The ‘cruelty’ & ‘failure’ of… government

The ‘cruelty’ & ‘failure’ of… government

“There is nothing more frightful than ignorance in action,” reminded German scholar and statesman Johann Wolfgang von Goethe. Or in words, we must add.

Witness a recent local newspaper editorial lauding the taxpayer-assisted (by government diktat) ascension of ByHeart, a Reading, Pa.-based baby formula manufacturer.

“In a hopeful sign for economy, a new Pa. formula factory breaks up a consolidated industry,” the headline goes.

“ByHeart’s emergence – and the high quality of its product – should show” the four companies that produce 90 percent of baby formula “that they can’t rest on their dominance of the market,” the editorial states.

Indeed, and to its credit, the editorial does explain that government helped to create the baby formula shortage. Well, sort of:

“The FDA’s suspicion of obviously-safe European brands has given the big four far too much security in the American market. Further, the federal government forces states in the WIC program (the Special Supplemental Nutrition Program for Women, Infants and Children) to contract with a single approved supplier for formula.”

But, and as briefly alluded to herein, the same government intervention that the editorial calls out for being an accessory to the shortage is lauded as a solution to the problem that such interventions created in the first place.

Go figure. And, somehow, the editorial goes on to profess that the following government behavior becomes acceptable:

“That’s why it was particularly encouraging that ByHeart benefited from Pennsylvania economic development assistance. Besides encouraging job-creation in the commonwealth, the state’s $10 million helped the company disrupt a notoriously calcified industry — thereby strengthening that particular supply chain.”

Continues the editorial:

“In essential industries — from infant formula to pharmaceuticals to semiconductor chips to the mining of rare-earth metals — the government must make sure that its policies don’t encourage industries to consolidate so that production problems cause such serious disruptions to the supply chains. The government, federal and state, must encourage American supply chains that are domestic and diversified.”

As altruistic as it sounds, it is not advocacy for what should be a required more hands-off, market-based approach. It is, rather, advocacy for government-directed and taxpayer-funded “industrial policy.”

To correct the prior failed “industrial policy,” we remind.

It is a marketplace perversion that we’ve repeatedly warned is nothing short of Orwellian.

Where does it end? It doesn’t end — unless the yoke that government has installed is removed. Don’t hold your breath. As we’ve said it many times before and we’ll say it many times more:

Government fears that the failure of the last government intervention (to end all government interventions) will be exposed for the economic lie that it is, thus requiring evermore government interventions to cover up the lie of each past intervention.

The practice is as legion as it is wrong-headed. 

As this scrivener noted previously this summer, quoting Reason Foundation scholar Eric Boehm, the baby formula crisis “is largely the result of protectionism, regulation and central planning of the sort that both Democrats and Republicans want more of in Washington.”

But more of it certainly is not the answer.

It is not, as our government overlords and shortsighted editorialists argue, “the supposed cruelty” (Boehm’s wry words) or “failure” of the marketplace (in the editorial’s too-slick-for-its-own-good implication) that created this situation.

It is, once again, the cruelty and failure of government.

It is ignorance, either nurtured or natural, of the marketplace that prevents markets from truly working their magic. For the “collective wisdom of individual ignorance” (a phrase coined by H.L. Mencken), of course is not wisdom at all but (as we are wont to say), mental midgetry of the tallest order.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).