On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
My Representative sent me an email this morning talking about how she co-sponsored a bill that “actually addresses” the formula crisis. The name of the bill she cited is found nowhere on GovTrack (house dot gov is down for maintenance this morning), but the one bill - among several - introduced by Republicans that have to do with the formula crisis which my rep co-sponsored is HR7830 written by Elise Stefanik.
She also voted against the FDA-funding bill that passed.
So, not only willing to hold up progress on aid for starving infants to push what I assume I will find when I’m able to read HR7830 is an eye-watering assortment of attempts to further the “back to the (17)80s!” Agenda, but the gall to lie about it in order to make even this feeble activity play better to us ignorant hayseeds she’s forced to interact with out here in her “district” or whatever.
There’s just not a single reason to remain aligned with the modern GOP I can see as an outside observer that isn’t “I want to make America into another Hungary or Russia because I believe I will be one of the few happy ones who benefits from the impoverishment and savagery visited on the rest!” I just do not understand how you can want that, even for yourself. I wrote her a long reply email and told her so.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
While racing light mechs, your Urbanmech comes in second place, but only because it ran out of ammo.
0
Options
Munkus BeaverYou don't have to attend every argument you are invited to.Philosophy: Stoicism. Politics: Democratic SocialistRegistered User, ClubPAregular
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Humor can be dissected as a frog can, but dies in the process.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
I'm really not following your points here. Formula manufacturing plants are not naturally occurring resources. They were constructed by companies in order to produce formula to sell to consumers. Requiring the breakup of the current oligopoly would in turn mean new companies constructing new plants to make new infant formula under their nameplate. It doesn't require transmutation or transformation at all, just hardhats.
Also, competitive markets reduce price thanks to that competition. Oligopolistic ones collude on pricing in order to maximize profit that the market will bear, which is then pocketed by management and shareholders. Every time M&A activity occurs claiming that the increased efficiencies from consolidation will be passed along to the consumer... it isn't. Or, if it does, that only lasts for so long as the DOJ's terms of approval require it to before screwing folks.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
This is… not strictly true. The mechanism that drives price down in an efficient market is competition sure but this requires that the efficient factory size (or efficient number of factories) is sufficiently small as to allow multiple competing brands. Production over the whole must be constant returns to scale over a large enough segment of the market. *
The natural state of a market where the efficient number of factories is 1 is a monopoly. Competition here does not produce lower overall prices it simply produces a monopoly.
HamHamJ is entirely correct. Anti-trust is not going to turn 1 factory into 2. And making it so that will increase prices so long as prices were reasonably close to marginal production. And they probably were because while there is a potential oligopoly** in supply there was also a monopsony in purchasing (which pushes prices down). If we split 1 factory into 2 the monopsony “cannot” push prices under marginal production so if marginal production goes up (which it will) then so will prices. You might say that the govt monopsony power wasn’t so strong but this probably isn’t the case. The WIC purchase agreement basically determines the market.
*decreasing marginal returns is the mechanism that causes extra factories to be made, and is not a feature inherent in production with multiple factories. The decreasing marginal utility is a necessary assumption in the demand side not a necessity in production. There are lots of good reasons to expect that production functions are CES.
**worth nothing that is is pretty hard to sustain oligopoly with 3 or 4 producers rather than 2.
+6
Options
FencingsaxIt is difficult to get a man to understand, when his salary depends upon his not understandingGNU Terry PratchettRegistered Userregular
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Well, there is regulation. The factory was breaking it. That's why the FDA shut it down.
0
Options
Munkus BeaverYou don't have to attend every argument you are invited to.Philosophy: Stoicism. Politics: Democratic SocialistRegistered User, ClubPAregular
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Well, there is regulation. The factory was breaking it. That's why the FDA shut it down.
Better enforcement of regulations means that you can stop infractions before they become monumental.
Humor can be dissected as a frog can, but dies in the process.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
This is… not strictly true. The mechanism that drives price down in an efficient market is competition sure but this requires that the efficient factory size (or efficient number of factories) is sufficiently small as to allow multiple competing brands. Production over the whole must be constant returns to scale over a large enough segment of the market. *
The natural state of a market where the efficient number of factories is 1 is a monopoly. Competition here does not produce lower overall prices it simply produces a monopoly.
HamHamJ is entirely correct. Anti-trust is not going to turn 1 factory into 2. And making it so that will increase prices so long as prices were reasonably close to marginal production. And they probably were because while there is a potential oligopoly** in supply there was also a monopsony in purchasing (which pushes prices down). If we split 1 factory into 2 the monopsony “cannot” push prices under marginal production so if marginal production goes up (which it will) then so will prices. You might say that the govt monopsony power wasn’t so strong but this probably isn’t the case. The WIC purchase agreement basically determines the market.
*decreasing marginal returns is the mechanism that causes extra factories to be made, and is not a feature inherent in production with multiple factories. The decreasing marginal utility is a necessary assumption in the demand side not a necessity in production. There are lots of good reasons to expect that production functions are CES.
