The issue here is that the FDA and Abbot didn't treat it as an emergency when the Abbot facility was forced to close in the first place. Had they acted as if it was an emergency, they would have mobilized all available resources to clean and disinfect the facility, replace the faulty milk drying equipment, and get the facility back up and running. Here we are, months later and it's now an emergency. Sure, importing from other countries will help, but like toilet paper, it's a product that has a pretty consistent demand and there isn't a lot of surge capacity out there, even in other countries, so we really need to get the facility back online.
The issue isn't bad government policy - infant formula is strictly regulated for very good reasons, it's a lack of urgency from the government and private sector to make sure a medically critical product is available.
Also, of course, we shouldn't have let such a critical product mostly be made by 3 companies, but that's another rant.
Reason missed the key point. Well over half of US infant formula is paid for by welfare programs. Those have per-state monopolies awarded by competitive bidding. So it's not an ordinary consumer product.[1]
Seems to me that still falls under the umbrella of "bad government policy". So, you could say bad government policy doesn't explain the whole problem. There's also bad government policy.
This is Reason. Ther good government policy would be doing nothing, which wouldn't help poor families get formula either.
There's a case to be made about fine-tuning things in some ways as the article suggests, but it's still gross to frame this under the "government is bad" banner as Reason does.
This concern is especially relevant in the baby formula space, where Nestle killed thousands of babies by pushing their mothers off breast milk onto unreliably supplied formula.
> Their good government policy would be doing nothing, which wouldn't help poor families get formula either.
Sure it would. If baby formula were unregulated the price would be lower - this is obvious on its face. It would also (probably) be riskier, and the trade-off might not be worth it, but it would be cheaper.
We systematically underestimate how much poverty is worsened by regulation that increase the prices and/or reduces the availability of goods. The left has finally gotten religion here on housing ("YIMBY" just means "deregulate construction in order to drive down prices") so maybe there's hope.
Cheaper but deadlier doesn't sound like a very good tradeoff when talking about infants.
We are all worsened if the cheap baby formula has a 20% chance of killing your baby.
> If baby formula were unregulated the price would be lower - this is obvious on its face
This isn’t obvious at all. One steady state condition that occurs without regulation is a predatory monopoly and price gouging.
And we aren’t even talking about fraudulent or harmful products reaching the market.
No regulation just leads to a mafia state. Nobody wants it.
What are some examples of CPG unregulated less expensive products?
> This is Reason. Ther good government policy would be doing nothing, which wouldn't help poor families get formula either.
Their good government policy would be to give the poor families money. This would have the great side effect of getting rid of the idiotic state by state monopolies but the justification is the same as every other tied benefit. This is stupid. Give people the money and let them decide what to spend it on. They have the information and motivation.
I have zero faith that once the government programs are stopped the second step of giving money to the poor would actually happen.
As a parent of a newborn, none of the mothers we talk to actually want to breastfeed. Breastfeeding is a huge PITA for women, especially if they work. Despite the advice to breastfeed for 2 years it's rare if a mother lasts 6 months.
I guess you could argue that if formula wasn't an option then mothers would _have_ to breastfeed but then they couldn't work.
My point is that formula is a very attractive option for women so it's not like Nestle is holding a gun to their head. It's just a product they know people will buy.
The nestle thing is referring to a specific set of events it sounds like you might not be aware fully of. "Thousands" is a dramatically conservative understatement and while they didn't literally hold a gun to anyone's head (that I'm aware of, in this case,,,) they did do things like have reps dress as nurses and advise impoverished illiterate mothers that they needed to use formula knowing it would be received as trustworthy medical advice.
I may not be representing it that well but if anything because I'm trying to carefully control my tone and am downplaying the harm knowingly caused.
There are lot of different pressures on people and a lot of reasons why they might choose not to breastfeed but the nestle thing is not really that and is as clear cut evil as it gets really go check it out.
It is more that you live in an anti brestfeed bubble then anything else. 57.6 percent of mothers breastfeed after 6 months. That is not rare, that is majority.
Also, women who stay with baby for few months or weeks arw no rarity - and breastfeeding is significantly easier in that setup. Not everyone can or find it comfortable, but it is not that much PITA in median.
That’s one of the many reasons I’m glad that I live in, and had my kid in, Germany. The year I was off work wasn’t paid anywhere near my pre-baby post-tax salary (those payments are capped at 1800 EUR/mo), but because they cover up to 65% of previous net, and there are very strong legal protections for your job, taking that year is pretty much expected, followed on by a further two years part-time.
That said, I was also amazed at how reasonably-priced formula is here. I had other issues and ended up supplementing for awhile, and it really wouldn’t have been that big a deal - about 2-3 EUR/day using Hipp (midrange) powder if we’d had to feed it exclusively.
>This is Reason. Ther good government policy would be doing nothing, which wouldn't help poor families get formula either.
This is not quite true. There are plenty of libertarian thinkers that would be perfectly happy just cutting checks to poor people and letting them procure what the need.
It's a good thing our leftist betters are always around to remind us that every time this has been tried, it has resulted in baby formula manufacturers switching to bottling pure toxic waste and killing millions of babies.
It’s all explained here: https://mattstoller.substack.com/p/big-bottle-the-baby-formu...
Matt says ‘According to Healthy Babies Bright Futures, baby formula made by the big guys in the U.S. is full of dangerous brain-altering heavy metals. HBBF tested thirteen different baby formulas, and every single one had “detectable levels of arsenic, cadmium, lead and/or mercury,” which are all considered to be neurotoxic, interfering with brain development and “causing permanent IQ reductions in children.”’.
Rather unscientific heavy breathing about heavy metals, since some level must exist in all foods. Matt even links to a mommyhood101.com article in the above, which I guess is the secondary source for his opinion?
The question is: what are reasonable limits to exposure for babies? For example, what are the EU limits for baby formula?
Here is the original “paper”: https://www.healthybabyfood.org/sites/healthybabyfoods.org/f...
Healthy Babies Bright Futures (HBBF) paid laboratories to measure amounts, but superficially their analysis looks rather poor I think. Any good links to scientific critiques of their analysis?
> The question is: what are reasonable limits to exposure for babies? For example, what are the EU limits for baby formula?
Maybe the question I'd ask is "if you sample milk from 100 different human volunteers, what fraction of the samples also contain detectable levels of arsenic, cadmium, lead and/or mercury?"
I do think that doing analysis of household chemicals and publishing the results is a great idea. A consumer-testing company did some great ad-hoc analysis of sunscreens and found higher-than-acceptable levels of benzene, leading to widespread recalls, which I thought was awesome: https://www.valisure.com/valisure-newsroom/valisure-detects-.... Still confused about how they plan to make money from this (maybe they could lobby the government to mandate that labs like theirs must do testing on certain consumer products?). Also still confused about this led to regulatory action against them: https://www.consumerreports.org/product-safety/valisure-foun....
Some people in this space publish consumer advisory articles saying "we measured <X> in <Y> and found some <X>" and don't list a safe PPM, or their reasoning, and it's very tough to know what to do with this information. There's often extraordinarily little evidence about how much <X> is bad for you and sometimes we only get the evidence years after people have had hunches that it's not so good. (trans fats? https://www.vox.com/2015/6/17/8793937/why-fda-banned-trans-f... )
So it's tough to know what to do when the pesticide-in-food people publish an analysis which "does not incorporate risk assessment into the calculations. All pesticides are weighted equally, and we do not factor in the levels deemed acceptable by the EPA." (https://www.ewg.org/foodnews/summary.php).
I guess this is one reason to have a doctor and a pediatrician you trust -- because part of their job is to sift through the latest available information and have reasonable heuristics about safety and risks.
Did you consider finding another pediatrician whose view of the data better align with yours?
There is a whole bunch of stuff that has changed over time -- for example the fairly recent view that evidence now weakly supports swim lessons at a young age to prevent drowning -- and I really don't know how to keep up with this, other than by talking to a bunch of friends who are MDs and tracking their own choices vs. the data I see.
Here's the text:
https://www.law.cornell.edu/cfr/text/7/246.16a
It's technically allowed to have some other cost-containment structure than a single-winner contract, but there a bunch of criteria that I don't fully understand that make it sound like it's effectively impossible to actually do.
> "State agencies must support all waiver requests with documentation in the form of a State Plan amendment as required under § 246.4(a)(14)(x) and may submit such requests only in either of the following circumstances:
> ...
> The single-supplier competitive system would be inconsistent with the efficient or effective operation of the program. Examples of justifications FNS will not accept for a waiver, include, but are not limited to: preservation of participant preference for otherwise nutritionally equivalent infant formulas; maintenance of health care professionals' prerogatives to prescribe otherwise nutritionally equivalent infant formulas for non-medical reasons; potential loss of free or otherwise discounted materials to WIC clinics and other health care facilities; potential inability of a manufacturer selected in accordance with applicable State procurement procedures to supply contractually-specified amounts of infant formula; and the possibility of interrupted infant formula supplies to retail outlets as a consequence of entering into a contract with a single manufacturer."
So, you have to able to make a case that a single-winner contract won't work in your case, but you can't use the argument that a single bidder makes the whole system brittle if the single winner becomes unable to produce product. Wild.
I don't see any mention of breach of contract penalties if the supplier can't keep up with demand. Not sure if that means it's left to the discretion of the participating states.
I was wondering what legislation created this regulation, and it looks like it dates back to the Child Nutrition Act of 1966, though perhaps it's been amended since. It looks like the concept of "single source" contracts was there from the beginning.
https://fns-prod.azureedge.us/sites/default/files/CNA_1966_1...
How does that affect retailers being unable to get supply?
Imagine that EV tax credits worked the way infant formula works. Within each state, that state would produce a contract for supply of electric vehicles and open it up for bidding. The manufacturer with the cheapest car wins the bid. Let's say it's the Nissan Leaf. Within that state, Nissan agrees to sell the Leaf at a given price, and the state gives coupons to prospective car buyers good for $7500 off the price of a new EV (paid for through Federal grants to the state), but it can only be used if you buy a Leaf.
That's sort of okay as long as Nissan can keep up with demand (not everyone wants a Leaf but at least one cheap EV is on the market), but let's say they're hit with a supply chain issue and can't get a critical part. Other manufacturer might be able to step in, but they're not participating in the EV rebate program so customers have to pay full price. And in this alternate reality those manufacturers probably don't make cheap or even mid-range EVs anyways because it's not profitable -- they can't compete with Nissan because they're at a $7500 price disadvantage, so they focus on selling cars for rich people. The Tesla Model S might exist, but the Model 3 probably wouldn't. A system of artificial and completely unnecessary monopoly would stop a whole competitive industry from forming.
Who the hell thought that this system was a good idea?
Is it corruption?
