Plain English with Derek Thompson The Mystery of America's Missing Baby Formula
May 18, 2022
In this insightful discussion, Scott Lincicome, Director of General Economics and Trade at the Cato Institute, delves into America's alarming infant formula shortage. He uncovers how a combination of trade policies and regulatory barriers, rather than just plant shutdowns, have exacerbated the crisis. Lincicome explains the implications of the WIC program's market monopoly, the struggles around importing European formulas, and the intricate balance between product safety and availability. His perspective offers a path towards a more rational approach to baby formula access.
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Pandemic Demand Swings
- The pandemic caused erratic demand for baby formula, initially surging due to hoarding.
- Demand then fell as stockpiles dwindled, confusing manufacturers and contributing to later shortages.
Fragile Formula Market
- The US baby formula market is fragile due to protectionist trade and regulatory policies.
- These policies restrict imports and limit domestic competition, exacerbating shortages.
Policy Problems
- US trade policy restricts formula imports with tariffs and regulatory barriers.
- Domestic policies promote market concentration and price controls, hindering flexibility.