Bastiat Predicted the Baby Formula Crisis 170 Years before It HappenedTags Economic PolicyPrice ControlsProtectionism and Free Trade
The current baby formula shortage in the United States is a pressing crisis, and many in the media have been rushing to explain how such a thing could have happened. But on close analysis, it appears to share the same root as virtually every other crisis experienced in the modern world: a government promised benefits without costs.
Our political leaders either fail to understand or outright ignore the basic, unavoidable limitation on government action, that no government benefit comes without a cost. As French writer and politician Frédéric Bastiat wrote in his 1848 essay, Government:
Thus, the public has two hopes, and Government makes two promises—many benefits and no taxes. Hopes and promises that, being contradictory, can never be realized.
Now, is not this the cause of all our revolutions? For between the Government, which lavishes promises which it is impossible to perform, and the public, which has conceived hopes which can never be realized, two classes of men interpose—the ambitious and the Utopians. It is circumstances which give these their cue. It is enough if these vassals of popularity cry out to the people—"The authorities are deceiving you; if we were in their place, we would load you with benefits and exempt you from taxes."
The current baby formula shortage is one more example of government promises running into the contradictory reality of their own hidden costs.
Government Promises and Hidden Costs
The formula shortage is due in large part to past and present government promises of "costless" benefits. As Ryan McMaken has already shown, it is largely the consequence of federal import restrictions, a government benefit to domestic producers, and the federal Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), a government benefit to both consumers and producers. These policies made the US formula supply dependent on a few large producers such that an unanticipated disruption in one producer's output now threatens to cut off thousands of infants from the nutrition their parents had believed they could depend on.
So, to the taxation levied to pay for formula subsidies and the higher domestic prices that resulted from protectionism—the "predictable" costs economists typically associate with such policies—we must add unreliable supply as another "hidden" cost of the promised benefits of publicly supplied baby formula.
However, government sources extol the benefits of programs like the WIC. The US Department of Agriculture (which administers the WIC) references studies claiming to show that the WIC program "reduces fetal deaths and infant mortality," "improves the growth of nutritionally at-risk infants and children," and "helps get children ready to start school."
Perhaps these statements are all true, but these benefits' costs are entirely omitted.
Rather than Admit Costs Exist, Governments Redouble Their Efforts to Provide "Benefits"
A baby formula shortage is therefore a grave threat to the government's power, or more specifically, the power of those politicians who control the government. If people were to realize how illusory promises of "costless" benefits really are, they might eventually decide the political class and its empty promises are not worth their burden. Even among the beneficiaries who are not taxed for the public benefits they receive, tolerance for the government's intrusion in their lives and paternalistic direction of their needs may begin to wane when those promises are found to be riddled with hidden, and sometimes disastrous, costs.
Therefore, it should be no surprise that the federal government has taken brisk action in an attempt to relieve the shortage, not by eliminating the barriers to free-flowing formula that it erected, but in the decidedly more dramatic and visible fashion of airlifting small batches of formula from overseas one planeload at a time. According to a May 18 White House press release, the current administration has "directed the Department of Health and Human Services (HHS) and U.S. Department of Agriculture (USDA) to use Department of Defense (DOD) commercial aircraft to pick up overseas infant formula that meets U.S. health and safety standards, so it can get to store shelves faster."
According to the White House, as of this writing, two planeloads of European-manufactured formula have been delivered to American shores, one on May 19 and another on May 22, delivering in total "the equivalent of up to 1.5 million 8-ounce bottles." With roughly half of US babies relying on formula, there may be at least 1.5 million babies needing up to thirty-two ounces of formula per day. This means the government spent three days obtaining enough formula to keep American babies fed for about six hours.
One has to imagine that simply declaring a moratorium on import restrictions would have accomplished at least as much. Thus, the government's actions here seem to make little sense unless we realize its primary goal in all of this isn't necessarily to feed babies, but rather to appear to feed babies. In fact, plenty of journalists and photographers were on hand to document the triumphant unloading of this cargo from DOD planes, accomplishing the important task of convincing the American people that their political leaders have saved, rather than harmed, them.
Like any purveyors of fiction, those who promise benefits without costs must maintain that fiction even in the face of failure. Rather than be revealed as incompetent or liars, they simply devise new promises. Today's new promises come in the form of a government airlift of miniscule volumes of baby formula set to artificial fanfare.
These two promises are forever clashing with each other; it cannot be otherwise…. Why, then, the new Government takes a bold step; it unites all its forces in order to maintain itself; it smothers opinion, has recourse to arbitrary measures, repudiates its former maxims, declares that it is impossible to conduct the administration except at the risk of being unpopular; in short, it proclaims itself governmental.
The subject of this quotation was French politics in the revolutionary time of 1848, but Bastiat could be mistaken as describing present-day American politics with uncanny exactness. Thus, the root cause of these crises always has been, and probably always will be, the same: the unwavering commitment of those who seek political power to promising the public unlimited benefits without heeding their unavoidable costs.