It sure looks like regulatory capture to me (what better way for a major incumbent to establish an economic moat to prevent any competition in their market?), but it's possible that congresspeople legitimately thought it was a good idea at the time.
It increases demand for that particular brand, but manufacturers don't want to invest in increasing their production levels in case they don't win the contract for the next round.
So its not all government's fault
If you deliberately design an extremely brittle system you are at fault for designing a brittle system.
Even if the government was not involved, it was government's fault for not being involved.
Just look at the sister thread 'why didn't government stockpile my freemarket products for me'
Only when the government specifies how things must be done.
You break it you bought it.
Oh look a Reason article where "government is bad." What a shock.
Baby formula needs to be closely regulated (see: history around baby formula.) Poor people need to be able to care for their babies (see: babies dying is bad.)
Seems like things went awry here, but the policies in place are all worthwhile in my view. (Limiting the import of baby formula from other countries falls under the need to closely regulate baby formula.)
If anything this is evidence that something so important to human life shouldn't have any for profit organizations involved because those companies can choose to risk not having adequate supply if the upside of that risk is greater profit.
Profit is just one of the many incentives that can and occassionally will cause great suffering.
Leaders and administrators of non-profit organizations won't be concerned about profit, but they are still imperfect humans and will be concerned about other things that may cross-interact with the original mission of the organization, like "staying in power", "winning an internal power struggle", "promoting their relatives or former students", "having 0 failures on their record and thus blocking any development that may lead to failure, even though there are big potential gains", "pushing certain political or religious viewpoints" etc.
Look at how dysfunctional the current scientific grant system is for a nice example.
> Oh look a Reason article where "government is bad." What a shock.
Let’s leave ad-hominem attacks on the publication out of this, shall we? I think we need more journalism that questions government and its efficiency. Not less.
It’s doing rather a disservice to excellent points you’ve brought up.
It’s only an ad hominem if Reason is ashamed of being libertarian. Which they probably are not.
It’s rather a wider point: this is where this publication is coming from. It’s part of their overall mission.
Sure. Only making this point can get tiresome. You just end up with a bunch of meta comments. But the GP also pointed out why this thing needs to be regulated. As in GP actually tried to counter their arguments. GP is staying on topic.
Pointing out media bias is just as important as pointing out inefficiencies in government.
Meta: We never like to point out media bias of NYT, but have a bias for pointing out how biased anyone else is.
NYT gets a free pass.
Can you imagine a comment that starts with something like this:
“Oh look a NYT article where government is good." What a shock.
—- But I digress. I agree, we should point out bias, but shouldn’t reduce the entire article to “What a shock”. Otherwise, we’d throw away every newspaper since they’re all biased. Right?
There are plenty of comments like that but dang does a good job of making sure they never violently assault your eyeballs.
But NYT reports on how gov is bad sometimes
We need dramatic supply-side improvements to get our way out of this inflationary spiral.
We need to unleash America's entrepreneurs to create more stuff to soak up this excess money. More housing. Lots more housing. More products with fewer roadblocks to bring products to market. The fact that it took over a year for American masks to come to market, just in time for them to not be needed, in large part because of regulation is a sign of how bad things have gotten here.
We need more energy too -- wind, solar, nuclear, and yes fossil fuels too. (Our current policy of begging Saudi Arabia to provide us more oil, when we have plenty in our own backyard makes zero strategic sense. Not to mention how high fuel prices are enriching our adversaries like Russia.)
This is incredibly short-sighted and ignorant of any externalities. We lost American manufacturing not because of regulation, but because of trade policies that allowed global corporations to avoid those regulations and profit by outsourcing manufacturing to countries with laxer regulations.
I do not want 'America's entrepreneurs' to start producing infant formula without any safeguards. That is recipe for disaster.
>We lost American manufacturing not because of regulation, but because of trade policies that allowed global corporations to avoid those regulations and profit by outsourcing manufacturing to countries with laxer regulations.
So how is that not losing American manufacturing to regulation? If other countries have laxer and more favorable terms for businesses and those business are succeeding, that's sufficient evidence to demonstrate that regulation stifles manufacturing.
You phrase your statement as though regulations are naturally occurring substances rather than the wishful, bureaucratic, and often violent mandates of government that they are. If the government has enough agency to compose such regulations, it should have enough agency to acknowledge and accept the resulting consequences when businesses vote with their feet and their wallets.
What I am saying is that in order for regulations to NOT cause businesses to 'vote with their feet and their wallets', we must also enact trade policies so that it is NOT cheaper for businesses to seek the laxest regulation (i.e. enforce tariffs for the difference in cost).
If we do not care enough about the regulation to have a tariff, then the regulation should not exist.
>You phrase your statement as though regulations are a naturally occurring substances rather than wishful and often violent mandates of government that they are.
Lol, what is this even? I'll bite though. Regulations are naturally occurring insofar as any other human invention is naturally occurring. All laws are regulations on behavior, and all laws are wishful. There is still murder even though we have laws against shooting people. For me, at least, that is not a reason to do away with laws, but to each their own.
>You're solution amounts to imprisoning or punishing companies for pursuing their economic interests.
Yes, I am so glad you understand. When 'economic interests' of a business run counter to 'societal interests' because of trivialities like pollution or contamination of infant formula leading to death, then society, using government, enacts regulations so that the harmful action is no longer in the 'economic interest' of the business because if the business takes that action then they will be punished.
>No one's rights are being taken away when a company chooses to trade/build in another country
That depends heavily on that country's stance on human rights.
Deindustrialization is, in my opinion, just a natural phase brought on by the profit motive. Labor and raw materials are always going to be the most expensive parts of producing anything, and even if we converted the United States into Ancapistan tomorrow, labor in Asia would still be cheaper. Our countries are just at different stages.
Deindustrialization will hit China and the rest of south-east Asia in time too. China right now is experiencing the boom we experienced post war.
> If other countries have laxer and more favorable terms for businesses
The "laxer and more favorable terms" include the fact that people in those countries are willing to work for pennies a day.
Unless you're proposing a substantial decrease in wages in the US, companies are not going to decide, of their own will, to bring those low-skill manufacturing jobs back.
The US is extremely close to its peak in manufacturing.
> Total production of U.S. factories peaked in 2007 before falling by 18% during the Great Recession, according to the Federal Reserve’s industrial production report, which measures the volume of goods produced rather than the market value of those goods. The manufacturing sector has nearly recovered from the recession; output in 2015 was within 3% of the 2007 level.
https://www.marketwatch.com/story/us-manufacturing-dead-outp...
We should also consider adjusting for population, if not consumption, when talking about how close we are to “peak” manufacturing output. GDP per capita means a whole lot more than straight GDP. We should apply the same logic to conversations about American manufacturing.
…and countries with massively cheaper labor. Imagine what MIUSA iPhones made with 100% MIUSA parts would cost (if they could even exist, given the realities of semiconductor manufacturing today).
> 'it took over a year for American masks to come to market, just in time for them to not be needed, in large part because of regulation'
What it really regulation that was at fault for masks being so delayed? The entire suplly chail for meltblown is missing.
There are more tooling engineers in the city of Shenzhen than in all of North America combined.
A basic masks that an average citizen had to wear to take the metro does not even come with any medical certification, what regulation was getting in the way, the need to file taxes?
> There are more tooling engineers in the city of Shenzhen than in all of North America combined.
This is because tariffs are not high enough to compensate for Chinese workers being paid below US minimum wage.
Chinese tooling engineers are highly paid
https://www.salaryexpert.com/salary/job/tooling-engineer/chi... Average pay is ¥230,664 or approximately $34,000 USD. That's probably pretty good at twice the average Chinese salary.
I think you diagnosed the problem, but not in the way that you think.
We have huge price increases because the governments printed money for so long. Price increases were always predicted by free market economists. You don't make anyone wealthier by printing money. You don't build factories, make people smarter or increase resources. All it does is redistribute wealth to the first people that get to use the new money (banks and wealthy elites) and increase prices.
I'm well aware the cause of inflation is bad monetary policy.
But now we have two options: control inflation by causing a severe downturn that will be painful, or control inflation with supply-side economics.
We need to match supply and demand -- either by reducing demand with a recession, or by increasing the supply of goods and services. Increasing the supply side of the equation will be better for everyone.
> We have huge price increases because the governments printed money for so long.
Not really. The unemployment checks did result in inflation, but the huge increase since November is because higher order supply chain issues (that started with the pandemic, ships waiting for unloading for many days, longshoreman on sick leave due to COVID, lack of empty containers, trucking industry problems, big swings of spending from services to products due to working from home, semiconductor shortages completely fucking up manufacturing schedules, then a few new waves of COVID in China, and so on).
There's also a cascade effect that happens because if something is out of stock people will buy something else, so the price of that will go up initially, then it will also go out of stock, because the next batches are sitting in containers somewhere.
> You don't make anyone wealthier by printing money.
That's not how it works.
Public spending has a fiscal multiplier, if that's greater than 1 then it does increase wealth. Public services, infrastructure, education, healthcare, all have high multipliers. Of course some have less than one, eg. giving tax credits to Amazon for moving their HQ, end of life hospitalization is arguably overdone in developed countries, a large chunk of military spending, spending public money on sports/stadiums, etc.
On top of this printing money during a pandemic is extending credit in time, so the private sector doesn't start a contagious bankruptcy chain.
...
Then after all this the Fed did wait too much to increase rates. (Mostly because the unemployment numbers were/are still high.)
This isn't really relevant. Either formula buyers have more money and so they can afford formula, or they don't and so formula would not inflate as much as other products.
Inflation only hurts when some buyers of a scarce good are benefiting more from money printing than others. This doesn't apply to consumer commodities.
Is it really regulation? Anecdotally this appears to be a knowledge/capability problem. We haven't grown domestic industry in so long that I honestly don't think many still know how to actually build.
If you give money to businesses that for the last 50 years have simply become experts at dealing with international supply chains... You’re probably just going to have the money sent abroad.
The amount of paperwork and approvals even simple businesses require to get off the ground is mind boggling. Some make sense. Most, from Phoenix’s generic municipal business licenses to California’s foreign entity fees or New York’s entity publication requirement to Texas’s hairdresser licensing requirements or many HOAs’ aesthetic policies do not.
Have you researched why those regulations came about?
> Have you researched why those regulations came about?
Yes. Almost all of them stem from before the internet. Publication requirements prevented accidental trademark infringement and provided public notice. Similarly for foreign entity registration. Business licenses linked business addresses to the tax registry. Hairdressing because many barbers provided shaves, which involves a sanitary component.
It's surprising how regs slow things down - it's just an accumulation.
Southern Cal wanted a desalination plant. Spent a TON of time in development. Shot down. Repeat time 100x, kind of crushing I think.
When the drought is extreme enough government regulations will be changed. Like how environmental reviews are being shoved to the side to export LNG to Europe.
