Eric Adams' Emergency Price Controls on Baby Formula Will Make the City's Shortage Worse
There are few things more politically popular, and more economically counterproductive, than banning price increases during a shortage.
The country's ongoing shortage of infant formula has been exacerbated and prolonged by a long list of counterproductive government interventions: from tariffs and trade restrictions to price-distorting subsidies and nonsensical labeling requirements.
New York City Mayor Eric Adams has decided to throw one more log on the fire by issuing an emergency order limiting price increases on infant formula.
"The nationwide infant formula shortage has caused unimaginable pain and anxiety for families across New York—and we must act with urgency," said Adams on Sunday. "This emergency executive order will help us to crack down on any retailer looking to capitalize on this crisis by jacking up prices on this essential good."
The mayor's order invokes city rules that prohibit merchants from raising prices more than 10 percent from where they were 30–60 days preceding the emergency. Adams urged people to report potential gouging to the city's Department of Consumer and Worker Protection.
The only thing surprising about Adams' order is that more politicians haven't followed suit. Laws and regulations outlawing acute price hikes in response to a sudden shortage, i.e. price "gouging," are as politically popular as they are economically counterproductive.
Obviously, no one likes rapidly rising prices, particularly on a product as essential as infant formula. But letting prices rise freely is the best way to deal with the negative effects of the current shortage.
In the immediate term, sudden price hikes discourage people from engaging in harmful and unproductive hoarding.
When news of a real or expected shortage starts to spread, people's first reaction is often to buy up as much of the endangered product as they can before it disappears entirely.
One way to discourage that panic buying is to let prices surge. When would-be panic buyers encounter far more expensive formula prices, they buy less. That leaves more product available for the next person.
But when price hikes are constrained, the people who get to the store first will buy more formula. The people who get to the store later will either get nothing or, at best, pay even more inflated prices in the inevitable baby formula black market.
Preventing prices from rising with demand creates an arbitrage opportunity for people buying up stock from price-regulated primary retailers and selling it on the unregulated secondary market.
Adams' own emergency order cites the plea from the Food and Drug Administration (which has played a major role in creating the formula shortage) that companies impose "purchasing limits" to prevent "predatory behavior"—i.e. people buying up baby formula and selling it at higher prices on the secondary market.
But those purchasing limits are only necessary in an environment where prices can't rise to meet demand. The mayor's price gouging order might outlaw that predatory behavior. It also makes it more likely.
In the intermediate term, one will expect Adams' order to prolong the city's shortage by discouraging would-be suppliers from entering the market.
Higher prices make once unprofitable activities suddenly lucrative. For example, it's usually not profitable to drive 100 miles to sell people bags of ice. That calculation changes when a hurricane drives up the price of ice to $15 a bag.
Conversely, if price gouging laws force a bag of ice to be sold at $1, hurricane or not, a lot fewer potential suppliers are going to be induced to take that trip. The result is more people go without ice.
Adams's order will similarly deprive New Yorkers of much-needed formula. Out-of-city suppliers who might have incurred higher transportation costs to reap the rewards of higher prices in the Big Apple will instead sell off closer to home. That'll be particularly true if they're located in a jurisdiction that hasn't banned market prices on baby formula.
The federal policies driving the formula shortage—whether that's prohibitive tariffs on baby formula or labeling rules that keep European products off the market—are outside the control of local officials like Adams, who are nevertheless expected by their constituents to do something.
The least the mayor could do, however, is not make the formula problem worse. His emergency order shows he can't even clear that bar.
Rent Free is a weekly newsletter from Christian Britschgi on urbanism and the fight for less regulation, more housing, more property rights, and more freedom in America's cities.
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Remember, like numerous other NYC mayors, he truly thinks he has a path to the Presidency.
If you can run NYC into the ground, you can run America into the ground.
Well if he can keep turnout under 20% he has a good chance.
What do you think mail-in ballots are for?
At least he is consistently always wrong about everything.
Never underestimate a Democrat’s ability to take a bad situation caused by another democrat and make it far worse.
That’s all they do
Equity: Everyone doesn’t get formula for a reasonable price.
Obviously mothers are suffering. He should have just mandated that stores give it away for free.
It’s a clever ruse to make them breastfeed.
Chestfeed.
Politicians at work, as the public face of government: Everything is counterproductive.
No, equity requires that selected groups get favorable treatment based on ancient grievances. You might be confusing that with equality (which when applied to outcomes is bad enough).
People who rush to stop the “price gougers” in emergencies are demonstrably ignorant. The “gougers” overcome obstacles, take risks and provide until shortages subside. The sanctimonious ones are declaring that having nothing until the normal state returns is the better option. That’s a political gambit that gets votes and hurts people.
