Based on what happened in Ontario during the past two weeks, it is hard to imagine how both the provincial and federal governments could have been more incompetent in dealing with the H1N1 virus. However, there are at least three important lessons we can learn from the public panic and government ineptitude.

Much of economic theory is built on the foundation of perfect competition. In this model, economists assume that all players are equally well informed and that no one has any advantage. Consequently, whenever there is a shock to a market, economists assume that there will be an orderly adjustment in response to the shock. The math assures this outcome because it is so assumed. But the logic is flawed!

If everyone has the same information, then whenever there is a signal for people to respond to a shock, it is more likely that everyone will try to act at the same time (imagine what might happen in a crowded room when someone yells “Fire”). Panic ensues; not an orderly progression from one point of “equilibrium” to another. In Ontario, panic followed the tragic death from the H1N1 virus of an otherwise healthy teenager. All  of sudden everyone wanted to be inoculated immediately.

Panic and fear are common in financial markets as well. Instead of blithely assuming orderly adjustment processes, economists must recognize the distinct possibility of panic. Thus, there is a need for government or some other type of agency to intervene to produce more orderly adjustments, whether they be in pandemic situations, financial markets or other situations or market environments.

A second lesson is what is called the peak load problem. Even if both the provincial and federal governments had perfectly anticipated the panic response, should they have invested in the resources necessary to deal with the enormous and time limited demands — the peak demands? This spills over into health care in general. Should governments ensure that there are always ample resources available for operations of all types, post-operative recovery, emergency treatments, etc., so that no one ever has to wait? Should the available service capacity levels be established to meet the periodic peak demands?

Governments could do this, but this would cost a lot of money, and most of the time the available infrastructure and health care workers would be underutilized. Ensuring that there will be no wait times during peak demand periods likely will bankrupt most governments. So trade-offs have to be made between wait times and costs.

Finally, the public health care officials responsible for overseeing the vaccine program were completely overwhelmed by the panic demand, and were totally incapable of devising procedures to minimize wait times and restore order during the first week. By the second week, they seemed to have learned that there were well established ways to organize the process. Even the parking tag office in Toronto has figured this out.

But this incompetence masks a serious problem, one that is apparent any time someone has the misfortune of having to use the emergency services at a hospital in Ontario. Health care programs and institutions should not be run by doctors and fund raisers. Experts are needed, such as people with backgrounds in managing hotels or operating supply chains.

My experiences with emergency rooms suggest that they are run on Darwinian principles. If a patient survives long enough to be treated, then this person deserves to use some of the health care resources. No one seems to be responsible for a patient admitted into emergency, so patients fall between the cracks, especially when there are shift changes. Furthermore, the lack of digital health records and the use of technology to diagnose a patient’s problem and recommend tests and medications, contribute to excessively long wait times and excessively high costs.