But before we build extremely expensive desalination, more effective and lower cost actions must come first. Reforming water rights law to stop insane use it or lose it incentives (e.g. flood irrigation of almond trees). Renegotiating water treaties. Increasing water efficiency in agriculture. Xeriscaping. Higher water prices that will hold down demand and provide a self-enforcing incentive to reduce waste, leaks, and low value water consumption. And better finance water works.
Reduce, reuse, recycle.
And this is where we run slam into problems. This was privately developed and paid for.
YOU have decided that another solution "MUST" come first because supposedly you understand the economics better. But these guys were willing to stick some money behind their idea. Govt cannot understand why private enterprise works, and this shoes it. Why not let them lose their shirts if it is such a stupid idea (hint, it's not and the folks talking down the economics are going to have massive egg on their face in 5 years).
In private enterprise without the blocking power of the red tape its likely a number of solutions could be brought to bear.
More market rate water pricing (hello alfalfa for china). Actual development of additional water sources (despite billions we get bupkis despite massive population growth).
Instead, we are getting local residential water use regulations that are comically extreme, and on a % basis do almost nothing.
And yes, the penalty rates for certain residential water use make that "extremely expensive" desalination plant look very very cheap.
Literally every proposal is met by some govt or other do gooder saying it's not good enough and there is something better to do - meanwhile nothing happens. That is until enough stupidity collects in a room and we get multi-billion dollar expenditures on things like hydrogen with almost no natural market demand.
> and yes fossil fuels too
It depends on your goals, if you want to absolutely destroy the global economy and wealth in 30 years for a short term shot in the arm, then sure.
Has there been a president more willing to burn regulations than Trump? If the delay happened despite him being in charge, perhaps the explanation is more complex than “it happened cuz regulation”?
Yes. Presiden Carter. He got the ball rolling, no small feat. Also accomplished more than Reagan, who nonetheless got all the credit. President Clinton was also committed to regulatory reform, but I can't judge how his admin compares.
It's not surprising that Reason points to trade restrictions which makes sense because importing food from Europe should not be an issue, but on the other hand, why does the government, federal or local not have a stockpile of well... the stuff you feed infant children with?
Same situation as the masks again. Yes, free trade alleviates these issues but only if you're not in global bottleneck which seem to be increasingly common with supply chain and production issues. This is food security, and countries should have the industrial capacity and backup to not end up with empty shelves.
> free trade alleviates these issues but only if you're not in global bottleneck
Which we are not with regard to infant formula; as the article notes, there's plenty in Europe that meets standards at least as stringent as US standards, the FDA just won't let US customers buy it because of stupid labeling requirements.
Also, your implication that in a global bottleneck, free trade doesn't work as well as other solutions, is not correct. Free trade has the least severe failure modes in global bottlenecks, precisely because there are no artificial impediments that get in the way of producers adjusting to market conditions according to straightforward economic incentives.
> the FDA just won't let US customers buy it because of stupid labeling requirements.
The labelling requirements don't strike me as that stupid; the Reason article links [1] with the text "formula available in Europe tends to meet or exceed the FDA's nutritional requirements, but not the labeling requirements", but it actually provides some good reasons:
"It was found that European formulas do not meet all FDA label requirements, including many not being in English, which may lead to the incorrect mixing of formula [mixing tends to be different for European formula]. The average listed nutrient levels of all but one of the identified imported European formulas fell within the minimum nutrient level requirements of the FDA. As the nutrient levels on the labels of European formula represents an average and not a minimal level, it is difficult to compare the actual contents with US formulas. In addition, it is important to note that hypoallergenic is defined differently in Europe than in the United States. Therefore, partially hydrolyzed European formulas may be labeled as ‘‘hypoallergenic’’ or HA, which is not appropriate for infants with CMPA and may lead to improper treatment of an infant with CMPA."
Expiry dates as being in EU formats (i.e. for the US' weird m/d/y thing) was also mentioned, as well as using US measurements rather than metric (whether the US date style and imperial units are a good idea is besides the point here: fact is it's what people use).
There were also some other much more minor issues, but these don't seem entirely unreasonable or "stupid" to me, especially the requirement that labelling should be in English, but also the different definition of hypoallergenic.
These problems are fairly minor and can be fixed without too much effort though.
[1]: https://naspghan.org/wp-content/uploads/2019/10/October-2019...
I don’t believe labeling requirements are preventing anyone from exporting to the US. Printing a new label and slapping on top of the existing one isn’t something that would hold anyone back from exporting.
Labeling requirements are common practice everywhere. And the solution is for exporters to print a new label that conforms to the requirements and place it on the product.
As I understand it it's not so much the labelling requirements per se, but rather that the FDA needs to approve the formula, including the label, and that takes times. For example the FDA probably wants to test that the nutritional content on the label matches what's actually in the product, or that it's not adulterated. This is fairly reasonable under normal circumstances IMO.
Some other requirements (like not having enough linoleic acid or iron) are perhaps more problematic than just the labels, and allowing formula which doesn't quite meet the requirements is a kind of unfair competition (that they happen to be imported from the EU is not really important as such).
It likely isn't the FDA's choice, there are a lot of statutory requirements under 21 USC 350a that requires inspections, audits and specific quality control measures that can't be set aside via CFR with an emergency rule making process. Changing these would require Congress to act, but bilateral food regulations on something as sensitive as baby formula is not a topic that lends itself to quick resolution.
You'll notice most of that law is giving authority to the Secretary of Health and Human Services, which is the same person that runs the FDA.
It does if the baby starves otherwise.
> there's plenty in Europe
Is that actually true? I would expect formula to be the kind of thing that has a very consistent demand profile, and there wouldn't be a lot of surge capacity in the European manufacturing plants.
Isnt that a really easy to spin up business slapping stickers on bottles and shipping them to the states?
IDK why are you getting downvoted. This is precisely how things are often done in Europe. On a continent with fortysomething major languages, you cannot possibly fit all descriptions in all languages onto the preprinted packaging. If I go to a Bulgarian store in Prague, all the ajvars, jogurts and kjufteta will simply have a Czech instruction label slapped on them.
The lack of a stockpile is due to limited shelf stability and long-term bacterial growth.
It's unfortunate Reason doesn't expand on the other side of this issue: the formula industry lobbied the FDA to reduce bacterial testing frequency (and inspections overall), with an emphasis on Cronobacter risks, arguing that the FDA "overestimat[ed] the expected annual incidence of Cronobacter infection". [1]
[1] https://theintercept.com/2022/05/13/baby-formula-shortage-ab...
It seems that the regulatory system is broken and I don't know how to fix it other than to remove the barriers of entry to this industry.
Four manufacturers, consisting of 89% of the nations supply, have so much influence over a regulatory agency insofar that they can write their own rules. Four manufacturers are able to shape the competitive landscape because the government has deemed their voices vital.
> why does the government, federal or local not have a stockpile of well
Because the real issue is that we have no diversity of supply.
1) We have allowed everything to become monopolized such that losing a single supplier knocks out large chunks of supply. At this point, it is quite clear that for economic robustness, any company found to control more than 25% of the market for any product should be repeatedly broken in two until that is no longer true. But that would require robust anti-trust enforcement.
2) The suppliers are Always-Late(tm) Inventory optimized such that they can't absorb a significant uptick in demand without a long wind up time. Covid comprehensively demonstrated that industrial producers no longer have the ability to "retool". By removing as many humans from production and replacing them with automation, the productions lines have traded any flexibility for maximum profit.
In 1, what's the product that you're considering the market share of? An iphone 13 mini? All iPhones? All smartphones? Or any phone? Or any portable computing device?
A Macbook? Or a laptop? Or a computer? Or a computing device (to include laptops, desktops, tablets, and smartphones)?
I don't understand what the two have to do with each other.
You say there's already a monopoly but if we'd bought a stockpile from the monopoly at market prices, we'd... still have a stockpile.
The point is that you don't need a stockpile if you have supply diversity.
If you have two suppliers, one going down clobbers half of the market and the other company has to ramp up 100% to take over. That's simply not feasible.
If you have five suppliers and one goes down, the remaining four companies only have to increase 20% each to take over the load. That's not easy, but it's actually in the realm of being possible.
There are lots of crucial goods, right? I don't see how the government could stockpile all of them. And infant formula is only good for a couple years, right? So it would have to be an ongoing project to keep it good. n95s eventually degrade, but I believe they've got a much longer shelf-life.
Also, masks become unusually important when there's an epidemic, so we wouldn't expect the economy to have capacity to deal with that. We should expect that in a well balanced economy, the supply of baby formula should basically match the demand. It seems to me that instead of government stockpiles (since they can't stockpile everything and don't know what will be needed) it would make more sense to monitor the market more closely and keep tabs on inventory... and, actually, it is pretty surprising that they didn't catch this before it became an issue.
Stockpile to a point and then regularly auction off things that are nearing end of life (or, in the case of baby formula that is heavily provided by state programs, just give it to the states to distribute).
We have national oil reserves. Having reserves of other essential assets seems fine to me, especially in the case where there are few substitute goods.
Why is that necessary when it appears there is sufficient global supply and regulations are causing it to be unavailable to the US market? The issue isn't a shortage of production, as far as I can tell. And even if there were, a stockpile only absorbs a temporary shortage. A strong industry with many producers is what the government should desire, I imagine.
I'm not a national defense expert, but it seems to make sense to ensure your country can get access to essential goods. One possible solution would be stockpiling them. Another would be maintaining the capacity either in the state or the private sector to acquire or manufacture them rapidly. It feels like hindsight 20/20 to say "why didn't the government have a stockpile of [thing we had a shortage of]".
It appears to me the policy here led to essentially a single point of failure or low optionality for the market to get the product. Not clear stockpiling is the answer to that problem.
It's literally impossible to stockpile all essential goods.
In our current political climate, people would attack this during the good times as wasteful and not a good use of money. I agree with you, but we have a party in this country that doesn't think good governance is a virtue.
I was actually thinking of something like that as well. If nothing else, the cast-offs from a stockpiling program could be a nice social welfare program.
> n95s eventually degrade
Only the ones that depend on an electrostatic spray to assist filtration.
Apparently all of their rubber bands eventually lose elasticity (but it is a very slow process).
Could they be made with a piece of string instead that the wearer has to tie?
It’s also funny that the thread talking about how this problem results from one monopolistic factory/company is so much further down the front page compared to the one blaming government regulation
The government regulations enable the monopolies. It’s incestuous.
The classic, "if you're prepared and it doesn't happen, it looks wasteful" reason. Or even if it doesn't happen, because you were prepared and released the stockpile, folks don't realize that's the reason. So prep for some politician to cut it.
Although, if it's more of a buffer in the supply chain instead of a strategic reserve, the waste doesn't have to be that great.
Which takes us right back to JIT vs JIC.