Price controls worked so well for gas, food, toilet paper, housing… Hmmmm
Just ask anyone in 1970s America, or 20th century USSR.
“The federal policies driving the formula shortage—whether that’s prohibitive tariffs on baby formula or labeling rules that keep European products off the market—are outside the control of local officials like Adams,”
Nothing about the fda shutting down a factory and then not inspecting it and working to re open it for production?
Nothing on the fed buying pallets to send to illegal immigrants, and Ukraine?
Nothing about WIC being 50% of the buying and resale, being given special privlage to not be limited in quantity?
Nothing about how evidence is now showing that the cantamination probably didn’t acctually happen?
I am all for open market and allowing formula from europ, but laying the shortage solely on that 1 topic and not even acknologing that there are multiple factors shows myopic one track thinking.
Try understanding second and third order effect. This is something libritarian pride themselves on (also probably a huge contributer to why libritarian tend to have higher iqs)
Amazing how they tend to ignore the big picture to highlight there small but favored issues instead.
If it was just tariffs it would be a price increase, not store shelves being empty. But that’s their go to in misunderstanding of the issue.
Shrike helpfully posted the article from Cato regarding the ways the FDA largely causes the supply disruption, but he too focused on a single sentence on Canadian tariffs to blame trump instead.
No parent right now is going to refuse to buy formula at a 20% markup especially when WIC pays for half of the country. Parents will prioritize their infants first for most people.
Absurdly, provisions were added to the United States‐Mexico‐Canada Agreement (USMCA) to restrict imports of formula from Canada, supposedly because China was investing in a baby food plant in Ontario, and this new production might eventually enter the U.S. market (heaven forbid!). Thus, the provisions in the USMCA’s agriculture annex establish confusing and costly TRQs on Canadian exports of infant formula, and the United States imported no baby formula from Canada in 2021.
Still defending Trump’s anti-trade and high tariff policies?
… and the United States imported no baby formula from Canada in 2021.
And yet there was plenty of it in the stores last year.
Buttplug is offering to nurse those babies with his pathetic little cock.
turd lies; it’s all he ever does. turd is a TDS-addled asshole, a kiddie diddler, and a pathological liar, entirely too stupid to remember which lies he posted even minutes ago, and also too stupid to understand we all know he’s a liar.
If anything he posts isn’t a lie, it’s totally accidental.
turd lies; it’s what he does. turd is a lying pile of lefty shit.
I posted the other parts of the article earlier lol. I see you didn’t link it again. Wonder why?
Because turd lies. It’s all turd ever does.
The author addressed all the issues you mentioned via links embedded in the story. The article was about NYC Mayor Adams’ price controls making the problem worse, as the title might have led you to understand. Please try and keep up.
I’m not sure what you’re complaining about. Those all still sound like “federal policies driving the formula shortage” and “outside the control of local officials”.
Sure, the author chose to highlight tariffs and protectionist labeling rules – but the author never claimed that was the exhaustive list of reasons for the current shortage.
Prices are information, and people don’t like information that they don’t like. For example when baby food is in short supply, and that stupid law of economics prices it high, its sending information that the supply is short. Thing is, government is magic. So when government fixes the prices, the information changes too. Government forcing prices to be what they were when something is in good supply will make it in good supply.
See? Magic!
Things like this are good for a society, every now and then in small doses, to teach average people that goods to not simply appear on store shelves in unlimited supply.
But can you teach that to Democrats?
Republicans used to understand this. But they’ve regressed in the last six or seven years. Forgot everything they knew about economics.
Like how 100k immigrants crossing illegally a year has no effect on housing or rents? Wait. That was your retarded take.
100k a month*
The obvious libertarian answer is to cut the baby formula with chalk to reduce costs to the owner while still providing a product to the public. Babies need their calcium anyway.
Sounds like something the Soviets would have done, but you do you.
This doesn’t hurt actual suppliers though. Suppliers create and sell product at wholesale to distributors/retailers.
Scalpers don’t create product. They simply profit off of buying up products, hoarding it, and selling it off to the highest bidders.
The mayor’s order invokes city rules that prohibit merchants from raising prices more than 10 percent from where they were 30–60 days preceding the emergency.
And since you can declare a state of emergency that lasts over a year, and there’s nothing preventing you from declaring a different state of emergency as soon as that one ends, you can just control prices indefinitely. This needs to be challenged on constitutional grounds. I don’t recognize the authority of any city or state to dictate the prices merchants can charge for goods.
Wait until you find about rental prices in NYC.
You’ve got to start the fight somewhere.
