Thursday, May 12, 2022

Speaking of baby formula...

I just found out it's not made with real babies.

Just kidding.

What I actually did just find out is that it's not just the supply chain issues and the huge recall by the largest manufacturer coming one on top of the other, but there's also a governmental regulatory angle that's making everything worse because of course there is.
Bad U.S. policy surely didn’t cause the infant formula crisis, but it just as surely made the situation worse than it needed to be. Trade barriers and poorly designed welfare policies helped create a brittle system dominated by a few domestic players—a system that might muddle through in the good times but one that crumbles in the face of a serious shock and struggles to recover thereafter. Meanwhile, American consumers (here, babies and their already frazzled parents) are left in the lurch, and world-class foreign producers can’t help much because they lack the necessary paperwork and financial incentives or because past U.S. policies have discouraged them from setting up official distribution channels or new facilities to serve the American market.
Oh, government! Is there anything you can't make worse?

Even if a Euro baby formula manufacturer saw an opportunity in the U.S. market shortages right now, by the time it could get its products approved for sale here, things would probably already be well on their way to normal and then they'd be facing tariffs that would make their stuff more expensive than the domestic product, so it would all have been a waste of time.

This is a problem when sudden demand spikes or supply shortages hit a market that's built around forecasts of steady demand. No doubt the infant formula manufacturers don't plan on having to suddenly double their output because Americans suddenly had twice as many babies... but that's the same net effect on the system as if half the suppliers had to suddenly recall their product; the other half of the suppliers would have to magically double their output, and that sort of elasticity is just not built into their plans.

(In some ways it's akin to things we see happen in the ammo industry. "Can't they just run the plant around the clock?" "Can't they just make more factories?" "Can't they just magic up some more components?")