The Baby Formula Shortage is Really About Government Regulation, Not Ukraine

People are using the baby formula shortage to push talking points about government spending. Unless you want the government to be in charge of making baby formula, that's dumb. Ukraine aid or anything else can be debated on its own merits. And I'm sure Senator Elizabeth Warren would love to get the government into the business of making baby formula with the result that each "free" tub would cost $2,000 and most of it would have to be thrown out.

What the baby formula crisis is really about is...

Excessive market consolidation. Having one company dominate an industry or a key area of it means that there's only one failure point. That's what happened here. It's also what happens when half the internet goes down because Amazon Web Services or someone else had a hiccup. Except this is much worse.

Market consolidation is obviously a private sector problem, but it's also fed by government regulations that help close off the market.

The argument is that these government regulations help protect consumers except the FDA, one of the formative organizations used for that argument, has screwed up here, and it's not the first time.

The combination of one failure point and the FDA's general dysfunction created this mess. It only went nuclear because hardly anyone was paying attention. Multiple consumer groups and advocacy organizations claiming to fight for parents and children did little about it until it hit parents. That's as sad as it is predictable.

What can the government do? It could speed up the reopening of the affected plant that led to the shortage, but even if it reopens, it will take a while to make an impact. Can it finance competing companies to significantly expand their operations? Probably. But that's likely to take even longer. 

The one thing the government could possibly throw money at with some effectiveness is obtaining a supply overseas. Maybe. 

The underlying issue here is a corporatist system created by government regulations in which a massive shortage can appear because of one failure point. Those failures just end up feeding more regulations and then leads to more consolidation, and that vicious cycle is how we got to where we are now.

Having the government get into the business of managing the supply would be disastrous, because guess who gets first dibs?

According to videos posted by a Florida lawmaker, the Biden administration has been shipping “pallets” of baby formula to migrant holding facilities.

“They are sending pallets, pallets of baby formula to the border,” said Republican Rep. Kat Cammack in one of two online postings yesterday. “Meanwhile, in our own district at home, we cannot find baby formula,” she added, holding a photo of empty shelves where the formula would be.

Getting that formula out of the government's hands would be a good first step.

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