Systematic shortages have become widespread. One hoped that the panic buying of toilet paper during the height of COVID hysteria was a temporary blip, the result of irrational consumer behavior. But shortages have now become a persistent, systemic problem.
I’ve noticed what seem like random shortages for items like pet food, green tea, or Aidells’ wonderful Cajun sausages. Bikes and bike parts were hard to come by for a while. Ammunition, of course, has been very expensive and is often out of stock. When there is not a shortage, there are very high prices and quality degradation. For example, meat is super expensive, and the cuts are worse.
It’s as bad or worse in the “B2B” sector. This is a frequent complaint of any contractor or procurement manager you run into. Everyone’s having issues, and it’s been this way for two years.
Experts blame it on the supply chain. Of course, this is simply a tautology: when willing buyers and sellers cannot get together, then there is some kind of supply chain problem. The nature of the problem, as well as its causes and potential solutions, are not illuminated by simply labeling it a supply chain problem.
More importantly, this is not how this country is supposed to be.
Shortages Used to be Only a Third World Problem
Two years ago, I wrote a piece on the Third Worlding of America. It emphasized the rise of corruption, the explosion of crime and disorder, crumbling infrastructure, and the breakdown of the rule of law. Shortages as a feature of contemporary life were less dramatic and less entrenched when the article was written. But these too are a feature of a Third World country, and are becoming very real—deadly, even—with the current baby formula shortage.
What is the lesson here? What’s the solution?
Surely the lessons are manifold. One is that, like an old piece of machinery, you can’t necessarily turn off the economy and then turn it back on again. This was exactly what the country did in March of 2020. This has led to various unintended and unforeseen consequences, and this was all set in motion by the massive overreaction to COVID.
Second, if you try to plan the economy, you will get a misallocation of resources. Remember the “essential industries” and the random ways certain businesses were favored in 2020? In the wake of those policies, industries got more consolidated as small businesses were suffocated by government, particularly in parts of the country that were slow to reopen like Chicago and California.
Apparently, the baby formula shortage has some very specific features owing to the details of that market. Abbott Labs, the largest provider of formula in the country, makes the familiar Similac brand. One of the five plants where Abbot manufactures the product has been shut down since February due to contamination concerns. The company also instituted a recall.
Abbott, for obvious reasons of self-interest, appears to be taking this quite seriously. What is missing here is seriousness on the part of the federal government. Where is the crack team of industrial hygienists, FDA experts, and others with know-how working to get this plant up and running yesterday?
Americans Should Demand Policies Ensuring National Independence
As for more general solutions, I am not entirely sure. I admit that I am not an expert on supply chains. But, as with anything, the first rule when you’re in a hole is to stop digging. Inflation, deficit spending by the government, and shortages are all related.
The $40 billion Congress just appropriated for Ukraine could buy a lot of baby formula, including from other countries. The baby formula the federal government is sending to border detention facilities would be available for American children, but for Biden’s treacherous betrayal on immigration.
When Biden’s new press secretary, Karine Jean-Pierre, was asked who was in charge of the baby formula shortage crisis, she didn’t know. Biden’s few speeches on the subject of the economy have been a collection of bromides aimed at phantom Republican policies. They’re insulting to everyone’s intelligence, and they deny all responsibility, even though high levels of government spending have fueled both inflation and the supply chain crisis.
There is a more long-term solution that focuses on national economic independence. In economics, there is a tradeoff between efficiency and resiliency. Our “just-in-time” inventory control regimes and the expansion of global trade have made our nation and others vulnerable to supply disruptions.
Consider the case of Europeans: they get 40 percent of their natural gas from Russia. They cannot easily find viable alternatives. So, while they arm Ukraine, they also send enormous amounts of money to Russia to support their energy needs. This is not sustainable.
Similarly, we import over $500 billion in goods from China—a product of American companies outsourcing manufacturing jobs over the last 20 years. We have become dependent on China for important goods, including essential drugs, rare earth minerals, and, in some cases, electronics that our defense industry relies upon. We also depend on other nations for critical oil supplies, including Venezuela and the unstable autocracies of the Middle East.
Tariff policies, anathema to many Republicans and the neoliberals of the Democratic Party, would encourage more to be done at home. When more things are made at home by more companies, we are no longer as dependent upon a single supplier, or as vulnerable to a hostile nation or profit-oriented monopoly. Economic independence supports national independence.
Since the mid-1990s, America’s corporate leaders have done everything they could to move manufacturing and labor-intensive parts of the economy overseas, while allowing greater consolidation of agriculture and other sectors at home. The end-result is a fragile economy, easily disrupted by problems in a single country or a single company.
In other words, globalism leads to a leveling of the entire world by facilitating convergence to a single economic level. It is understandable why China or Nigeria would favor globalism. But, for a First World country like the United States, this means that we are being dragged down in various ways to the level of the Third World, with all the danger, poverty, corruption, and mediocrity that entails. And it means American parents are now worried about whether they can feed their kids.