**worth nothing that is is pretty hard to sustain oligopoly with 3 or 4 producers rather than 2.
Seeing how there is currently more than 1 factory, and in the past there were even more of them prior to various consolidations in the industry, your argument that infant formula naturally points towards monopoly just doesn't strike me as withstanding scrutiny. Similarly WIC covers ~44% of newborns, which is a significant market influence, but I guess I'd like to see the math to bolster the claim it has a full monopsonistic rate setting over pricing.
Are other geographic markets as similarly consolidated as ours?
moniker on
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FencingsaxIt is difficult to get a man to understand, when his salary depends upon his not understandingGNU Terry PratchettRegistered Userregular
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Well, there is regulation. The factory was breaking it. That's why the FDA shut it down.
Better enforcement of regulations means that you can stop infractions before they become monumental.
Well, yes, that's the point I was getting at.
+1
Options
Munkus BeaverYou don't have to attend every argument you are invited to.Philosophy: Stoicism. Politics: Democratic SocialistRegistered User, ClubPAregular
This is… not strictly true. The mechanism that drives price down in an efficient market is competition sure but this requires that the efficient factory size (or efficient number of factories) is sufficiently small as to allow multiple competing brands. Production over the whole must be constant returns to scale over a large enough segment of the market. *
The natural state of a market where the efficient number of factories is 1 is a monopoly. Competition here does not produce lower overall prices it simply produces a monopoly.
HamHamJ is entirely correct. Anti-trust is not going to turn 1 factory into 2. And making it so that will increase prices so long as prices were reasonably close to marginal production. And they probably were because while there is a potential oligopoly** in supply there was also a monopsony in purchasing (which pushes prices down). If we split 1 factory into 2 the monopsony “cannot” push prices under marginal production so if marginal production goes up (which it will) then so will prices. You might say that the govt monopsony power wasn’t so strong but this probably isn’t the case. The WIC purchase agreement basically determines the market.
*decreasing marginal returns is the mechanism that causes extra factories to be made, and is not a feature inherent in production with multiple factories. The decreasing marginal utility is a necessary assumption in the demand side not a necessity in production. There are lots of good reasons to expect that production functions are CES.
**worth nothing that is is pretty hard to sustain oligopoly with 3 or 4 producers rather than 2.
Antitrust enforcement means that we stop 4 factories from becoming 1. It's a preventative measure first.
Second, if the issue is a current monopoly/oligopoly of a necessary good (which baby formula undoubtedly is) with a limited amount of infrastructure then the government should just fucking take it over and transform it into a utility type service.
Humor can be dissected as a frog can, but dies in the process.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula.
It seems like you are the one with the reading comprehension issues. More FDA Inspectors means more regular FDA inspections of formula making plants. Catching the plant failures that allow deadly Cronobacter to contaminate infant formula sooner. Resulting in fewer pallets needing to be recalled, shorter shutdown times to bring the plant into compliance with not killing babies through negligence, and fewer sickened children.
Oh, but surely the Invisible Hand of the Market will sort out all of those issues, with no need for onerous regulations.
Wait, that's how we got here?
Well, shit.
This is… not strictly true. The mechanism that drives price down in an efficient market is competition sure but this requires that the efficient factory size (or efficient number of factories) is sufficiently small as to allow multiple competing brands. Production over the whole must be constant returns to scale over a large enough segment of the market. *
The natural state of a market where the efficient number of factories is 1 is a monopoly. Competition here does not produce lower overall prices it simply produces a monopoly.
HamHamJ is entirely correct. Anti-trust is not going to turn 1 factory into 2. And making it so that will increase prices so long as prices were reasonably close to marginal production. And they probably were because while there is a potential oligopoly** in supply there was also a monopsony in purchasing (which pushes prices down). If we split 1 factory into 2 the monopsony “cannot” push prices under marginal production so if marginal production goes up (which it will) then so will prices. You might say that the govt monopsony power wasn’t so strong but this probably isn’t the case. The WIC purchase agreement basically determines the market.
*decreasing marginal returns is the mechanism that causes extra factories to be made, and is not a feature inherent in production with multiple factories. The decreasing marginal utility is a necessary assumption in the demand side not a necessity in production. There are lots of good reasons to expect that production functions are CES.
**worth nothing that is is pretty hard to sustain oligopoly with 3 or 4 producers rather than 2.
Antitrust enforcement means that we stop 4 factories from becoming 1. It's a preventative measure first.
Second, if the issue is a current monopoly/oligopoly of a necessary good (which baby formula undoubtedly is) with a limited amount of infrastructure then the government should just fucking take it over and transform it into a utility type service.
No. Anti-trust enforcement means we stop 4 factories being owned by 4 companies to be 4 factories owned by 1 company.
There isn't a large externality or informational issue with baby formula. There is no need for the government to make it into a utility. What was needed was better enforcement of FDA regulations...
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
This is… not strictly true. The mechanism that drives price down in an efficient market is competition sure but this requires that the efficient factory size (or efficient number of factories) is sufficiently small as to allow multiple competing brands. Production over the whole must be constant returns to scale over a large enough segment of the market. *
The natural state of a market where the efficient number of factories is 1 is a monopoly. Competition here does not produce lower overall prices it simply produces a monopoly.
