"The finger pointing has begun but what I see is that capitalism failed once again. And everyone just expects the government to step in and solve the problem with ... Dunn Dunn Dunn!"

Not quite. It was government that initiated the problem.

The first issue had to do with investigations into infections in four babies that may have been connected to a baby formula plant owned by Abbott. Abbott controls around 40% of the domestic market. Another 58% is divided amongst three others.

Perhaps the biggest contributor is the FDA, which is (or was) highly restrictive when it came to importing baby formula. So only about 2% of it is imported.

That's before today, of course. Now the US Government is trying to get all the European baby formula they can get their hands on.

So, in summary, this problem was largely created as a result of government regulation, and had European (or other) companies been able to export baby formula to the US, the market (capitalism) would have invisibly solved this problem.

"That's hilarious... the Invisible Hand of the (not at all) Free Market"

"Why would Republicans vote to keep those restrictions?"

I couldn't tell you. And it doesn't matter. It's still a case of government restricting the import of high demands goods.

JPW.

I've been visiting this site since 2003. I've been here a while. You have too.

So I have a hard time understanding how you could ever accuse me of isolationism when I might be globalization's biggest champion. At least here.

And typically I'm defending it and it's virtues from progressives who prefer a more "america first" approach.

"There Is No Invisible Hand - Harvard Business Review"

There actually is. It's information. In an economic where the flow of information was perfect, arbitrage would not exist. You wouldn't be able to be able to purchase a widget at a lower rate in one location and sell it somewhere else at a mark-up, all other things being equal.

And this is actually the biggest difference between Keynesian and classical economic theory. Classical economic theory assumes that markets will clear instantly as a result of changing information on the markets themselves. That doesn't happen and isn't even possible. Keynesian theory holds that markets won't clear quickly as the information changes, and that government can smooth out the effects of that uncertainty. Which is why I could consider myself more of a Keynesian than a classicist in most cases.

But still, at the end of the day, markets are the reflection of supply vs. demand vs. supply. And there is very little than even governments can do to impact that market value of something.

"The problem isn't the government. The problem is the baby formula plant that decided they don't want to change the way they produce formula. So rather than fix the problem. They shut down."

You're literally stating in the same sentence that the problem isn't government, backing up your assertion by pointing out how the problem is government.

Nice job champ!

"But SadBoomer hates America."

I think you spelled it wrong.

It's Amerikkka, right?

"It's a temporary FDA funding measure. It doesn't fix any of the underlying issue with importation, tariffs, etc."

So government will shortly go back to being the problem.

It's actually the same with cars. I can't buy a German-spec car and have it delivered to the US because the US doesn't acknowledge German safety requirements, even though German cars (at least mine) are of a much higher quality that what you would typically get in the US.

"See what I mean about Article of Faith?"

I think you may mean education. And in any case the article certainly doesn't question the validity of supply and demand within markets...only when/how/if those markets reach equilibrium. And that market clearing point will always be changing.

You should take an econ class, lil homie.

"This isn't the government's problem, though. It's a company's free will to do business or not."

Really?

Abbott wasn't forced to shut down their formula factories by the FDA?

"If the government starts paying triple the going rate for wolf pelts, that triples the market value of wolf pelts."

Not really. If it were a Bernie-healthcare like situation where the government was the only entity permitted to buy wolf pelts, then yes. It also depends on what you mean by "going rate." if the market value for a wolf pelt was $1, and the government was paying triple, the cost would be $3. But In a free market there could still be someone willing to pay $5, in which case the government would have to pay $15 for that same pelt.

Likewise, if the government imposes price controls on wolf pelts, that too affects the market value.

This is even less likely. The government could cap the selling price of a wolf pelt at $5, but that's going to have two effects. The first is that the new market clearing demand rate for wolf pelts is wherever the demand line hits $5. It's also going to have a black market effect. In socialist economies where price controls were common, insiders would purchase goods at the government rate, and sell them at the much higher market value rate.

"They had a choice: Follow the rules, or stop doing business. Which one did they choose?"

