main idea: How market regulation and manipulation create shortages
Over the last couple of months we have seen an unprecedented shortage in baby formula. It is devastating to see it first hand as I (Jessica) have a cousin whose daughter has Rett Syndrome. She is completely disabled and cannot chew, and there is a very specific brand of formula that she is able to tolerate and upon which she relies for all of her nutrition. As of this evening she has only 12 days left in her supply. It is sold out at every supplier, and on back order from the manufacturer.
In October 2021 the FDA received a whistleblower complaint regarding conditions in Abbott Laboratories. There was no action until late December, when the investigation was initiated, followed by inspection in January 2022 and recall following in February. Abbott holds about 43% of the market share, according to a 2011 USDA Report (most recent data available). Abbott is also has exclusive contracts with many states’ WIC programs and USDA Supplemental Nutrition Assistance Programs (SNAP) which provide nutritional services to low-income families.
- Only three major companies control the vast majority of the baby formula market
- Roughly 98% of baby formula distributed in the US is manufactured domestically
- Due to regulation it is very difficult to import any supply from international providers
- The shortage is disproportionately impacting those low-income families relying upon government assistance to provide formula
Of course the government’s response to the problem it created was to throw more money at it. This week congress approved a $28 million emergency spending bill to assist low-income families with purchasing baby formula. Because let’s not address the root of the problem, right? This is a perfect example of how regulation can stifle competition and cripple the market.
Baby food isn’t the only market that’s being unveiled as crooked, crony, government shenanigans. Supply chain woes caused by covid have revealed broken systems in:
- Meat packing
- Student loan services providers and college ed (link) – so-called “scam schools” like the Marinello Schools of Beauty were found to be over-charging and under-providing and so $238M in loans to such schools were “forgiven” – meaning the students and the schools are off the hook. But guess who’s on it? Taxpayers.
- Big tech
- And every Libertarian’s favorite, the fed (link) – who “hiked” interest rates by a ½ point in a continuing effort to control the economy. Cuz yeah. Central control of the economy is a real thing, right? right?
And those war- and inflation-driven problems in the energy sector (link) and retail (link)
Thankfully, there’s the Democrats to blame “greedflation” (link) or corporations and swiftly prepare legislation that would limit profits. Cuz yeah. That’ll work. ::facepalm::
NEXT WEEK: Kasie and Jess live from the Libertarian National Convention where they’ll be listening to Edward Snowden over coffee and fighting off the alt-right Mises Caucus over everything from the party’s abortion plank to national committee leadership and regional control. Fun fun fun.
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