HamHamJ is entirely correct. Anti-trust is not going to turn 1 factory into 2. And making it so that will increase prices so long as prices were reasonably close to marginal production. And they probably were because while there is a potential oligopoly** in supply there was also a monopsony in purchasing (which pushes prices down). If we split 1 factory into 2 the monopsony “cannot” push prices under marginal production so if marginal production goes up (which it will) then so will prices. You might say that the govt monopsony power wasn’t so strong but this probably isn’t the case. The WIC purchase agreement basically determines the market.
*decreasing marginal returns is the mechanism that causes extra factories to be made, and is not a feature inherent in production with multiple factories. The decreasing marginal utility is a necessary assumption in the demand side not a necessity in production. There are lots of good reasons to expect that production functions are CES.
**worth nothing that is is pretty hard to sustain oligopoly with 3 or 4 producers rather than 2.
Seeing how there is currently more than 1 factory, and in the past there were even more of them prior to various consolidations in the industry, your argument that infant formula naturally points towards monopoly just doesn't strike me as withstanding scrutiny. Similarly WIC covers ~44% of newborns, which is a significant market influence, but I guess I'd like to see the math to bolster the claim it has a full monopsonistic rate setting over pricing.
Are other geographic markets as similarly consolidated as ours?
Seeing as there are currently more than 1 factory does not mean that forcing the building of a new factory would not suddenly change the efficient factory size. (also there is kind of only one factory for this specific type of formula... the shut down of which was kind of the problem. If there were a large number of factories then this would not have been a problem)
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Munkus BeaverYou don't have to attend every argument you are invited to.Philosophy: Stoicism. Politics: Democratic SocialistRegistered User, ClubPAregular
This is… not strictly true. The mechanism that drives price down in an efficient market is competition sure but this requires that the efficient factory size (or efficient number of factories) is sufficiently small as to allow multiple competing brands. Production over the whole must be constant returns to scale over a large enough segment of the market. *
The natural state of a market where the efficient number of factories is 1 is a monopoly. Competition here does not produce lower overall prices it simply produces a monopoly.
HamHamJ is entirely correct. Anti-trust is not going to turn 1 factory into 2. And making it so that will increase prices so long as prices were reasonably close to marginal production. And they probably were because while there is a potential oligopoly** in supply there was also a monopsony in purchasing (which pushes prices down). If we split 1 factory into 2 the monopsony “cannot” push prices under marginal production so if marginal production goes up (which it will) then so will prices. You might say that the govt monopsony power wasn’t so strong but this probably isn’t the case. The WIC purchase agreement basically determines the market.
*decreasing marginal returns is the mechanism that causes extra factories to be made, and is not a feature inherent in production with multiple factories. The decreasing marginal utility is a necessary assumption in the demand side not a necessity in production. There are lots of good reasons to expect that production functions are CES.
**worth nothing that is is pretty hard to sustain oligopoly with 3 or 4 producers rather than 2.
Antitrust enforcement means that we stop 4 factories from becoming 1. It's a preventative measure first.
Second, if the issue is a current monopoly/oligopoly of a necessary good (which baby formula undoubtedly is) with a limited amount of infrastructure then the government should just fucking take it over and transform it into a utility type service.
No. Anti-trust enforcement means we stop 4 factories being owned by 4 companies to be 4 factories owned by 1 company.
There isn't a large externality or informational issue with baby formula. There is no need for the government to make it into a utility.
Stop being obtuse. It's both.
Humor can be dissected as a frog can, but dies in the process.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Efficiencies of scale also drive prices down. Two factories each producing half of what the single factory did but each paying the full amount of overhead for running a factory means the cost of production will be higher.
While racing light mechs, your Urbanmech comes in second place, but only because it ran out of ammo.
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Munkus BeaverYou don't have to attend every argument you are invited to.Philosophy: Stoicism. Politics: Democratic SocialistRegistered User, ClubPAregular
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Efficiencies of scale also drive prices down. Two factories each producing half of what the single factory did but each paying the full amount of overhead for running a factory means the cost of production will be higher.
This sounds like a fundamental misunderstanding of how it would work. If those factories are in competition with each other, it would drive the price down. Each would be dealing with the same overhead and would not pass the buck along to the consumer in order to have the more competitive price. You are also throwing in a new assumption into the mix to try and gainstay my point, that you have two factories running at half capacity.
Humor can be dissected as a frog can, but dies in the process.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Efficiencies of scale also drive prices down. Two factories each producing half of what the single factory did but each paying the full amount of overhead for running a factory means the cost of production will be higher.
This sounds like a fundamental misunderstanding of how it would work. If those factories are in competition with each other, it would drive the price down. Each would be dealing with the same overhead and would not pass the buck along to the consumer in order to have the more competitive price. You are also throwing in a new assumption into the mix to try and gainstay my point, that you have two factories running at half capacity.
The consumer market is not really in competition that much though because people don't generally just buy the cheapest formula whatever it is. They buy WIC contract formula overwhelmingly and a state WIC contract switch drags the non-WIC market with it. Even those not getting WIC will probably get that formula in the hospital and such and if it works why change? The competition really seems to be in getting WIC contracts
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Efficiencies of scale also drive prices down. Two factories each producing half of what the single factory did but each paying the full amount of overhead for running a factory means the cost of production will be higher.
