Politics

The baby formula shortage might be caused by parental hoarding – HotAir



To be fair, the RNC clipped only a short sound bite from the response on inflation and baby formula from Rep. Katie Porter (D-CA). They may have done her a favor, though, because the longer answer would have provided even more fodder for the Disinformation Governance Board … if that agency was actually interested in government accuracy. Porter offers a blizzard of misdirection on the formula crisis and Joe Biden’s response to it, so much so that it’s almost impossible to keep up.

The most hilariously false part of her response? “I think what the White House has done here is act very quickly,” a claim which is false in almost every word of the sentence (via Twitchy, at 3:23):

Let’s start by defining “very quickly,” an issue we’ve covered in the past. The New York Times reported on widespread formula shortages in October 2021, well before the FDA shut down the Abbott facility over contamination concerns. The NYT report even specified that the shortages were hitting hardest in the price-controlled SNAP-WIC program, a point to which we’ll return shortly. At about the time that the FDA shut down the Abbott production line, the Wall Street Journal and the Washington Post reported on shortages in January and again in April of this year, with explicit reference to FDA action taking Abbott offline.

The first White House acknowledgment of of this crisis came … last week. That’s not “very quickly” even for Congress.

Next up, let’s check Porter’s claim that the White House has “acted” at all. They slapped together a website last week, which is full of advice and hotline numbers that are entirely useless, as CNN’s MJ Lee discovered when she called them all.  The advice is just as ill-informed:

Er … what? Samples might be useful if you have an infant that only needs to eat once ever. Otherwise, samples hardly qualify as even a temporary stop-gap measure.

Next, Porter tried to claim that producers could “price gouge,” while earlier claiming that parents had accelerated the shortage by hoarding:

Part of this is people saying ‘I’m worried I’m not going to find it,’ so when they do find it they’re buying a lot. … We’re very concerned about market concentration. When you only have two, three, or four producers in any market, you have two big risks; we’re seeing the consequences of these two big risks. Risk One is that one of those producers will have a supply chain disruption, will go off line, will shut down.  The second risk is they’ll be able to price gouge because they have so much market concentration.

This is nonsense on stilts. First of all, the structure of the baby formula industry didn’t just spring into being last week or last year. We didn’t get shortages or price gouging until the Biden administration took its eye off the ball on the supply chain crisis. Second, price gouging would tend to prevent shortages by setting a price at a demand equilibrium — and the best way to protect against price gouging is to ensure plentiful supply anyway. It’s worth noting on that point that the shortage first manifested itself in the price controlled SNAP-WIC program, and then expanded to all consumers.

“Price gouging” is nothing more than demagoguery, a cheap attempt to shift the blame from the White House over a crisis they ignored for months until it bit them in the ass.

Besides, this isn’t a shortage caused by a short-term consumer panic, like the infamous Johnny Carson-toilet paper story. It’s not even the Great TP Shortage of Spring 2020, when the issue was a sudden shift in the demand model (residential rather than industrial) to which took a couple of months for producers to adapt. This is an actual supply shortage, one that has lasted now for more than seven months at least, regardless of the level of demand, which likely remains constant in the long run thanks to the product’s use only for infants and babies. Even if parents spot-hoarded at the beginning, it’s a certainty that they have long since run out seven months later.

And finally, we have this kind of market concentration because economic protectionists of both parties have blocked foreign producers from selling in our markets. The FDA created absurd regulatory hurdles regarding labeling, and Congress and the FTC set up tariffs to protect American producers from competition. The FDA certainly knew that when it shut down the Abbott production line in December well after the shortages had been reported by the NYT, and should have followed up afterward when the WSJ and WaPo began reporting it too afterward. Had Biden and his team acted in October of last year to lower those trade barriers, much of which they could have done through executive action, we would have solved these shortages months ago.

If Porter wants to blame “market concentration” and regulation, then perhaps Democrats from Biden on down should start taking a much more market-based approach to economics and regulation rather than embrace the central-planning model they love. That’s not happening “very quickly” — it’s not happening at all.




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