Perhaps sensible regulation on just how lean manufacturing may be in critical industries. (It's a race to the bottom, so re-define the bottom & let the market re-optimize)
One fun thought: for identified industries, each production line maintains X days of inventory of any foreign dependencies. The implications are interesting to ponder.
Plus, if it does happen, but the other party is in charge, they take all of the credit.
Even if that happens, it's a good thing we filled up the oil reserves back when we did.
Agree it's a good thing. Purely from an incentive perspective though, there's a perverse incentive to let your opponents take the blame for things that you did, and take the credit for things that they did.
or worse, we have too much captivity and donate overages… the horror
Because like most things the govt stockpiles it would just go to waste.
Why not just get rid of the regulations? It’s free, and saves everyone money and alleviates shortages.
Personally, I love having moved to a country where no one relies on the govt for anything.
Because some of us don't want to buy infant formula that's full of lead, bacteria, cellulose, or whatever other garbage would end up in it?
Why not just go back before the FDA existed, in other words? Because it's generally frowned up when people mix things like plaster of paris, "bluish, white compound of true milk, pus and dirty water" and sell it as milk.
This stuff happens even with the FDA.
I don't think anyone is making the claim that regulation is foolproof. But the idea that no regulation is inherently better seems specious.
Risk isnt free, it's mitigated by insurance costs, and when the negatives happen, from the government stepping in as the last resort.
You don't save money by sending infants to the emergency room because they are bad formula
"Personally, I love having moved to a country where no one relies on the govt for anything."
So it can be like supply of cocaine, laced with horse manure and rat poison?
I can assure you the cocaine here has far fewer impurities here than your FDA regulated / CIA sponsored coke in America.
> why does the government, federal or local not have a stockpile of well... the stuff you feed infant children with?
Isn't infant formula a solution to a problem that is in large part created by infant formula manufacturers?
There are a number of reasons for a mother to choose formulas:
- baby has special diet needs
- mother doesn't produce sufficient amount
- mother is on medicine, supplements or drugs that would be expressed via breastfeeding
- mother works and preparing / preserving pre-pumped milk isn't feasible
- mother is dead
- mother chooses to use formula
Only in the last case is the availability of formula itself to blame, and even then the notion that it shouldn't be an option is somewhat cruel.
It seems to me like it could be prescription (though first a real health system would be needed) if there is a shortage. I mean I think the last one is 80% of the market and putting the other 20% of infants at risk.
> A doctor writing a prescription for it doesn't help you get any if there's not any available in significant quantities- it's not a one and done thing, it is literally all the baby can eat until they've grown enough to be weaned off.
If it is available in any quantity then needing a prescription keeps it from being used for infants that don't need it. (Market naturally drops but I don't think risking the health of many infants who don't need formula to keep it cheap is a great ethical move anyway.)
There are infinitely refillable prescriptions and nutritional prescriptions, they have an advantage that they can be billed to health insurance which is fairer if an expensive diet is a medical need.
The overall effects of losing the local market, importing for infants that need it and having insurance pay much higher costs may well pay for itself if we could measure the future health consequences of unnecessary formula use.. but the rule of do no harm means we shouldn't try to feed kids formula without a medical need.
This is just wrong. A non-insignificant fraction of women can't produce milk in high enough quantities to feed infants. This is an undisputed fact.
The only alternative to robust infant formula supply is to accept pre-modern levels of infant mortality. Period.
Wet nurses exist. Period. I know of more than one woman who donates breast milk. They both have continued to pump as their kids grow to give back to the community.
“Wet nurse” is a phrase for this very reason.
Wet nurses are extremely expensive, they also introduce a variety of challenges in modern times as you must trust a stranger to carefully and correctly preserve the milk, not dilute it with anything, and be in good health without any complicating factors.
When all is said and done, milk can be purchased peer to peer at roughly 4x the cost of infant formula or between 1 and 2 dollars per oz. Purchasing through a service with some notional guarantees on the above concerns increases the cost to 5 dollars per oz. A 3-6 month old can consume 40+ oz per day.
Can you elaborate on this? I've always been surprised at how many families use formula. Do mothers just not breastfeed much anymore?
Exclusively breastfeeding is very challenging to do while working, for one. Even at my megacorp with a dedicated space, a hospital grade pump, and 2 hrs a day dedicated only to that, it was a substantial hit to supply. Considering that most women don't have those amenities and support I'm not surprised they don't breastfeed exclusively after their mat leave (for most women in the US, 6 weeks unpaid)
Not to mention - it can be painful (if I had no option of course I would endure pain for my child, but there is no shame in looking for something less painful) or the baby can not learn to latch (formerly known as "failure to thrive" and a driver of infant mortality)
I've recently become a father and I do wonder how much US maternity leave (or rather, lack thereof) accounts for your high formula usage.
While my wife is coping, it's still very draining to handle a newborn and pump at regular intervals, even at 10 weeks. If she was in the US and had been forced to go back to work already, she may well have given up on breast milk already.
> Do mothers just not breastfeed much anymore?
Mothers who can't breastfeed adequately don't have any of slaves, paid wetnurses, or children that die of starvation as much as they used to.
Nursing is nearly a full time job. When I was doing it with a six month old via pumping, I tracked my hours spent one week and came up with 30 hours. With another baby, I was nursing in the evenings when home from work, and it was literally 3-4 hours a night. Every night. And often almost a full hour in the morning before work. It varies from baby to baby, but it's a brutal time commitment.
Also, when you're nursing full time, you can't leave the baby. Ever. Getting a haircut requires significant planning because if the baby gets hungry, it is your problem and yours alone. If you want to go shopping or see a movie or just leave the dang house for any reason at all, if you want to do any activity that occupies you for a length of time and is hard to interrupt, you need a baby plan. And for a period of months, when in love with a newborn, this seems totally fine and totally worth it. But somewhere on the road to a year? Being able to hand a baby to someone to watch for an hour or two and go do things is amazing.
Don't get me wrong, nursing is a wonderful experience and very important for the health of mother and baby. But the value diminishes over time. With a preemie, it is downright lifesaving. With a newborn it has proven lifelong benefits. But somewhere around the time they're eating cheerios and licking the floor and snacking on apple juice, and you have other things to do, you ask yourself if it's really worth what it costs. At least, I did.
Where you come down on the value of breastfeeding vs formula really depends a lot on your life circumstances and the relative priorities you place on mothering via milk, and mothering via other activities. When and where you leave off is very personal. Some women want to nurse toddlers, and I support that. Some women want to use formula from day one, and I'm not crazy about that, but life is varied and sometimes circumstances dictate and when they do, I'm glad we have the option. In particular, I think this is really common after a C-section, which makes sense -- mom is recovering from surgery and breastfeeding can involve resting a baby on a recovering wound! I'd certainly never second guess someone who thought it more important to have the energy to be emotionally present with the baby, even if that meant feeding baby a different food than they'd wish for in a perfect world. Milk has its benefits, but having an emotionally healthy mom counts for a lot, too. Probably more. And it's a long journey. Trying too hard to do everything perfect can result in mental health issues for mom, which isn't good for anyone, baby included.
Some women transition early, and I support that, some do late, and I support that, too. All parents try to do right by their children, and for some that looks like laborious custom homemade food and for some that looks like neighborhoods and education and opportunities. I do think we'd be better off as a society if it were more practical to nurse for the first year--I think a lot of women would choose it if it were easier. But that involves understanding it like the full time commitment it is. Can I put a year of "full time mom" on my resume? Three times? Can I take a year off of work? Is spending a year nursing seen as a normal and honorable career choice? That's essentially the ask. Whether the gap is made up by state or society or family or whatever, the world would have to look pretty different for me to find it a practical option to make such a commitment to nursing that formula was entirely unnecessary. For some people it's that important. Some would like to, but it's too hard. Some people aren't cut out to be full time moms. And sometimes even full time moms think it's better to use their energy for other things.
Yeah, I suppose I'm overstating it. It would be better to say that when you're full time nursing, going and doing things requires planning and support.
When I was directly breastfeeding exclusively, stepping outside the house for an hour felt crazy and scary. You're right that it got easier as the baby got older, and I knew the baby wouldn't die, but I wanted to be there for him!! Who wants to leave a kid hungry when they need you? So from a practical perspective, I rarely did anything.
When I was pumping, I worried about supply and timing and what I'd left behind and if I'd make it back in time to sufficiently support everyone's biology. It was doable but I was always planning around it. Better, and now hours on end became practical, but the hassle still made it hard to want to go out. You're always worrying, if you miss your pumping appointment, if that means ultimately baby won't get enough. I mean, you know that's not true, but you worry. The practical effect for me is that something fun and easy that doesn't fit perfectly in the schedule -- like seeing a movie -- just doesn't seem worth the stress. So you never see movies.
But man, the sheer freedom of being able to tell grandma "Here's the baby, here's a box of unlimited food" and not think about it. Man. If you want to know why people make that call, I'm sure that's a factor. That's really what I mean.
Not surprising at all in a country with very little to no paternity leave. The mother is not with her infant 24/7, and the baby has to eat.
Check the female workforce statistics. We decided as a culture it was more important for women to be working than “wasting time” raising and caring for their children.
This development has occured in most of the world, including some rather conservative societies like Japan and Iran. The sad truth is that modern economies need a lot of educated workers.
How exactly is it a problem caused by infant formula manufacturers?
Infant formula makers market their goods aggressively to new mothers. The formula makers fully understand that once a child is on formula, a mother will soon stop being able to create her own milk and the baby will have to use formula from then on.
Not every new parent fully understands this, especially in places that don’t have a lot of marketing dollars spent influencing people at one if the most vulnerable times of their life.
This can, and does, lead to situations where the mother’s milk dries up “early” and then formula isn’t available and the baby dies.
See https://www.ranker.com/list/nestle-baby-formula-boycott/meli...
It's also incredibly common for mothers not to have sufficient supply regardless of formula use. This results in a negative spiral where the baby won't be fed enough, and the mother isn't able to sleep, resulting in even less supply. Formula allows the mother to sleep, and the baby to be properly fed, even when they mother wants to breast feed.
I deliberately said “new parent”.
Some mothers want to breastfeed but don’t produce enough milk.
Reason never found a regulation they didn’t hate or cast as the root cause for a complex problem. The Kochs created it specifically to promote that point of view.
> "only" if you're not in global bottleneck
Weird thing to bring up for this very local bottleneck.
Mostly because of one factory being closed by regulators, if I understood things.
There is tons of formula just across the borders in Canada and Mexico.
There is formula available in Canada, but there have also been some shortages recently. We're not completely immune.
In addition to this, the reason that Europe is an attractive option for baby formula is because their regulatory bodies take "food for infants" more seriously than we do here.