This sounds like a fundamental misunderstanding of how it would work. If those factories are in competition with each other, it would drive the price down. Each would be dealing with the same overhead and would not pass the buck along to the consumer in order to have the more competitive price. You are also throwing in a new assumption into the mix to try and gainstay my point, that you have two factories running at half capacity.
That's not necessarily true. Because the overhead for 2 factories is not necessarily half as much as for 1 factory producing the same amount as those 2 combined. Fixed costs or costs that don't vary 1:1 with production can mean it's more efficient to produce everything at one factory then to produce the exact same amount at multiple factories. This means that if you divide that production over multiple companies with multiple factories, prices go up because it costs more per unit output to make the stuff.
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OrcaAlso known as EspressosaurusWrexRegistered Userregular
What is the net profit of making baby formula? Just because it's cheaper to make at a single factory doesn't mean any of that is reflected in the cost to the consumer.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Efficiencies of scale also drive prices down. Two factories each producing half of what the single factory did but each paying the full amount of overhead for running a factory means the cost of production will be higher.
This sounds like a fundamental misunderstanding of how it would work. If those factories are in competition with each other, it would drive the price down. Each would be dealing with the same overhead and would not pass the buck along to the consumer in order to have the more competitive price. You are also throwing in a new assumption into the mix to try and gainstay my point, that you have two factories running at half capacity.
I literally just explained how this is wrong. You have a fundamental misunderstanding of how this works. If factories compete with each other it only drives the price down IF there is a difference between the sales price and the marginal production cost. If there are two factories producing the same total quantity of goods as compared to one factory and the one factory is the efficient number then "overhead" is higher and the "competitive price" is higher under two factories. This produces a monopoly situation but only insomuch as they can keep prices low enough to prevent entry into the market. And there are loads of easy ways... one of which we are currently doing, to efficiently curb that monopoly power.
The company did not build a big huge factory because it was a bad idea. One factory was built because one factory was more efficient than two factories. If two factories was as efficient or more efficient the company would have built two factories in order to make more money (or in this case to defray capital costs and allow more efficient spool up/spool down and also to prevent issues like the one we're seeing).
This is… not strictly true. The mechanism that drives price down in an efficient market is competition sure but this requires that the efficient factory size (or efficient number of factories) is sufficiently small as to allow multiple competing brands. Production over the whole must be constant returns to scale over a large enough segment of the market. *
The natural state of a market where the efficient number of factories is 1 is a monopoly. Competition here does not produce lower overall prices it simply produces a monopoly.
HamHamJ is entirely correct. Anti-trust is not going to turn 1 factory into 2. And making it so that will increase prices so long as prices were reasonably close to marginal production. And they probably were because while there is a potential oligopoly** in supply there was also a monopsony in purchasing (which pushes prices down). If we split 1 factory into 2 the monopsony “cannot” push prices under marginal production so if marginal production goes up (which it will) then so will prices. You might say that the govt monopsony power wasn’t so strong but this probably isn’t the case. The WIC purchase agreement basically determines the market.
*decreasing marginal returns is the mechanism that causes extra factories to be made, and is not a feature inherent in production with multiple factories. The decreasing marginal utility is a necessary assumption in the demand side not a necessity in production. There are lots of good reasons to expect that production functions are CES.
**worth nothing that is is pretty hard to sustain oligopoly with 3 or 4 producers rather than 2.
Antitrust enforcement means that we stop 4 factories from becoming 1. It's a preventative measure first.
Second, if the issue is a current monopoly/oligopoly of a necessary good (which baby formula undoubtedly is) with a limited amount of infrastructure then the government should just fucking take it over and transform it into a utility type service.
No. Anti-trust enforcement means we stop 4 factories being owned by 4 companies to be 4 factories owned by 1 company.
There isn't a large externality or informational issue with baby formula. There is no need for the government to make it into a utility.
Stop being obtuse. It's both.
I am not being obtuse. Anti-trust does not mean we enforce inefficient factories. It means we prevent mergers. If there is only one company in the market because the others went out of business because they could not compete we do not step in to help those companies. (unless the reason they could not compete was anti-competitive behavior but there does not appear to be anti-competitive behavior here AND the primary way in which can can mitigate monopoly is by price fixing... IE almost exactly the monopsony effect WIC purchasing has...)
Edit: We will step in when the situations are separable. In order to prevent vertical integration. And we will potentially step in if one company owns all the production through multiple factories. But we very much do not prevent monopoly as a result of efficient factory size
What is the net profit of making baby formula? Just because it's cheaper to make at a single factory doesn't mean any of that is reflected in the cost to the consumer.
What is the net profit of making baby formula? Just because it's cheaper to make at a single factory doesn't mean any of that is reflected in the cost to the consumer.
Honestly this makes a good argument for just nationalizing it or otherwise stepping in. It's a critical component and the free market has had a massive failure that is impacting our ability to feed our children with a declining market that means investment will only be as needed by manufacturers.
This looks to me like the free market can only fail here since it will want to cut margins to the bone to maximize the available profit, which means there's nothing left for when something interrupts supply like, oh, right now.
