I've recently argued that the biggest reason over the recent shortages of infant formula in the US has been over-regulation. A brief summary: a handful of babies developed serious infections, resulting in hospitalization, even death. They had been consuming infant formula manufactured at an Abbott Labs Sturgis, MI plant. At the facility FDA inspectors would later find evidence of environmental contaminant (none in product samples), and the pant was closed by this past February. Abbott Labs is one of 4 main domestic vendors, in a market which is anti-competitive by incumbent vendor-supported restrictions. Parents eligible for government assistance find their purchase options limited; foreign vendors find themselves saddled with up to a 17.5% tariff; new vendors may find at least initial marketing options limited; the FDA's unnecessarily restrictive formulation requirements may differ from the standards of our trading partners.
So in the 3 months since the Sturgis facility was closed down, the loss of Abbott products in the market has not been offset by other vendors and we have seen growing shortages with empty store shelves in multiple states. It's not clear the FDA anticipated the implications of prolonged shutdown of a production facility and had contingency arrangements. Now, as the media has started saturation coverage, Biden and the Dem-controlled Congress are eagerly showing they are addressing the storage. Biden has Operation Fly Formula flying in Nestle products from Europe; and Congress is looking at beefing up government inspector manpower and WIC program funding.
These, at best, treat symptoms, not causes. Foe instance, we import goods all the time from Europe without government flights. Why weren't Nestle's supplies already imported? Is it necessary to hire government workers to conduct inspections? (We don't have the government attesting to financial statements, for instance.) Why did it take as long as it did for the FDA ro inspect Sturgis? Why have there been tons of US baby formula shipped to Canada and none sold by Canada here since USMCA? Why did it take the government 3 months to figure out shutting down a major plant with few vendors might result in shortages, and where was the contingency plan?
For the purposes of contrast, let's compare a couple of problems during the earlier phases of the US COVID-19 pandemic. The FDA botched early COVID-19 testing, even discouraging (unlike South Korea) involvement from the private sector. The price to this is early detection could have checked the rapid spread of the disease, even as FDA dragged out its own development and then rolled out defective shipments. Then there was the private sector rollout of vaccines; the longer the delay, the more hospitalizations and mortality. On this count, the FDA did somewhat better: they did allow an early emergency use authorization instead of the full time period for final authorization (which the mRNA vaccine makers now have).
Now how should Biden have responded, over and beyond the obvious step of shortening the downtime of the Sturgis facility? (And reportedly it should be up in less than 2 weeks, but it may take 6-8 weeks to restock store shelves.)
Mike Lee outlined an approach (also discussed in a Kibbe video embedded in my Thursday morning daily post) of 3 steps for a temporary workaround:
- waive import restrictions from trading partners with FDA-like regulators, including Europe, the global export leaders, presumably including nitpicking labeling compliance
- waive tariffs (including things like duties placed on Canadian infant formula when its global sales exceed a certain level, apparently in effect since no recent imports)
- relax WIC brand purchase restrictions, impacted by shortages in approved brands. (WIC is a jointly administered program where brands may be specified at the state level.)
This is a government-caused problem, unlike the global energy supply shortage (actually Biden has suppressed domestic production with anti-fossil fuel policies). Human babies have similar nutritional needs that don't differ across national borders. The government has been engaging in protectionist policies which may benefit existing vendors, but at the expense of market competition and improved choices, supply, and prices for consumers.
Democrats like Biden are vested in Big Government programs, and the size, power, and resources will attract crony capitalists who want to weaponize regulatory policy as an anti-competitive weapon to win what they can't achieve in the free market. They naively see government civil servants as a meritocracy of experts, not in the context of public choice influenced by their own bureaucratic incentive. For example, no one wants the blame for approving a bad drug. Never mind a delay in drug release could cost prospective users their lives, Bastiat's infamous distinction between things seen and unseen.
One Dem Congresswoman tried to blame this on the vendor for not following regulations and insists she is motivated by "safety". She doesn't trust foreign supplies/facilities without FDA inspections. But Americans don't have a monopoly on hygienic facilities. In fact, the evidence tying the handful of baby infections to Abbott's products isn't clear.
But the point remains, I'm sure Biden had the administrative discretion to temporarily waive import restrictions and waive tariffs weeks ago. He doesn't do a damn thing until the shortages hit the media and now he's more concerned about the optics and photo opps he has the authority to deliver formula imports by military jets Why did it take more than 3 months for Abbott to get the approval to reopen the Sturgis plant?