They are following the government's rules. To a T. which is why they are closed down until the FDA allows them to begin producing again.

The government found a possible link between four sick babies and the Abbott plant and shut them down.

"I would hope you'd want a plant producing a contaminated product that being fed to infants to be shut down."

That's thing. The FDA never established a definitive connection between the sick babies and the Abbott plant.

And really, this is sort of a tangental concern. The biggest problem is the US government prohibiting foreign producers from exporting baby formula. Had that been permitted, it's likely the Abbott production facility could have been closed with much less impact on the availability of baby formula.

"Are you saying some lone individual in the market choosing to outbid the government does more to impact the market value of something, compared to the government itself?"

It depends on the conditions of your argument. Do we assume the government is the only entity permitted to purchase wolf skins, or are they operating in a competitive market?

"So let's flip the script. Now it's the government outbidding. Why wouldn't that be equally as effective at setting the value, as when some individual does it?"

Because price, supply, and demand are all interrelated. You can't change one without changing the others, unless one of the others is a constant. In which case you get into elasticity, which is a different thing altogether.

"Ah, who to believe? The actual economic experts or the Bomber of Myths, Son of Ayn and Ludwig?"

Would you care to compare academic pedigrees?

How many econ courses do you have under your belt?

"You are no economic genius.... well, maybe in Somalia you would be, rofl!"

So...economics in Somalia is the same as economics anywhere. It's kinda like weather.

Which you would know if you had taken an econ course.

"Harvard Bus School, and the vast majority of economic theorists, otoh, are much more reliable than a known bomber of myths."

That is absolutely, 100% true. Everything I know about economics I learned from people with a PhD in economics. And there were a lot of them.

How many econ classes have you taken?

It's a serious question. How many?

"You America hating POS."

'Murica!

Amiright?

"You musta had your hands over your ears, as most real economists now have little use for the wholly dated theory you espouse. A little research would inform you of that."

Maybe it's changed.

Since it appears that you keep up on these things, maybe you can give me the BLUF.

"Define definitive."

As in, we, the FDA have looked at the research and made an undeniable connection between the infections in the four babies and Abbot Baby formula.

"When the government offers triple the going rate, guess what happens to the going rate? It triples."

Totally untrue.

That would be the case if the government were the only entity allowed to purchase wolf skins, but in a competitive environment someone else may choose to more than three times the market rate as offered by the government.

"You could sell to me for the normal rate. Or you could sell to the gubmint for triple."

If you want a wolf skin, you'll pay more than the government is paying.

You would understand this better if you'd have taken an econ course.

"What's a few more dead babies in the meantime?"

No one was going to make parents buy Abbott formula...but the government denied parents the choice.

Maybe they will resort to purchasing black market bathtub formula, since the government has largely created conditions where the legal acquisition of baby formula is difficult and expensive.

"In most cases, that formula is of considerably higher quality than the swill sold in the US."

Maybe the restrictions are the result of lobbying by big formula...

"This level of self-sabotaging protectionism predates Biden. It takes decades to build up"

And it's not just baby formula. The government prohibits the import of many products, especially food products.

#81

Then your argument is meaningless, because outside of a handful of hunters, no one is going to pay to kill a wolf. Especially as part of a commercial enterprise.

Once the wolf skin is no longer a commodity, your argument is no longer an economic argument. I mean, think about it, what is the market rate for killing a wolf?

You really should take an econ course before entering into a discussion on econ. You just learn from those who have.

"Huh? Governments have paid for wolf pelts throughout history. To eradicate wolves."

Yes, but that's a service. They're not looking to purchase a commodity (wolf skins), so the impact would be most felt on hunters choosing to hunt wolves over something else. And even then, it could be that some other organization would be willing to pay more for a focused depredation effort in a more focused area.

#88

Is it your assertion that the government would pay three times more than the rates you listed to kill wolves?

Even if it did, if someone really wanted to kill a wolf, they could outbid the government.

"They purchase the commodity as proof of the service rendered."

Dude, yer killing me here. Please take an econ course.