Does "Europe" have an abundant surplus of infant formula that they are prepared to export? A lot more mothers breast-feed in Europe, formula feeding is rather uncommon so why would one expect that inventory is available to send somewhere else?
And then you have the mother in Tennessee who gets a can of German-labeled formula powder, with mixing instructions in metric. Is she going to add the correct amount of water? Or are we going to re-label it? Who does that? Who checks it? How long will it take?
I don't think this is the simple answer it appears to be.
Being from Paris and living in The bay area, a lot more women breastfeed here than in France. Even in the countryside of France, where my extended family is, few women breastfeed.
Please let’s not make blanket statements about Europe vs USA.
Clearly, European countries will be touchy about exporting baby formula. Also, the food regulation being widely different, I’m not sure how easily one could import european baby formula
> Clearly, European countries will be touchy about exporting baby formula.
Formula will have to be labeled in English (and possibly French or Spanish) to not violate EU Export Regulations.. No one got upset about bulk exports to China, shipping direct consumer containers was OTOH illegal.
Certainly, since this would be the first food Americans have ever imported from Europe, there is no framework for Imperialization of nutrition labels, since no one has ever done it before in the history of ever. Congratulations you found a show-stopper!
It can’t be that hard to add a label on top of the existing label.
These are fair points. I suppose I was giving Reason the benefit of the doubt about the EU being interested in selling some type of surplus. Certainly not a forgone conclusion, as you pointed out. The most potent critiques of libertarian thought often rest their case on the world as it is, not as the libertarians imagine it to be.
I did a cursory googling and you are correct that formula feeding is less prevalent in Europe. TIL. My only knowledge was that, anecdotally, I know several expats that prefer EU formula for their kids. This jived with my general sense of more stringent EU regulation around food safety.
Yes.
Another example of "we don't know that it's okay, so you can't have it." This flawed logic has been used in various forms to create twisted reasoning for plenty of stupid laws. E.g. We don't know that you're not going to use the cold medicine to make meth, so you can't have it." The presumption of innocence is dead.
There are excellent reasons to generally forbid the import of certain critical items such as infant formula- as a matter of national security, for example. It's important that this industry exist domestically.
However, in extraordinary cases such as we are in right now, the appropriate thing to do would of course be to import formula from other countries to make up for the shortage.
Seems to me that this is the sort of thing that should have already been approved by the FDA, and controlled purely via import restrictions/tariffs, so that more can be quickly imported if needed.
>>> as a matter of national security
If this was a national security issue, someone from NIH and FDA and welfare departments would be having public service announcements extolling the virtues of breast feeding.
Mostly like the Biden administration will start doing this in the next two weeks. It will quietly sweep under the run the problem and say it's the population that's not following the science.
This article is a summary of a different article: https://capitolism.thedispatch.com/p/americas-infant-formula...
It seems odd that the posted article ignores how WIC contracts are distorting the market and encouraging a monopoly and instead jumps on over-regulation being the problem. It sure seems like those contracts should either not be exclusive or should require suppliers to demonstrate supply resiliency in the face of a single factory failure.
Two things to know as well. WIC only pays for certain sizes for formula[0] purchased at retail because they're afraid that poor women will stock up on formula or resell it. Also women have to pay part of the cost of the formula for the same reason.
> Many others have simply switched to Enfamil. Increasingly, they reach for the 12.4-ounce cans, the only size paid for by WIC.
> “I’ve gone to stores in Long Beach, I’ve gone to Rolling Hills, Carson — I’ve gone to Inglewood just to see if I could get lucky,” said Landers. “If they do have it, it’s the larger size; it’s not the size that’s approved.”
[0]- https://www.latimes.com/california/story/2022-05-13/baby-for...
I was frankly alarmed something like half of kids qualify for WIC.
Don't get me wrong, feed em, but why is child poverty so bad in the US ?
WIC eligibility can vary by state, but is between 100% and 185% of the federal poverty level (I spot-checked a few states, and all I saw was 185%). 185% comes to ~$50k per year for a family of 4. And most people have children relatively young, which usually means they aren't earning a ton of money.
This is the sort of program that I'd rather 'too many' people be eligible for than exclude anyone who might be helped (it is not just about adequate nutrition, but also providing information on healthy eating and referrals to health care).
Part of it is the exact federal poverty line depends on the family size. An income that's just over the poverty line for two adults would be under the line once it's two adults and one kid. Something like a third of adults in poverty would not be if they were childless. And then of course their kid(s) are a statistic.
https://www.healthcare.gov/glossary/federal-poverty-level-FP...
I'd argue the poverty line in America is very low compared to what it really takes to live.
Most people can't significantly save money, so when you have a bad month it's hard to catch up.
You have to be poor or very affluent to afford children in many American cities. And many of the affluent aren’t procreating.
> And many of the affluent aren’t procreating.
Source?
Has the relative, inflation-adjusted average wealth of new parents changed substantially?
I implied no such thing.
You, be contrast ("do your own googles") implied that I lack the work ethic or skill to determine this. But I did give it a quick go, and searching phrases like (birth trends by income decades) didn't yield anything to support this assertion.
I doubt you are dishonest; I just don't know the facts myself.
My understanding is that it mostly goes to immigrants.
edit, probably being touchy about a misunderstanding, nvm
Pretty sure the gp was saying that it's surprising/appaling so many people in the US are living in poverty. Not that relying on welfare is bad, or that buying food any particular way is bad.
Can you please stop posting unsubstantive and/or flamebait comments to HN? It's not what this site is for, and it destroys what it is for.
If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.
It only seems odd that the article ignores X and emphasises Y until you look at where the article is from.
'Reason' has an ideological hammer, and goshdarnit they'll go find some terrible government nails for it, whether that's the actual problem or not.
"This whole scheme, done under the guise of welfare, is essentially a transfer of wealth from the middle class to the poor, done by enriching the baby formula cartel."
I'm not sure how transferring wealth from the middle class to the poor would be "under the guise of welfare" rather than "welfare". No, enriching the cartel is not good.
Did the linked article change? You seem to be quoting: https://mattstoller.substack.com/p/big-bottle-the-baby-formu... which is not the article here, nor linked in the article as far as I can tell.
You're right, I am quoting Stoller. His article, though, is linked to in the comments. I should have commented on that comment, not at the top level.
> In a well-functioning market, any temporary shortage caused by the removal of one company's product from the market would be addressed relatively quickly.
Is that actually the case in real life? In a well functioning market I'd expect producers to have just enough capacity above average demand to cover the normal random fluctuations in their market.
I wouldn't expect them to have enough excess capacity to quickly make up the temporary loss of a major producer. Also, what about logistics? Say some particular plant starts producing say 50% more...are they going to be able to quickly find shipping capacity to deliver that?
Or maybe in real life, most markets aren't well functioning.
Significantly increasing production capacity would take time, and companies would only do it if they thought the shortage would be long-term. There's no use making a long-term investment in response to a temporary shortage.
In the short term, the market would "address" the problem by increasing prices. Poorer parents would respond by buying less infant formula. Better-off parents would accept the price hike. Infants in poor families would suffer.
This is the sort of thing you'd expect a modern society to prevent. Just letting the market solve the issue by letting prices spike - and consequently risking malnourishment in infants - is a bad idea.
The actual problem here, as it is with some many parts of our economy, is consolidation and monopoly.
One company, Abbott, controls about half the country’s supply, and has a stranglehold on distribution:
https://mattstoller.substack.com/p/big-bottle-the-baby-formu...
I wish more people would wake up to the impact that monopolies have on their economic and wellbeing security.
Legalizing imports would break, or at least put strong pressure on, such a monopoly.
Maybe. Or maybe we’d then be subject to a bigger more international monopoly.
These two issues are loosely related at best.
So you're claiming there is an international monopoly controlling the world formula market? And they would crush or assimilate Abbot when the borders opened?
Can’t congress just make an emergency exemption and possibly start importing formula from Europe? Apparently customs seize shipments that people attempt to purchase directly from Europe.
A president is usually better at doing this via executive orders... Simply because it's one president who has to sign the order vs many congressman who have to agree to pass an act... So it's unclear why this has not happened...
Don't worry they've formed a committee to look into maybe doing something about this. Meanwhile babies are starving. I wish I were joking.
>Don't worry they've formed a committee to look into maybe doing something about this.
Yes. You have to 'form a committee' to understand the problem, instead of just winging it.
>Is there a good reason why it takes that committee over a week just to meet?
It's a complicated issue, that will take time to sort out. There is no decision that will just magically fix everything.
>It's not like starving babies are a time critical issue ...
This is a baby formula shortage, in a rich first-world nation. No babies are going to be harmed. Is there really a need to go into hyperbole?
Sometime in the future, there will then be a commission tasked to determine why the committee failed.
What is it specifically about European countries that makes inspection of their foods unnecessary, but foods from other continents does need inspection first?
Is this a real question? They have higher food standards, regulation, and inspection regime than the US does itself. Other countries are a mishmash, but I'd imagine at least Canada/Australia/UK/etc would meet or exceed the bar too.
Europe has different standards. I don't believe you can say that we have higher standards since IMO that claim would require every component of our standards to be objectively higher. But standards can have different effects in different places. Witness for example the fact that unwashed (high grade) eggs are banned in the US whereas washed (high grade) eggs are banned in the EU, but both of these bans are based on local conditions. US authorities believe that washing is necessitated by conditions on US farms, whereas EU authorities believe that washing eggs damages the protective coating of eggs. Both authorities believe that the opposite regulation would be the worse option in their respective situations, hence the status quo.
Is that really true? Unless I'm missing something, American food standards and regulations are usually just as good as europe/canada/UK's , if not better. If anything I'm a bit puzzled by your claim, considering just how many food related scandals europe has had in the past few decades. Fake olive oil, horse meat, poison tainted wine, mad cow disease... and that's not even getting into the mishmash of "cultural/local exceptions" to food regulations (which are a good thing, but still undermine your point!).
But maybe I'm wrong, it's just that I've never heard any expert or anyone else really claim that the USDA/FDA are too lenient, more so than their europeans/CANZUK counterparts. It's usually the opposite actually!
Europe generally has much more regulation than the US, not just in food, but in all areas of life. In addition to individual counties having on average more complex regulation, the EU's main purpose is to set regulation standards between member states.
Also, from a cultural angle, food tradition is more deeply ingrained and there is much more skepticism of GMO and food products. American food has a reputation of being fake/candy.
Interestingly, the UK seems to be far more on the US's page when it comes to food and it was a component of Brexit that they wanted to right to race to the bottom on their food products.
Reason calling the government bad is like Uncle Leo in Seinfeld calling everyone an anti-semite.
What a ridiculous title and "article".
