Government responsible for formula shortage
Parents still struggle to find formula.
The left and most of the media (sorry, is it the same thing?) accuse “corporate power of being unleashed”. House Speaker Nancy Pelosi said: ‘There might be a need for an indictment!’
They blame Abbott Laboratories for shutting down a Similac plant. The Food and Drug Administration says unsanitary conditions led to the deaths of two infants, but Abbott denies its formula recall had anything to do with those deaths.
In any case, a plant closure does not normally cause massive shortages.
My new video gives the real reason for the formula shortage.
First: import bans. There are plenty of formulas on supermarket shelves in Mexico and Europe. Normally American companies would just buy it and ship it here.
But they can’t, because of several destructive government policies.
“The dairy industry in the United States has a very long history of lobbying the government and obtaining protection,” explained Scott Lincicome, trade policy specialist at the Cato Institute.
This “protection” includes fat tariffs on preparations from overseas and outright bans by the FDA.
There was a gray market where people were circumventing these rules. “American parents have been using third-party sellers to get European infant formula,” Lincicome said.
Boxes of formula have arrived, but customs won’t let American parents have any. They “seized European shipments of infant formula at the border, much like a drug seizure,” Lincicome said.
Why are imports prohibited? For safety, says the government, but formula milk is often banned for stupid bureaucratic reasons.
“If you scooper the wrong way, get banned!” said Lincicome. “If you don’t mention a certain ingredient required by the FDA, you’re banned!” If the ingredients are listed in the “wrong” order or are not listed in English, the food is prohibited “even if a third party retailer provides you with the English translation”.
I said to Lincicome, “I would think the government would now suspend these rules.”
“It certainly should be,” he replied. “But the dairy industry lobbied very hard for these rules which basically provided them with a captive market. They’re not going to give it up easily.”
Due to the shortage, our government has now approved imports from a UK company. They also launched “Operation Fly Formula”, which flies formulas here in military aircraft.
But these answers are pathetic. They only pick up the few bottles made in FDA-approved facilities, and then waste time re-inspecting them when they arrive.
“They want to make sure the formula is safe,” I told Lincicome.
“A legitimate concern if it was infant formula from China,” he replied. “But the biggest producer of formula is in Europe.
Maybe the European product is not so safe.
“He is!” said Lincicome. “It’s exported all over the world.” But we can’t have it because “the FDA is extremely jealous of its regulatory authority.”
Another reason for the shortage is government-imposed limits on competition.
The US food stamp program, WIC, grants exclusive licenses in each state to a single company. Like all welfare programs, WIC (it stands for Women, Infants and Children) has grown. It now buys half of all infant formula in America.
Abbott Nutrition captured most of this market by offering the government the lowest price. Good for them. But after Abbott’s recall, parents had few alternatives to turn to.
“It’s going to take weeks for Abbott to restart manufacturing because they’re going to need FDA clearance,” Lincicomes said. “The time to fix this was months before the crisis hit, because we now have a very concentrated domestic market (and) a tariff and regulatory wall around the country.”
A lot of what the government does is try to fix the things the government messed up in the first place.
But politicians rarely admit it. They blame the companies.
On the floor of Congress, big government supporters like Connecticut Rep. Rosa DeLauro are complaining about “corporate greed” and demanding that the FDA get more money. “The usual suspects blame capitalism and greedy corporations,” Lincicome said. “Obviously it’s government policy that’s causing the biggest problems.”
John Stossel is the creator of Stossel TV and the author of “Give Me a Break: How I Exposed Hucksters, Cheats, and Scam Artists and Became the Scourge of the Liberal Media”.