Do you want to be the store owner fighting for higher prices on baby formula?
Absolutely, because I’m not a supplier. If it’s costing me more money to acquire it, I’m either going to charge more to sell it, or else I’m not buying it at all. I’m not going to go out of business for moralistic purposes.
If I’m doing well enough, I might, from my personal wealth, buy up some of them to give away as a charity to needy persons, but that’s not a business decision.
So public relations is not something you have experience with.
You missed the point entirely. If the cost of supplying formula outweighs the amount of what a retailer can sell it for, then they just won’t carry it anymore, resulting in no formula on store shelves. Except for large chains that have prices already set by 3-to-5-year contracts, price fixing is a covert attack on small business and nothing more. On the surface it appears benign, but one must take into account that these problems start with government, and government offers a solution that is actually meant to have a desired effect other than what we are to believe was intended.
Is there any economic issue where Democrats are close to sensible and correct?
No.
No. And that used to be the appeal of Republicans. But now both parties are economic ignoramuses.
And both parties hate liberty. God help us.
Process over outcome.
Predictably moronic move. I can’t wait for him to issue an executive order requiring suppliers to bring formula to NYC to sell at a loss. Something truly idiotic like “Every semi bringing goods into New York City must also be carrying at least a pallet of baby formula.”
“…Something truly idiotic like “Every semi bringing goods into New York City must also be carrying at least a pallet of baby formula.”…”
The soviet joke at the time had the gym-shoe maker meeting his quota of 3 tons of sneakers by making one pair, each weighing 1-1/2 tons.
Democrats = Government by executive fiat.
You mean Execution by Government fiat?
You guys ever own a Fiat? Automotive intentions without results.
So, Fiat (D) ?
Hmm, could also be R–and that could be better, given that I prefer stalled government more than stalled cars.
Fix It Again, Tony.
In the immediate term, sudden price hikes discourage people from engaging in harmful and unproductive hoarding.
Fuck off. Nothing harmful or unproductive about buying up a lot of goods you want to store. WTF.
Anyone familiar with the term food hoarder? It’s older than you think.
Sometimes I begin to wonder if I’m reading Jacobin instead of Reason.
where is the breastmilk lobby?
Retard Democratic Economics Rule #8
Stuff appears by magic, guided by government planning, and has nothing to do with prices.
Retard Democratic Economics Rule #1
All financial numbers, including wages, prices, costs, taxes, etc. have nothing to do with each other or any physical or measurable phenomena. Financial numbers are social constructs and should be set by government for maximum political gain.
Deliberate economic ignorance doesn’t have party affiliation.
“The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”
― Thomas Sowell
Funny he should mention hurricanes, as a new season is about to start.
Every time there is a hurricane, people need generators. Bringing in a truckload of generators requires planning for the entire trip to include limited fuel gas availability, limited food availability, limited water availability; you have to approach it for full self sufficiency. So there are a lot of extra expenses. Then when you get to the devastated area, you may find these idiot price controls. So a lot of needed generators sit in warehouses in other states, and people in the hurricane area have none.
So stock up now with water, non-perishable foods, batteries, flashlights, extra medicines, and be safe.
Oh, wait. There are federal laws that prevent having extra medicine.
Oh, wait. You can’t stock up on baby formula, there isn’t any, due to federal regulations.
Oh, wait. You can’t stock up on anything, it’s all too expensive now, due to the federal war on energy.
Plus, if you have anything, you will be expected to share.
Oh boo hoo. Being nice to your neighbors is such a chore.
I didn’t mean to imply it would be voluntary.
I went shooting this weekend. Have five guns to clean. It was fun.
A real shooter cleans his guns the same day.
Hey, we wold not need to consider any of those things if we had the right Top Men, er Women, er Womyn, er Persons in government and the right laws so they could control the weather and the economy.
We’re simply not giving them enough of our money and property. They need MORE.
I’ve got some lead they can have.
‘There are few things more politically popular, and more economically counterproductive, than banning price increases during a shortage.”
Can’t let facts get in the way of buying votes with the supposed ‘victim’s’ money!
I think P.T. Barnum said something like that.
But he has good intentions and that’s all that matters.
Mr. Adams, and Ms. Warren (who suggested price controls on gasoline and food), are in the company of Richard Nixon. 1971 saw the only peacetime imposition of such controls in US history. And he admitted he did it for election purposes. He also admitted it would hurt rather than help the economy, but people want to see action! This is the same calculus today. From Men In Black: “a person is smart, but people are dumb”.
Why not just force all the upper west side and park slope moms onto milking machines? They all think breast is best and agree with redistribution.