Imagine what the hell is going on with the rest of the food, drug and completely unregulated vitamin/mineral/supplement industry if this is what happens with baby food
> The company recalled several lots of the formula brands Similac, Alimentum, and EleCare in February following complaints that infants contracted cronobacter sakazakii, an environmental bacteria. All four babies used formula produced at the company's Sturgis, Michigan facility.
> cronobacter sakazakii bacteria was found in a number of areas in the facility, and other safety protocols, such as employees wearing gloves, were not observed
So right, the government regulation is the "bad guy" just like making people wear masks in a pandemic is the "bad guy"
One good reason for protectionism in this way is to protect from international shocks. If there was an event that caused international production of formula to scale back (say a volcanic eruption), then it would be beneficial to have as large a domestic supply as possible. This is achieved by subsidizing local production, eg via tarrifs on foreign imports. It would be valuable in addition to expressly allow for foreign imports in response to shocks like this, but making that the permanent regime would have its own risks.
How does consolidating an industry improve its resilience? Unless consumers have all decided that they love the formula exclusively manufactured under that volcano, they're not going to find themselves in the same bind that they are in now.
Now, this is different than if a certain country controls a significant portion of the raw materials needed to make a good, but that doesn't apply in this case. Cows and grass are abundant in every nation. Protectionism effectively reduces their supply, thereby increasing our exposure to shocks.
A more nuanced take is here:
https://www.theatlantic.com/ideas/archive/2022/05/baby-formu...
and here:
https://prospect.org/blogs-and-newsletters/tap/monopolies-an...
How is this more nuanced than the OP's article? The OP article actually _adds_ nuance by expanding on the Atlantic's claim that "America’s regulatory and trade policy" is largely to blame. The Atlantic claims that this "might be the most important part of the story."
Well I take issue on the very first line of the Reason article "Trade restrictions and over-zealous FDA regulation are a big part of the problem, but there's more."
The plant is closed with bacterial infection problems linked to the deaths of two infants. That seems the opposite of over-zealous FDA regulation.
There are definitely other regulatory issues, but I would characterize them as regulatory capture - too little regulation going against corporate interests.
Temporary easing of trade restrictions does seem like a good thing, but not really permanent easing as I suspect Reason would prefer. Permanent easing leads us to even bigger supply insecurity risks imho.
No mention of the effective monopoly in place -- that a single factory getting shut down would have such an impact.
Obviously government policy has failed as well.
Matt Stoller covered that in his BIG newsletter about antitrust and monopolies in America.
https://mattstoller.substack.com/p/big-bottle-the-baby-formu...
Matt Stroller writes a very good newsletter[1] on monopolies and antitrust matters. Last article touched this exact topic.
[1] https://mattstoller.substack.com/p/big-bottle-the-baby-formu...
Wait, if you actually read the recall notice...
"Importantly, no distributed product has tested positive for the presence of either of these bacteria, and we continue to test. Abbott conducts extensive quality checks on each completed batch of infant formula, including microbiological analysis prior to release."
So if I read that correctly, despite there being reports of contamination of formula, none of it can be exclusively linked to the actual product and the bacteria in question are commonly found in the household environment?
So there is a chance that there is zero problem with the formula?
This is an article by a Koch supported organization. They are very blatant they want to remove all regulation and are behind climate misinformation. The real reason we have a problem is that Abbott was not maintaining their factory all the while doing stock buybacks.
The reason we have an FDA is because before that babies would get milk with worms in it and die. There is no free market solution to a dead baby. You can’t just say “whoops, I guess I will buy a different brand next baby.”
I’m in agreement with you. Let’s not ignore that it was also negligence that caused this. Read the whistleblower’s accounts of all the blatant health and quality violations in the factory that had been going on for years. It’s no surprise that they eventually killed babies.
“Regulation bad” is a pretty hard take when it’s clear that they were evading the regulations that could have prevented this in the first place.
https://www.foodsafetynews.com/2022/04/former-employee-blows...
Looks like we're gonna have to buy it from a foreign manufacturer that happens to be owned by the legislators behind the regulations that caused the shortage.
If it's too expensive the fed will supply funds, no doubt.
I made some comments on another thread here on HN about the Infant Formula Shortage, and how the individuals strains of Cronobacter sakazakii bacteria from the unfortunately deceased infants did not match the strains of Cronobacter sakazakii bacteria found at the food production facility, did not match each other, but, the baby food production facility was shut down anyways. [1]
EDITED.
[1] https://www.foodsafetynews.com/2022/04/five-strains-of-bacte...
I'm not sure why you think that matters? Even if its not directly causal, the plants should not have bacteria of that sort.
Exactly. The reason the plant was shut down was because it had poor sanitation.
What probably happened: company got the initial reports of deaths, did a one-off sanitation effort but didn't address systemic hygiene/sanitation issues, and the plant ended up with contamination again.
I don't think it's unreasonable to close it. I don't know anything about this bacteria, but is it normal to find it in the formula?
If another child died someone would have to explain 'well we let it open because whole we found bacteria in the product, it was not exactly the same bacteria that killed the other kids'.
> However, it is clear there is a HN downvote brigade out in force patrolling the comments
> The proximate cause was a recall of formula produced by Abbott, but that was only the triggering event. In a well-functioning market, any temporary shortage caused by the removal of one company's product from the market would be addressed relatively quickly. Why hasn't that happened here?
My understanding is that the above has already and is indeed happening. Infant formula is still readily available - what's unavailable is infant formula from specific brands. For parents who are willing to switch to other brands, formula does exist. Is this not the case?
Sometimes efficiency and just-in-time production come at the cost of decreased robustness. A maximally optimized system has no slack.
Much of the problem is with families that need a specific formula. How would, say, importing different formula from Europe help that?
So I'm a bit out of the loop here. Are infants going hungry because of the formula shortage?
Some infants, probably. On a widespread general basis, probably not (yet?).
Switching between different formulas for normal/healthy babies can be done (if a preferred brand is out of stock but something else is available), but it's not trivial.
Switching to a different formula for a baby with special dietary needs, special allergies, etc., can range from "difficult" to "impossible." For those parents, this is an acute crisis, and "going hungry" doesn't begin to describe the potential impact; stunted development in the newborn phase, has long-term knock-on effects. Newborns are very different from adults (or even just, older children); adults can skip a few days worth of meals or ration their calorie intake for weeks, without much adverse long-term impact... newborns cannot do this.
A semi-related source about what kinds of scenarios parents are facing: https://www.nytimes.com/article/formula-shortage-help.html
Remember folks: anything important enough to be regulated is also important enough not to be.
The FDA has been trying to kill us for over two years now. At the beginning of the coronavirus epidemic, recall how they wouldn't allow anyone to do their own testing - the only test allowed was a known-broken test from the CDC. More recently they dragged their feet for purely political reasons on approval of Paxlovid. And still going on now is the approval of vaccinations for small children, where their reasoning for holding approval has nothing to do with safety or efficacy, but something stupid about causing confusion when a second vaccine hasn't yet been approved.
The FDA has demonstrated that their only concern is avoiding down-side risk, and are completely incapable of evaluating up-side risk: what's the danger to the American public of NOT having access to a given treatment.
This agency seems beyond reform. It needs to be gutted and completely redesigned from the ground up.
+1
Is the domesticated human, chained by relations of dependence to industrial society, still in fact a mammal?
mammal (n): An animal that nurses its young.
We are not even a boob culture any more, but an ass one. Whatever happened to boobs? Were we supposed to forget we have them?
WSJ has an article on it, too:
https://www.wsj.com/articles/who-made-the-baby-formula-short...
TL,DR: government manipulation of the market caused the shortage
people in this thread seriously seem to think there's some meaningful distinction between the bank notes that they collect at their bullshit jobs and wic coupons for feeding children
>So while you might think formula from Germany or The Netherlands is safe enough for your child (formula available in Europe tends to meet or exceed the FDA's nutritional requirements, but not the labeling requirements.) the FDA will not let you have it because it has not reviewed and approved the label or inspected the production facilities overseas. Reasonable people can debate whether this is a reasonable policy in normal times, but in the current mess this sort of rule undermines the health and development of the infants the FDA purports to protect.
Is this even a debate about whether or not it is a reasonable policy? Why would you allow uninspected products to feed your most vulnerable population? Now, I understand the nuance of "well we're in a shortage, so we should allow it temporarily." But think about it from a security perspective: you'd still be exposing babies to uninspected food products. Any America-hating entity could capitalize on this attack vector, if they knew we would bypass our security controls. Is it likely? I don't know, but I do know that suspending your security in response to a crisis is dangerous.
Why would european formula need to be inspected by US officials if it was good enough for the European parents? Shouldn't parents be able to make their own decisions here rather than be beholden by government rules?
>Why would european formula need to be inspected by US officials if it was good enough for the European parents?
Because that's how things work??
The default position for any government regulatory body is to not delegate its authority to regulate to a counterpart in another region/country. Sometimes there are bilateral agreements where each regulatory body recognizes the judgments of the other, but those are few and far between.
American chicken is perfectly safe to consume, but you would not be allowed to sell it in the European market.
> Because that's how things work??
You misspelled "because the US has stupid regulations that are more concerned with covering the asses of the regulators than with actually protecting consumers".
> American chicken is perfectly safe to consume, but you would not be allowed to sell it in the European market.
As I understand it, the reason US chicken is not saleable in European markets is that European countries do not agree that US chicken is "perfectly safe to consume" because of the way it is produced (IIRC chemical washing in the US was a key issue).
There is no such disagreement about the infant formula that is the subject of this article; the FDA is not saying it's not safe, just that it's not labeled the way the FDA wants it to be labeled--even though everybody knows it meets safety standards at least as stringent as the FDAs and nobody needs the labels to tell them that.
> Can you provide where the FDA has said European formulas are perfectly adequate?
I didn't claim that the FDA said that. All I said was that the FDA's stated reason for prohibiting European formulas in the US has nothing to do with safety standards, only with labeling. The FDA, as far as I know, has not made any statement one way or the other about the safety standards themselves, but as the article notes, the European ones in this respect are at least as stringent as the FDA's.
Is this something that the FDA even has discretion of or are there statutory requirements for labeling infant formula in the US?
EDIT: In response to my own question there are statutory requirements listed in 21 USC 350a.
How so?
"Because that's how things work??" is not a good reason when it's arbitrary policy, it's just a cause. "Would" implies why, or underlying reasons, saying we should judge them as valid or not, and he is rightfully judging it as wrong.
Other than sibling comments, I want to provide another counter-point (in this case, I have limited knowledge to say whether trusting European inspectors right or wrong):
EASA heavily rely on FAA for 737-Max's initial certification (https://en.wikipedia.org/wiki/Boeing_737_MAX_certification#I...), many now believes if it is done differently, the issue can be discovered earlier.
