but still unclear how to make money in a Communist-ruled country of 11 million people who have little purchasing power.

With detente raising hopes that full commercial ties could be restored, U.S. companies are being drawn to Cuba. But it is a market whose attraction defies convention, given that foreign businesses complain about the island’s bizarre dual-currency system, rigid labor market and opaque legal guarantees.

Alabama-based Cleber LLC says it has been approved by the Cuban government to assemble tractors at the special development zone surrounding the port of Mariel. But because of the continuing U.S. trade embargo, Cleber would need special U.S. permission to open shop.

“We can open businesses anywhere in the world. Cuba is special on a personal basis,” said Saul Berenthal, a Cuban-American who left the island in 1960, the year after Fidel Castro’s rebels came to power.

U.S. President Barack Obama and Cuban President Raul Castro agreed last December to end Cold War-era animosity and restore diplomatic relations, but the embargo remains in place as only the U.S. Congress can lift it.

Obama has permitted some commerce, such as telecommunications, and allowed U.S. companies to sell to Cuba’s nascent private sector, adding to existing limited business.

The newcomers can look at the experience of privately held shipping company Crowley Maritime Corporation, which has been making losses or breaking even in Cuba for 14 years.

Jacksonville, Florida-based Crowley entered Cuba in 2001, after Washington started allowing food sales to Cuba, largely because Jay Brickman fell in love with Cuba in 1978, when his boss Thomas Crowley first sent him to Cuba to investigate business opportunities.

Brickman, now vice president of government services for Crowley, said he expects profits soon under the market-friendly changes from the U.S. and Cuban governments.

“Is it worth it, only in a business sense? No,” Brickman said from the annual Havana International Fair. His reward has been many friendships and a book he authored, he said.

As Crowley and European, Canadian and Latin American investors can attest, uncertainties hang over the business climate.

“How guaranteed is your investment? Are you sure that you can make profits? Are you sure that there will be no confiscation of your industry?” Brickman said.

There are U.S. companies with a firm business plan. Sprint Corp signed an agreement with Cuba’s state telecoms monopoly Etecsa on Sept. 25 and added an agreement on roaming services on Monday.

Others are global giants that see every market as worthy of capturing. Among the visiting U.S. companies this week were PepsiCo, American Airlines, Boeing, Cargill and Caterpillar.

U.S. businesses at the trade fair appeared united in opposing the embargo. Congressional advocates of the embargo argue it should remain in place to pressure Cuba on human rights.

“It’s not fair for our politicians to be blocking us from at least exploring the opportunity,” said Michael Maisel, international liaison for Commonwealth Packaging Company. “At that point, we take the risk, but at least let us get to that point.”