Excess supply has a shelf life and will get thrown out, so any margin means almost literally lighting that money on fire. Businesses will be loathe to do that.
Headlines are fucking terrible. In the article itself, the closest it says to saying that is that a lower birthrate naturally means a smaller market
It's a shrinking market, so of course any investment will only be what is strictly necessary and margins will be cut as far as they can.
I don't see how the free market solves this one.
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Munkus BeaverYou don't have to attend every argument you are invited to.Philosophy: Stoicism. Politics: Democratic SocialistRegistered User, ClubPAregular
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Efficiencies of scale also drive prices down. Two factories each producing half of what the single factory did but each paying the full amount of overhead for running a factory means the cost of production will be higher.
This sounds like a fundamental misunderstanding of how it would work. If those factories are in competition with each other, it would drive the price down. Each would be dealing with the same overhead and would not pass the buck along to the consumer in order to have the more competitive price. You are also throwing in a new assumption into the mix to try and gainstay my point, that you have two factories running at half capacity.
That's not necessarily true. Because the overhead for 2 factories is not necessarily half as much as for 1 factory producing the same amount as those 2 combined. Fixed costs or costs that don't vary 1:1 with production can mean it's more efficient to produce everything at one factory then to produce the exact same amount at multiple factories. This means that if you divide that production over multiple companies with multiple factories, prices go up because it costs more per unit output to make the stuff.
Again, this line is base on an assumption pulled out of thin air about how it would work. Let's assume that both factories can run at full capacity. Wow, that fixed the problem! Because I pulled an assumption out of my ass.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Efficiencies of scale also drive prices down. Two factories each producing half of what the single factory did but each paying the full amount of overhead for running a factory means the cost of production will be higher.
This sounds like a fundamental misunderstanding of how it would work. If those factories are in competition with each other, it would drive the price down. Each would be dealing with the same overhead and would not pass the buck along to the consumer in order to have the more competitive price. You are also throwing in a new assumption into the mix to try and gainstay my point, that you have two factories running at half capacity.
I literally just explained how this is wrong. You have a fundamental misunderstanding of how this works. If factories compete with each other it only drives the price down IF there is a difference between the sales price and the marginal production cost. If there are two factories producing the same total quantity of goods as compared to one factory and the one factory is the efficient number then "overhead" is higher and the "competitive price" is higher under two factories. This produces a monopoly situation but only insomuch as they can keep prices low enough to prevent entry into the market. And there are loads of easy ways... one of which we are currently doing, to efficiently curb that monopoly power.
The company did not build a big huge factory because it was a bad idea. One factory was built because one factory was more efficient than two factories. If two factories was as efficient or more efficient the company would have built two factories in order to make more money (or in this case to defray capital costs and allow more efficient spool up/spool down and also to prevent issues like the one we're seeing).
This is… not strictly true. The mechanism that drives price down in an efficient market is competition sure but this requires that the efficient factory size (or efficient number of factories) is sufficiently small as to allow multiple competing brands. Production over the whole must be constant returns to scale over a large enough segment of the market. *
The natural state of a market where the efficient number of factories is 1 is a monopoly. Competition here does not produce lower overall prices it simply produces a monopoly.
HamHamJ is entirely correct. Anti-trust is not going to turn 1 factory into 2. And making it so that will increase prices so long as prices were reasonably close to marginal production. And they probably were because while there is a potential oligopoly** in supply there was also a monopsony in purchasing (which pushes prices down). If we split 1 factory into 2 the monopsony “cannot” push prices under marginal production so if marginal production goes up (which it will) then so will prices. You might say that the govt monopsony power wasn’t so strong but this probably isn’t the case. The WIC purchase agreement basically determines the market.
*decreasing marginal returns is the mechanism that causes extra factories to be made, and is not a feature inherent in production with multiple factories. The decreasing marginal utility is a necessary assumption in the demand side not a necessity in production. There are lots of good reasons to expect that production functions are CES.
**worth nothing that is is pretty hard to sustain oligopoly with 3 or 4 producers rather than 2.
Antitrust enforcement means that we stop 4 factories from becoming 1. It's a preventative measure first.
Second, if the issue is a current monopoly/oligopoly of a necessary good (which baby formula undoubtedly is) with a limited amount of infrastructure then the government should just fucking take it over and transform it into a utility type service.
No. Anti-trust enforcement means we stop 4 factories being owned by 4 companies to be 4 factories owned by 1 company.
There isn't a large externality or informational issue with baby formula. There is no need for the government to make it into a utility.
Stop being obtuse. It's both.
I am not being obtuse. Anti-trust does not mean we enforce inefficient factories. It means we prevent mergers. If there is only one company in the market because the others went out of business because they could not compete we do not step in to help those companies. (unless the reason they could not compete was anti-competitive behavior but there does not appear to be anti-competitive behavior here AND the primary way in which can can mitigate monopoly is by price fixing... IE almost exactly the monopsony effect WIC purchasing has...)
Edit: We will step in when the situations are separable. In order to prevent vertical integration. And we will potentially step in if one company owns all the production through multiple factories. But we very much do not prevent monopoly as a result of efficient factory size
Dude. It happens all the time in mergers where they shut down factories and junk equipment because it's no longer 'necessary' for them. You are being obtuse because you're refusing to acknowledge this simple fact.