Purdue Pharma insists on compromising Germany for OxyContin's classification as uncontrolled drug based on the premise that if Germany approves it (even later retract), it will enable other Euro-zone countries to classify OxyContin as uncontrolled drug as well. (https://www.statnews.com/2019/02/21/purdue-pharma-richard-sa...)
21 USC 350a is probably why, there are requirements for audits and inspections in there that the FDA cannot just set aside with an emergency rule making process since they are statutory.
>if it was good enough for the European parents
That's an assumption based on the fact that it isn't inspected. You don't know that you're getting the same product if you don't inspect the facilities where the product is produced. That's trusting, but not verifying. You need to verify something like this.
>Shouldn't parents be able to make their own decisions here rather than be beholden by government rules?
Domestically yes, but importing foreign uninspected baby products is a national security issue.
It seems perfectly reasonable to set up some sort of FDA trade alliance. We decide we trust the European standards bodies for products X,Y,Z, and they trust out standards.
You don't have to take a driver's test in every state when driving across country. We have a precedent for intra government reciprocal licensing.
Because German inspectors aren't appreciably worse than US inspectors? (and probably more stringent).
If you took your baby on vacation, you wouldn't starve them until you got back right?!? Same logic here.
Well, the one time I traveled to Europe with an infant, I brought enough formula along for the duration of the trip. Not so much because I didn't trust what would be available locally, but because I knew there were no issues with the formula we were using and didn't want to deal with potential digestive upset or worse on the trip.
But if it spilled or something, you'd just go to the store. You wouldn't fly home.
Yes, and there is a history of unscrupulous producers putting all kinds of garbage into infant formula. Who is going to complain? Not the babies. That's why it is one of the most regulated food products. It's almost like a pharmaceutical product. And which countries are safe enough? Germany? UK? France? Probably. Estonia? Romania? Hungary? Do we really think that there are uniform standards and inspections in all these places?
> Do we really think that there are uniform standards and inspections in all these places?
Yes, there are.
https://ec.europa.eu/food/safety/labelling-and-nutrition/spe...
From China and countries where there is no recourse, not from Europe.
Everything made in China is cheap garbage /s
Everything? No. Milk that I'd feed my baby? I wouldn't risk it, considering China has had multiple scandals around tainted powdered milk.
What does "inspected" mean to you in this context that makes it so obvious that it's essential?
And essential for Americans but not Germans??
I'm not sure I understand your question, can you rephrase it please?
Germany clearly inspected the formula. Clearly baby formula imported from Germany is still inspected. The only distinction is it's inspected by Germany instead of American inspectors.
This would be as insane as Florida insisting that baby formula can only be sold in Florida if it was inspected in Florida. Baby formula inspected in New York cannot be sold, even though it was inspected.
Florida & New York “agree” because they’re both governed by the FDA. Even if a state wanted to import German baby formula, the federal government would not allow it.
> There's nothing stopping the US and Germany from doing the same.
Great. So we should do that, right? You agree that Biden should sign an executive order saying any infant formula approved by the EU is legal to sell in the United States.
> Is this even a debate about whether or not it is a reasonable policy? Why would you allow uninspected products to feed your most vulnerable population?
They are inspected products. They are inspected by an European country.
> Any America-hating entity could capitalize on this attack vector, if they knew we would bypass our security controls. Is it likely? I don't know, but I do know that suspending your security in response to a crisis is dangerous.
It is not likely at all. The chance of e.g. the UK/France/Germany attacking the US via formula is close to 0%.
Cool, then inspect batches and allow them in depending on the results.
It should be doable. Inspecting facilities makes sense if you want to import continuously without much worry.
Still, that should also be doable given enough time.
Yeah, it blows my mind the whole general push of, "Parents know best". Hell no they don't! They're not experts on anything, how in the everloving fuck would any parent be qualified to determine if a specific formula brand is "good enough" for their child?
I would bet 90%+ of parents could not tell apart formula from formula cut with 10% fentanyl. Parents do not know best.
They don't inspect most foods though... look at all the mislabeled fish in grocery stores and worst, restaurants...
https://www.cnn.com/2019/03/07/health/fish-mislabeling-inves...
Some discussion (given this is IT site) use IT as analogy, but many IT world cannot be easily applied. Regulation is needed. In fact the triangle of regulation, competition vs facilitation-participation-governance has to be balanced.
Here, I wonder given we are IT site let us learn from one history not gov regulation but military mandate that help - the alternative provider concept that leads to AMD survival along side of intel. (Sadly no Boeing alternative now which it should to avoid the 1 monopoly vs 1 regulator killing the other trianlge). That means e.g. there must be at least one competitor per state instead of one per state for critical sector. (Let one may add for critical sector be American 50+% and controlled by chinese, Russia, india, eu or Brazil etc. or at least buffer for say anti-biotic enough for local produce to replace any issue, like oil reserve).
You know in our field, AMD survived because of this mandate and we have innovative idea. One of the issue of monopoly is not they are poison which they might be, but they do not know alternative. Organisation compete also but once settle down they do one way. And then the regulator was captured. And the facilitator, the participants (stakeholders) and the governance all gone bad. You just do not know any alternatives.
Can 80x86 do 64 bit, say? No, we need another architecture. Microsoft, HP … all followed intel leads to nowhere for a decade. Windows NT has those you know. Even here alternative is there but no need. (And it comes ultimately as ARM… another story.)
History now, and for novice you always wonder have i selected right - amd64. No, I use intel cpu … should I choose the non-amd option. No you should not. It is AMD told us that the x86 can have 64 bit. And the rest is history. But if we have only intel. We still are trying to switch. With a very hot cpu in 14 nm …
Key is not regulation vs competition vs gov oversight/public stakeholder participation/ facilitation and helping hand. It is all.
In many industry you cannot really allow free competition (everyone can be a doctor), but also undesirable to have no competition (single provider - which can be ok if there are alternatives abd competition to provide option ).
Sidetrack but important, in one of discussion, Gov need to help, but not play 2 incompatible role the facilitator AND the regulator at the same time (usda vs fda as mentioned in sone post; or the Boeing incident of delegation of flight safety by Boeing as the regulator … does not really know as they are not from a different background, the so called capture).
China example is the worst. They have too much competition and they break the system by ganging it. And then the regulator, media, … all forced to cover it up.
The “infrastructure” for this is hard (like current Wuhan virus handling and vaccine innovation/certification etc). But the triangular relation is a must. And must be balanced.
Occasionally Reason gets it right...this is not one of those times.
If you're going to post just "you're wrong" without any explanation, you shouldn't be surprised that you get downvotes without any explanation.
You and I both know that in the lions share of cases of the above, the comment gets passed over without any ado. When its attached to ANYTHING related to Rand, or Cato or Reason, its a fluffer parade of anger.
The short answer then is the same problem Reason has always had...it treats any regulation as anathema, and will volley the blame anywhere else reflexively. It is occasionally correct in that regard, but it's total lack of nuance makes it mostly just agit-prop, and for those of us who have read Reason since at least the .com era...the miles per gallon of ink with the same tropes ad nauseum, are....nauseating.
Happy now?
All you’ve done is offer a contradiction and an ad hom, so why not bring a more substantial argument to the table for discussion.
Because they have reason (magazine) on their side
You have distilled a better framework in two sentences than Reason could have in two issues of features.
Well done.
If baby formula is vital to national security, can you name anything that isn't also vital?
You ever stop to consider that maybe you’re the problem, and it actually has very little to do with your ideology
Would you like to borrow a mirror? You clearly appear to want everyone else to and not bother yourself.
Classic comeback! Sometimes I’m stubborn too though, I get it.
All problems are caused by greedy corporations! Throw executives in prison! If we just had more government all of this would be better /s
Reason is correct that tariffs on Canada, pushed by Abbott, helped exacerbate the baby formula problem.
This is what happens when heirs and corporations gain too much power. When they are not responsive to working people or the government. Not only are they unresponsive to the government, they buy the government, and get rulings like Citizens United to buy the government even more.
All of this is the result of what Reason has been pushing forever. They wanted to prevent government from dealing with Abbott, and the result is these tariffs and the baby formula breakdown. The market is incapable of working due to the policies of Reason. It's like the bread shortages in the USSR after the failure of Khruschev's Virgin Lands program. Different mechanisms but same result.
The government has, in fact, been "dealing with Abbot" -- specifically, by imposing anti-competitive tariffs and locking out both foreign and domestic competition. You want them to do more of that? Because, empirically, that's the kind of thing governments tend to do all the time. (See also: regulatory capture and the idea of "concentrated benefits and diffuse costs" in public choice theory.)
Yeah, I think some people/groups like Reason often see government as mostly ineffective and then say we should give them less money, which can make them more ineffective, and then they say they're even more ineffective so we should give less money, so on and so forth. I was reading elsewhere that stronger FDA regulation and enforcement could help fix issues like this one with the baby formula yet many libertarian perspectives don't seem to want to give more power to the government. I don't know.
The govt isn’t ineffective it’s very effective at making the free market ineffective which is what the reason crowd wants to defund.
I live in South America, taxes are 10% and there’s no shortage of formula.
> I live in South America, taxes are 10% and there’s no shortage of formula.
There doesn't seem to be a shortage in Europe either, where taxes are much higher and with your argument, the government may be even more effective.
It's an argument I seem to hear often: government is simultaneously all powerful and completely ineffective.
But I'll stay open and curious: what did the US government do to primarily or fully cause a shortage of infant formula?
Well maybe you should just ban Reason magazine then. Afterall, they don't have 1st amendment protection since 'Reason' is owned by a foundation, and not a person.
> infant formula is strictly regulated for very good reasons
> Also, of course, we shouldn't have let such a critical product mostly be made by 3 companies, but that's another rant.
Do you think these two are related?
Was just about to say as well. The more regulated an industry is the more consolidated it will become and the higher the costs will have to be, which either get passed on to consumers and/or in cutting capacity.
Why is that? I can think of "just so" explanations that would point in the opposite direction, that less regulation leads to more consolidation. For example, the less regulated an industry is, the fewer barriers there are to buying up competitors. Or the less regulated an industry is, the more companies in the industry will be forced to cut corners to remain competitive, decreasing resiliency and causing bankruptcy when conditions change.
Starting a company in a regulated field is hard. With unregulated fields like most internet companies, you "just do it" -- as long as you pay your taxes, the government will pretty much leave you alone. In a regulated field, the hard part is not following the rules but merely trying to figure out what the rules are. People who haven't dealt with this are probably picturing something straightforward and readable like "thou shalt not put poison in the groundwater" but what you really get is thousands of pages of incomprehensible nonsense that you don't stand a chance of understanding on your own. There are law firms that can help with this, but now it's scary and expensive enough that the 18 year old founders will stay away.
