Wolf enables baby formula market perversion

Wolf enables baby formula market perversion

To what does government intervention in the marketplace lead? Why, more interventionism, of course.

Or, put in its most basic form, government intervention – perversion, really – in the marketplace is a lie based on the lie that government can allocate precious resources more efficiently than the marketplace.

When that intervention fails, as it invariably does, government employs a new intervention to cover up the failure of the last intervention. That is, it lies again to cover up its prior lie that government intervention is required to fix a free-market “failure.”

A great case in point is Pennsylvania’s “investment” of $10 million in ByHeart, a Reading-area company, said to be the first new federally U.S. baby formula maker in 15 years.

Mind you, these are taxpayer dollars subsidizing a private company. Again.

But it’s all for the babies, Gov. Tom Wolf says:

The “investment” will support additional production and hiring “that will ultimately feed up to 500,000 more babies” in the next two years.

“I promised to do everything I can to support Pennsylvania families,” Wolf said in a statement. “What ByHeart is doing is amazing and innovative; I’m proud to invest in them and that they chose Pennsylvania as home.”

Well, and first off, I’ve long argued that this kind of “investment” scheme is a direct violation of the Pennsylvania Constitution, Article VIII, Section 8:

Commonwealth Credit Not to Be Pledged

The credit of the Commonwealth shall not be pledged or loaned (sic) to any individual, company, corporation or association nor shall the Commonwealth become a joint owner or stockholder in any company, corporation or association.

That said, such a taxpayer subsidy only serves to further pervert this nation’s baby-formula marketplace, which already has been government-perverted.

In fact, it’s a long line in farcical government perversions that led to the baby-formula shortage in the United States.

As Reason Foundation scholar Eric Boehm recently wrote, “This crisis is largely the result of protectionism, regulation and central planning of the sort that both Democrats and Republicans want more of in Washington.”

Boehm says reporters like CNN’s Jake Tapper have been pressing officials to explain why government didn’t respond more quickly to this shortage “but the actual solution is for the government to be less involved entirely.”

“A better question is why didn’t the Biden administration clear the way for the private sector to react to price signals, like it does in every other industry? Food suppliers would have started stockpiling European-made formulas months ago if only U.S. tariffs and regulations weren’t an obstacle.”

Boehm reminds that, first, the federal government prohibits importing many European-made baby formulas because they fail to meet the Food and Drug Administration’s (FDA) labeling requirements.

Never mind, he also notes, that Europe is the world’s leading exporter of baby formula, thanks to major producers based in Germany, the Netherlands and Britain.

“If the FDA’s labeling regulations are so necessary, why is it that infants all over the globe safely consume formula made in Europe? Meanwhile, about 98 percent of the formula sold in the U.S. is produced domestically. We’ve sealed ourselves off from a robust, and safe, global market.”

Not to be outdone in its market-perverting ways, Boehm also says the government imposes huge tariffs on foreign-made formula to protect domestic manufacturers and the American dairy industry.

“Now the U.S. is heroically flying in European-made baby formula. But just a year ago, customs officials were bragging about heroically seizing it at a port of entry.

Boehm’s bottom line here is that regulation and protectionism have worked in tandem “to scare aware foreign suppliers.”

Concludes the Reason scholar:

“The Biden administration and Congress get to come off like heroes, rushing to feed American babies left to go hungry because of the supposed cruelty of the free market. But that’s all an act. Don’t be fooled about the real cause of this shortage.”

As will Gov. Wolf, never mind that his action will only help to embolden even more, if not evermore, perverse government interventions.

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