Humor can be dissected as a frog can, but dies in the process.
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Munkus BeaverYou don't have to attend every argument you are invited to.Philosophy: Stoicism. Politics: Democratic SocialistRegistered User, ClubPAregular
Headlines are fucking terrible. In the article itself, the closest it says to saying that is that a lower birthrate naturally means a smaller market
It's a shrinking market, so of course any investment will only be what is strictly necessary and margins will be cut as far as they can.
I don't see how the free market solves this one.
The issue here is cutting corners in order to 'maximize' profits. Which is absolutely ghoulish considering that baby formula is a medical necessity for many.
The government should be able to take control in situations such as these.
Humor can be dissected as a frog can, but dies in the process.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Efficiencies of scale also drive prices down. Two factories each producing half of what the single factory did but each paying the full amount of overhead for running a factory means the cost of production will be higher.
This sounds like a fundamental misunderstanding of how it would work. If those factories are in competition with each other, it would drive the price down. Each would be dealing with the same overhead and would not pass the buck along to the consumer in order to have the more competitive price. You are also throwing in a new assumption into the mix to try and gainstay my point, that you have two factories running at half capacity.
I literally just explained how this is wrong. You have a fundamental misunderstanding of how this works. If factories compete with each other it only drives the price down IF there is a difference between the sales price and the marginal production cost. If there are two factories producing the same total quantity of goods as compared to one factory and the one factory is the efficient number then "overhead" is higher and the "competitive price" is higher under two factories. This produces a monopoly situation but only insomuch as they can keep prices low enough to prevent entry into the market. And there are loads of easy ways... one of which we are currently doing, to efficiently curb that monopoly power.
The company did not build a big huge factory because it was a bad idea. One factory was built because one factory was more efficient than two factories. If two factories was as efficient or more efficient the company would have built two factories in order to make more money (or in this case to defray capital costs and allow more efficient spool up/spool down and also to prevent issues like the one we're seeing).
This is… not strictly true. The mechanism that drives price down in an efficient market is competition sure but this requires that the efficient factory size (or efficient number of factories) is sufficiently small as to allow multiple competing brands. Production over the whole must be constant returns to scale over a large enough segment of the market. *
The natural state of a market where the efficient number of factories is 1 is a monopoly. Competition here does not produce lower overall prices it simply produces a monopoly.
HamHamJ is entirely correct. Anti-trust is not going to turn 1 factory into 2. And making it so that will increase prices so long as prices were reasonably close to marginal production. And they probably were because while there is a potential oligopoly** in supply there was also a monopsony in purchasing (which pushes prices down). If we split 1 factory into 2 the monopsony “cannot” push prices under marginal production so if marginal production goes up (which it will) then so will prices. You might say that the govt monopsony power wasn’t so strong but this probably isn’t the case. The WIC purchase agreement basically determines the market.
*decreasing marginal returns is the mechanism that causes extra factories to be made, and is not a feature inherent in production with multiple factories. The decreasing marginal utility is a necessary assumption in the demand side not a necessity in production. There are lots of good reasons to expect that production functions are CES.
**worth nothing that is is pretty hard to sustain oligopoly with 3 or 4 producers rather than 2.
Antitrust enforcement means that we stop 4 factories from becoming 1. It's a preventative measure first.
Second, if the issue is a current monopoly/oligopoly of a necessary good (which baby formula undoubtedly is) with a limited amount of infrastructure then the government should just fucking take it over and transform it into a utility type service.
No. Anti-trust enforcement means we stop 4 factories being owned by 4 companies to be 4 factories owned by 1 company.
There isn't a large externality or informational issue with baby formula. There is no need for the government to make it into a utility.
Stop being obtuse. It's both.
I am not being obtuse. Anti-trust does not mean we enforce inefficient factories. It means we prevent mergers. If there is only one company in the market because the others went out of business because they could not compete we do not step in to help those companies. (unless the reason they could not compete was anti-competitive behavior but there does not appear to be anti-competitive behavior here AND the primary way in which can can mitigate monopoly is by price fixing... IE almost exactly the monopsony effect WIC purchasing has...)
Edit: We will step in when the situations are separable. In order to prevent vertical integration. And we will potentially step in if one company owns all the production through multiple factories. But we very much do not prevent monopoly as a result of efficient factory size
To be frank, given what I know about Abbot and Nestle, I quite simply don't believe that. And everything else flows from there.
Headlines are fucking terrible. In the article itself, the closest it says to saying that is that a lower birthrate naturally means a smaller market
It's a shrinking market, so of course any investment will only be what is strictly necessary and margins will be cut as far as they can.
I don't see how the free market solves this one.
By eliminating tariffs and allowing free trade so that the smaller national markets merge into one larger market that can support more production and will be more resilient because regulatory deficiencies in one country won't impact others.
While racing light mechs, your Urbanmech comes in second place, but only because it ran out of ammo.
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OrcaAlso known as EspressosaurusWrexRegistered Userregular
Headlines are fucking terrible. In the article itself, the closest it says to saying that is that a lower birthrate naturally means a smaller market
It's a shrinking market, so of course any investment will only be what is strictly necessary and margins will be cut as far as they can.