In purely unregulated fields like web hosting, there are tens of thousands of competitors because it's easy to create one. It's true that someone could go around buying up a bunch of them (and companies have done this), but even after they're done there are still thousands of competitors remaining. If a regulatory agency wrote couple thousand pages of rules for web hosts, many existing owners would probably sell their companies rather than embark of the emotionally draining task of trying to make sense of those rules.
Ironically, as the number of competitors declines, the ones that remain will feel more free to abuse both employees and customers. This will lead to demands for more regulation, which reduces the number of competitors further, and so on it goes.
what if gov't regulated industry must also come with a mandated set of startup tax breaks or grants, for fostering competition?
If regulation is what stops competition from forming, but the regulation is required for safety reasons, it makes logical sense to assist new competition into the market. This assistance should be limited to helping the startup be certified, etc, in such as way as to eliminate the barrier to entry resulting from the regulation (but not more - i.e., startups aren't getting extra help beyond that, so as not to artificially subsidize them but not their larger counterparts).
I don’t think the commenter was talking about competition law (aka antitrust law), but rather lower level regulations concerning day to day operations. Stuff like food safety regulations, hours of service regulations for truck drivers, etc. I think many (but probably not all) of these regulations will tend to encourage consolidation simply by imposing an additional cost that benefits from economies of scale.
Because understanding and satisfying regulations has a high minimum cost and scales slower than revenue.
Consequently, in heavily regulated industries, it's more efficient for extremely large firms to design and implement the necessary internal gymnastics, and amortize that labor cost over a large amount of business.
Smaller firms still have to do much of the same (at some point, 1 person is the minimum in a role), but can't spread it over as large a customer base.
Or, to put it another way, it's easier to merge your way into larger profit margins in heavily regulated spaces.
I don't think that's true. Look at banks, to are highly regulated and there are almost 5000 of them[0] https://en.m.wikipedia.org/wiki/Banking_in_the_United_States
Banks are probably the worst example you could have given.
There were ~12,500 banks in the US as recently as 1990 (when the population was much smaller than it is today!)
Since the regulations that were passed following the great financial crisis, almost zero new banks have been founded.
https://ilsr.org/number-of-new-banks-created-by-year-1993-to...
> It's a similar case to cell phone providers: although there are hundreds in the U.S., all but four do not operate their own network, but rather resell the network of one of the big four.
Three mobile networks, since Sprint was merged into T-Mobile. It was also inevitable since it does not make much sense to have many different organizations install cell towers and run all that wiring all over a country the size of the US, and split a limited resource like wireless spectrum conducive to data transfer.
A nitpick - there actually are small cell phone providers that operate their own network.
They usually have expensive and slow roaming on one of the big providers once you leave their area though.
Most of the 'banks' in that count serve as the local monopoly, or as part of a duopoly, or triopoly in their region and are protected by and regulated primarily by state laws as well. Many state banking regulations are significantly more lax than federal banking regulation.
The handful of banks in the U.S. that serve multiple states and fall under federal banking regulation seem even more consolidated than the baby formula industry on a variety of metrics.
Certainly more consolidated per dollar of cash flow. Probably more consolidated per dollar of net profits. etc.
Which would be the expected outcome of the theory if the baby formula industry in the U.S. were less regulated than federal banks but more regulated than state banks.
X implying Y does not mean !Y implies !X
Can't wait for VC to pump money in startups that will bring free baby formula to everyone through sponsored growth marketing /s.
Winner takes all outcomes are inevitable without regulation to preserve competition.
Orthogonal to administrative burden, regulatory capture, politics (dairy lobby, protectionism, whatever). Which are all also base states which must be actively thwarted.
The world is more complicated than Chicago School of Economics' Kiplingesque just so stories.
Here's a fare primer:
https://fs.blog/mental-model-winner-take-all/
tldr: power laws, prefential attachment, compound interest.
Just like the telecom industry, Making it ludicrously easy for an attacker to taken down communications during a war.
I hope the current world events forces the governments to rethink their strategy of keeping the telecom industry an oligopoly and decide that reducing the barrier for entry to the telecom industry is vital for the national security.
Capitalism will solve everything! Private business is efficient! Competitors will surely recognize this opportunity and swoop in to save the day! High demand and low supply == increased prices and everything still works great! /s
You're replying to a comment about an article from Reason on Hacker News. Godspeed.
Considering that it's a heavily regulated space, it sounds more like your dream of an authoritarian, centrally planned economy failed.
Not really no. Plenty of things are much less regulated and just as consolidated (in fact, many examples that are also consolidated into exactly this same set of companies). So it may have some effect but clearly isn't the main one since we see this result for all kinds of products at every level of regulation.
Regulation can also mandate a reserve stock.
The fact these regulations didn't reflects badly on these regulations, not regulation in general.
Well yes but would you suppose they deregulate infant formula ?
That's a perplexing blanket libertarian statement We shouldn't let the market decide what goes into baby formula, that would be crazy.
Although the linked article does not address it, the FDA is certainly working to mitigate any fallout from the plant closure. Much of the complexity is that WIC is administrated at the state level, so the FDA must work with each state individually to address the shortage.
Of particular note: >more infant formula has been produced in the last four weeks than in the four weeks that preceded the recall, despite one of the largest infant formula production facilities in the country being offline during that time.
https://www.usda.gov/media/press-releases/2022/05/13/usda-co...
>>> FDA is certainly working to mitigate any fallout from the plant closure.
This should not be the role of the regulator. Let the FDA set standards and check for compliance.
My mistake. The press release is actually from the USDA, and this is the only mention of the FDA:
>USDA has been working closely with FDA to ensure program participants and stakeholders have the information they need to keep infants safe
I apologize for any confusion.
Had they acted as if it was an emergency, they would have mobilized all available resources to clean and disinfect the facility, replace the faulty milk drying equipment, and get the facility back up and running.
But why wasn’t it a priority for Abbott? They don’t care about sales or making money?
They spent a lot of money on stock buybacks [0]. Maintaining production capacity was not a priority. Never forget what Milton Freedman said, the first priority of a company is to increase profits for its shareholders. With the recent evolution of finance, that priority term is getting shorter. The value must be brought for the next quarter. What happens 6 months from now is becoming less and less relevant.
[0] https://www.abbott.com/corpnewsroom/strategy-and-strength/ab...
That makes zero sense.
They either had a profitable product line or not. If it was profitable, they had every incentive to fix the problem. Stock buybacks don't change any of that - in fact, they need profit to actually do buybacks.
And not thinking long term? I mean Abbott has been making formula for decades? You're telling me their CFO is like "meh, who care if that multi-billion dollar business goes under in 6 months"?
I mean the article covers this?
The issue is absolutely bad government policy. The Reason article isn't very good but its premise is correct. I'm surprised to find myself saying this, but Truthout wrote a much better investigative piece almost a month ago: https://truthout.org/articles/company-responsible-for-tainte...
This is why government policy is at fault:
- Around two thirds of all infant formula is purchased through a single government program
- The government requires that there only be a single supplier of formula for this program in each state
- Through the natural tendencies of capitalism this has led to consolidation where one provider, Abbott, enjoys government-mandated monopolies in 34 states and a controlling share of the formula produced in the US
- Through the natural tendencies of monopolies which are unchallenged by competition, they sought to maximize margins above all else, concentrated their production and poisoned their own product, leading to the production shutdown and the shortage.
The government screwed up. Rather than blaming the problem on hoarding moms, Vladimir Putin or whatever next week's appallingly self-serving disinformation will be, they should amend the law which maintains a monopoly in the formula market. If the industry was not so consolidated by the government's addiction to picking winners, Abbott's screwup would have been more disastrous for Abbott and less disastrous for moms.
Well it’s not like they were compliant with regulations anyway. The only reason they got pinned here is that they killed multiple babies too quickly from their negligence.
https://www.foodsafetynews.com/2022/04/former-employee-blows...
It’s worth noting that Abbot claims to have sequenced the bacteria and disputes the claim that their facility caused the infant deaths.
They also left out a another key point. Trumps renegotiation of NAFTA into USMCA created significant restrictions on importing formula from Canada.
> Absurdly, provisions were added to the United States‐ Mexico‐ Canada Agreement (USMCA) to restrict imports of formula from Canada, supposedly because China was investing in a baby food plant in Ontario, and this new production might eventually enter the U.S. market (heaven forbid!). [1]
[1] https://www.cato.org/blog/rock-bye-trade-restrictions-baby-f...
They did not left the point out.
It is at the end of the 4th paragraph
>>>>>"(Note to my MAGA readers: Trump's renegotiation of NAFTA helped make these products worse in an effort to "protect" American formula producers from Canadian producers"
Oh I’m sorry I must have missed that. Thanks for pointing it out.
Really want a chinese infant formula… you guys are not joking.
What an absurd statement. It's a factory in Ontario with a foreign investor, subject to Canadian CFIA oversight. Literally everything you rely on to live your life is made in China, this is a very strange place to draw the line as children are dying.
Why don't we stockpile it, though, like other critical items like petroleum and medicines, for temporary shorateg relief? Surely that's a government failure.
It expires. I don't know at what point it becomes unhealthy/dangerous but infant formula is one of the few shelf-stable items that's illegal to sell past the use-by date. Many things are perfectly safe/stable past their 'sell by, best by, use by' dates (bottled water, most canned food) but I haven't read data on this specific item.
Who is we? You are free to stock your pantry as you desire.
What are we going to be short of in 5 years' time, that we should start stockpiling now?
Sure, it may not be possible to stockpile every niche product, but this is literally food, perhaps the most obvious thing (up there with water and medical supplies) for governments to stockpile.
You mean the niche of babies?
Pretty much everything?
Lean does nothing but put cash in the pockets of those at the top at the expense of everyone else when there is a hiccup in the supply chain.
No, it makes the stuff cheaper.
It's easy to see in hindsight that a certain item should have been stockpiled in anticipation of a shortage. What's hard is predicting what's going to be a shortage years into the future. Petroleum is an easy choice since energy is almost always in demand.
And then there's cases where there was good foresight in stockpiling certain essentials in some wiser countries, but then they go and decide to stop stockpiling. The craziness! ;) (see https://www.bbc.com/news/world-europe-50402048 https://www.economist.com/europe/2019/11/21/defending-switze...)
> it's a lack of urgency from the government and private sector to make sure a medically critical product is available.
Yes and no. But mostly no. It's that we're optimized for the best case scenario. We're in love with theory, of economies of scale and a world with no pot holes (so to speak).
That's profitable. But it's also ridiculous and stupid.
If Abbot being compromised can lead to this then that smells like a monopoly. Or at least a bad case of cronie capitalism. Three companies is not a rant. It's The Root Problem.
> If Abbot being compromised can lead to this then that smells like a monopoly.
where "Abbot" means "one facility". what are you going to do, break up the one facility?
So you believe the status quo is the best possible answer?
You're suggesting we opperate a mission critical application without a disaster plan. We all know that's foolish.