Infant Formula: Blame Protectionists, FOOD AND DRUG ADMINISTRATION for the Shortage

Federal government intervention in the method market is rampant. Thanks to the Special Supplemental Nutrition Plan for Women, Infants, and Children (WIC), formula companies are greatly subsidized by voucher applications which means the US government is providing more than half of the formula that is used in the US.

With regard to parents who rely on infant formula— whether by selection or due to medical necessity— the nationwide baby formula shortage has become increasingly difficult to ignore.  

According to the  Wall Street Journal , Walgreens, Target, CVS, plus Kroger have all begun rationing supplies of formula.

Covid lockdowns, combined with a product recall by method manufacturer Abbott Nutrition has established a very real shortage in a product that is key for proper nutrition in many kids.

With the lack has come the usual half-baked bromides about “ evil corporations” and how baby formula companies are supposedly not regulated enough. Throw in a few references to “ late-stage capitalism” and you’ll get a good taste of the usual “ blame capitalism” story that accompanies every bout of shortages or increasing prices.    

Formula is Seriously Regulated and Subsidized

In reality, federal government intervention in the formula market is definitely rampant. Thanks to the Special Additional Nutrition Program for Women, Infants, and Children (WIC), formula companies are heavily subsidized by voucher programs which mean that the US government is “ provid[ing] over fifty percent of the formula that is used in america.

Within this voucher programs, money are funneled to select companies through programs that give a formula company “ the exclusive right to have its formula supplied to WIC participants within the State. ” In practice, this means the largest companies with the most lobbyists are able to dominate the subsidized portion of the market. Since the subsidized portion of the market is really huge, that usually means individuals companies dominate the market overall. This makes it harder for beginners to break into the market and provide any real competition. This means the marketplace becomes reliant on the small number of large firms.  

[Read More: “ Why Are the Feds Subsidizing Baby Formula Companies? ” by Ryan McMaken]

The anti-competitive character of federal WIC plan is just one aspect of how small the formula market has to do with anything we might call “ the free market. ”

Protectionism Helps prevent Access to Foreign Formula

Another major and important factor is the restriction upon foreign imports enforced by federal law.

The US regime overall is extremely protectionist when it comes to dairy products in general, and formula is certainly no exception. As one pediatric medical journal  states flatly   “ Infant formulation in the United States is highly regulated. ” This can be seen clearly within protectionist trade law enforced on formula in the guise of protecting consumers.

As noted by Derek Thompson at The Atlantic: “ FDA regulation of formula is so stringent that most from the stuff that comes out of Europe is illegal to buy right here due to technicalities like labeling requirements. ”

These bureaucratic requirements fall under “ non-tariff barriers” which many cases present even greater barriers than tariffs.

[Read More: “ Thanks to Nontariff Barriers, ‘Free Trade’ Isn’t very Free .” by Ryan McMaken]

But tariff barriers are usually significant as well. Thompson furthermore notes that

U. S. policy also restricts the importation of formula that  does   meet FDA requirements. At high volumes, the tax on formula imports can exceed 17 percent. And below President Donald Trump, the particular U. S. entered into a  new North American trade agreement   that actively discourages formula imports from our largest trading companion, Canada.

However , those products that will jump through all those hoops face  further  restrictions. The FDA mandates that even qualifying formulation manufacturers  must wait around 90 days   just before marketing any new method.

As a result, unsurprisingly,   98 % of all formula consumed in the United States is produced domestically . Moreover, if that supply will be ever endangered— as it has been by lockdown-induced logistical problems and corporate recalls, United states consumers have few other available choices.

Trade limitations function to prevent reliable outlines of importation of foreign formula. Thanks to that 90-day delay on marketing, international suppliers can’t introduce  new   items to the market quickly, possibly.

So , when you have adopted children, a double mastectomy, or some other reason for needing formula for your baby, you can thank advocates of tariffs and other trade limitations for shortages.

Protectionists and their Excuses

Naturally, the particular baby-formula protectionists have plenty of excuses for why their preferred form of central preparing and big-government intervention in the marketplace is “ necessary. ” They’ll insist that FOOD AND DRUG ADMINISTRATION regulations are necessary to protect children— as if European baby formulation is not already heavily regulated. European infant mortality furthermore tends to be lower than US baby mortality, so the claim that protectionism is “ for the children” is clearly baseless.

These facts, nevertheless , don’t prevent Trump-style protectionists from claiming government rules are good “ since China. ”

Secondly, the particular protectionists are likely to claim that govt control of formula— and all other dairy-based imports — are  important because they  “ protects jobs. ” Exactly what protectionists are   really   saying  is that you and your family must just do without essential goods in order to protect hardly any corporations that dominate the particular formula marketplace thanks to US regulations.

Protectionism Means Punishing Entrepreneurs

Finally, there is little doubt that if the federal government in fact allowed some true degree of freedom in the formula marketplace that entrepreneurs would part of to import formula to meet the need quickly.

This, of course , can’t occur because these entrepreneurs don’t want to be jailed, sued, and otherwise destroyed by federal bureaucrats. After all,   protectionism must be enforced by federal government police and federal courts , and that means fining and jailing any importers who run afoul from the law. Protectionism is essentially about using violence against Americans who try to provide goods to market in ways that this protectionists don’t like.

Once again, the anti-capitalist “ fair  trade” advocates and advocates of WIC corporatism who caused these disadvantages will likely escape unscathed. Method industry lobbyists will deploy and ensure nothing is done in order to endanger the protection-induced income at the dominant firms. Welfare-state Leftists will ensure that the us government continues to subsidize these corporations as well. Rightwing protectionists can continue to insist that international goods must be kept out to make America great.  

Somehow, this is all capitalism’s fault.  


Leave a Reply

Your email address will not be published. Required fields are marked *