I don't see how the free market solves this one.
By eliminating tariffs and allowing free trade so that the smaller national markets merge into one larger market that can support more production and will be more resilient because regulatory deficiencies in one country won't impact others.
Being self-sufficient for critical goods like uh infant formula seems like a useful thing to me.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Efficiencies of scale also drive prices down. Two factories each producing half of what the single factory did but each paying the full amount of overhead for running a factory means the cost of production will be higher.
Yes, that is the argument companies always present to DOJ. And then miraculously the cost efficiencies never make it to the consumer. There's a large stock buyback next quarter for completely unrelated reasons, though.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Efficiencies of scale also drive prices down. Two factories each producing half of what the single factory did but each paying the full amount of overhead for running a factory means the cost of production will be higher.
This sounds like a fundamental misunderstanding of how it would work. If those factories are in competition with each other, it would drive the price down. Each would be dealing with the same overhead and would not pass the buck along to the consumer in order to have the more competitive price. You are also throwing in a new assumption into the mix to try and gainstay my point, that you have two factories running at half capacity.
That's not necessarily true. Because the overhead for 2 factories is not necessarily half as much as for 1 factory producing the same amount as those 2 combined. Fixed costs or costs that don't vary 1:1 with production can mean it's more efficient to produce everything at one factory then to produce the exact same amount at multiple factories. This means that if you divide that production over multiple companies with multiple factories, prices go up because it costs more per unit output to make the stuff.
Again, this line is base on an assumption pulled out of thin air about how it would work. Let's assume that both factories can run at full capacity. Wow, that fixed the problem! Because I pulled an assumption out of my ass.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Efficiencies of scale also drive prices down. Two factories each producing half of what the single factory did but each paying the full amount of overhead for running a factory means the cost of production will be higher.
This sounds like a fundamental misunderstanding of how it would work. If those factories are in competition with each other, it would drive the price down. Each would be dealing with the same overhead and would not pass the buck along to the consumer in order to have the more competitive price. You are also throwing in a new assumption into the mix to try and gainstay my point, that you have two factories running at half capacity.
I literally just explained how this is wrong. You have a fundamental misunderstanding of how this works. If factories compete with each other it only drives the price down IF there is a difference between the sales price and the marginal production cost. If there are two factories producing the same total quantity of goods as compared to one factory and the one factory is the efficient number then "overhead" is higher and the "competitive price" is higher under two factories. This produces a monopoly situation but only insomuch as they can keep prices low enough to prevent entry into the market. And there are loads of easy ways... one of which we are currently doing, to efficiently curb that monopoly power.
The company did not build a big huge factory because it was a bad idea. One factory was built because one factory was more efficient than two factories. If two factories was as efficient or more efficient the company would have built two factories in order to make more money (or in this case to defray capital costs and allow more efficient spool up/spool down and also to prevent issues like the one we're seeing).
This is… not strictly true. The mechanism that drives price down in an efficient market is competition sure but this requires that the efficient factory size (or efficient number of factories) is sufficiently small as to allow multiple competing brands. Production over the whole must be constant returns to scale over a large enough segment of the market. *
The natural state of a market where the efficient number of factories is 1 is a monopoly. Competition here does not produce lower overall prices it simply produces a monopoly.
HamHamJ is entirely correct. Anti-trust is not going to turn 1 factory into 2. And making it so that will increase prices so long as prices were reasonably close to marginal production. And they probably were because while there is a potential oligopoly** in supply there was also a monopsony in purchasing (which pushes prices down). If we split 1 factory into 2 the monopsony “cannot” push prices under marginal production so if marginal production goes up (which it will) then so will prices. You might say that the govt monopsony power wasn’t so strong but this probably isn’t the case. The WIC purchase agreement basically determines the market.
*decreasing marginal returns is the mechanism that causes extra factories to be made, and is not a feature inherent in production with multiple factories. The decreasing marginal utility is a necessary assumption in the demand side not a necessity in production. There are lots of good reasons to expect that production functions are CES.
**worth nothing that is is pretty hard to sustain oligopoly with 3 or 4 producers rather than 2.
Antitrust enforcement means that we stop 4 factories from becoming 1. It's a preventative measure first.
Second, if the issue is a current monopoly/oligopoly of a necessary good (which baby formula undoubtedly is) with a limited amount of infrastructure then the government should just fucking take it over and transform it into a utility type service.
No. Anti-trust enforcement means we stop 4 factories being owned by 4 companies to be 4 factories owned by 1 company.
There isn't a large externality or informational issue with baby formula. There is no need for the government to make it into a utility.
Stop being obtuse. It's both.
I am not being obtuse. Anti-trust does not mean we enforce inefficient factories. It means we prevent mergers. If there is only one company in the market because the others went out of business because they could not compete we do not step in to help those companies. (unless the reason they could not compete was anti-competitive behavior but there does not appear to be anti-competitive behavior here AND the primary way in which can can mitigate monopoly is by price fixing... IE almost exactly the monopsony effect WIC purchasing has...)
Edit: We will step in when the situations are separable. In order to prevent vertical integration. And we will potentially step in if one company owns all the production through multiple factories. But we very much do not prevent monopoly as a result of efficient factory size
Dude. It happens all the time in mergers where they shut down factories and junk equipment because it's no longer 'necessary' for them. You are being obtuse because you're refusing to acknowledge this simple fact.
ARPA Laminates were recently bought out by Formica, I believe. Might have been Trespa, I forget because there's also a lot of consolidation in building materials. ~80% of their line, that they were producing profitably, was eliminated or moved from standard to 'made to order' which basically means they'll dust off the IP from storage and do a special run for you if you're willing to pay. Both companies were doing just fine prior to the acquisition and more than capable of making a buck. They just wanted to eliminate the competition rather than actually have to compete with them. And then they did.
Dude. It happens all the time in mergers where they shut down factories and junk equipment because it's no longer 'necessary' for them. You are being obtuse because you're refusing to acknowledge this simple fact.
So... Sometimes factories and equipment are not used because they're inefficient yes. But i do not see what this has to do with the issue. We do not break up companies when they only run one factory. We tend to let more mergers happen if the merging party can show that the merger will lower consumer prices(I.E. because the factories are not producing at capacity and could meet the same production at lower costs by only running one). And we tend to be more skeptical of mergers when they modify the number of players in the market below 4. [The saying at the FTC at least used to be 4 to 3, we'll see. 3 to 2, we'll sue]. But this is a merger situation and we are not dealing with a merger.
We are dealing with potentially breaking up a company that has one factory simply because it runs one factory and for no other reasons that that factory is "too large".
And we don't do that. And we shouldn't do that.
Again, this line is base on an assumption pulled out of thin air about how it would work. Let's assume that both factories can run at full capacity. Wow, that fixed the problem! Because I pulled an assumption out of my ass.
No. It is you who is assuming that the sky is green. Look. There is an efficient number of factories. A company will tend to want to run factories efficiently. So if company A owns all the market and the market would support two factories company A would run 2 factories. And if the market would support 10 factories then company A would run 10 factories.
If company A only runs 1 factory what does that tell you about the efficient number of factories? A: Its probably one. If it was two, they would be running two factories. If it was three they would be running three factories. But they're not. They're running one. They think this makes them the most money and it will always make them the most money if it produces the sales output amount of formula for the least cost.
So if we move from 1 factory to 2 factories the most reasonable assumption is that this will cause a decrease in efficiency and an increase in prices unless there is strict monopoly power increasing the price of the goods and no competing factors.
And there does not appear to be so. And even if there was so there is good evidence for monopsony power in government purchasing. Which is more or less the idealized way to deal with monopoly power when it is true that the government wants to subsidize the good.(if the govt does not want to subsidize/provide the good then a price cap is the idealized way to curb power)
The problem does not seem to be the market structure. The problem seems to be
1) The FDA is underfunded and so problems at one factory can get out of hand and not get fixed before they become an issue.
2) import restrictions (and lack of money for inspections) imposed by the trump administration mean that the US does not have access to production from other nations. (Bigger market -> more factories -> easier to overproduce marginally in order to fulfill temporary shortages) which effectively segregated the market (one way in which to artificially impose a monopoly is to restrict trade such that the efficient number of factories to serve a particular area is 1, though this would not terribly have that effect here and we shouldn't be that worried about it due to WIC power but we should absolutely be worried about supply variance as a result)
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Munkus BeaverYou don't have to attend every argument you are invited to.Philosophy: Stoicism. Politics: Democratic SocialistRegistered User, ClubPAregular
edited May 2022
So... Sometimes factories and equipment are not used because they're inefficient yes. But i do not see what this has to do with the issue. We do not break up companies when they only run one factory
I'm gonna stop right here and give you the same courtesy you gave me, because you're ignoring the salient point from the start of this conversation regarding anti-trust
This is… not strictly true. The mechanism that drives price down in an efficient market is competition sure but this requires that the efficient factory size (or efficient number of factories) is sufficiently small as to allow multiple competing brands. Production over the whole must be constant returns to scale over a large enough segment of the market. *
The natural state of a market where the efficient number of factories is 1 is a monopoly. Competition here does not produce lower overall prices it simply produces a monopoly.
HamHamJ is entirely correct. Anti-trust is not going to turn 1 factory into 2. And making it so that will increase prices so long as prices were reasonably close to marginal production. And they probably were because while there is a potential oligopoly** in supply there was also a monopsony in purchasing (which pushes prices down). If we split 1 factory into 2 the monopsony “cannot” push prices under marginal production so if marginal production goes up (which it will) then so will prices. You might say that the govt monopsony power wasn’t so strong but this probably isn’t the case. The WIC purchase agreement basically determines the market.
*decreasing marginal returns is the mechanism that causes extra factories to be made, and is not a feature inherent in production with multiple factories. The decreasing marginal utility is a necessary assumption in the demand side not a necessity in production. There are lots of good reasons to expect that production functions are CES.
**worth nothing that is is pretty hard to sustain oligopoly with 3 or 4 producers rather than 2.
Antitrust enforcement means that we stop 4 factories from becoming 1. It's a preventative measure first.
Second, if the issue is a current monopoly/oligopoly of a necessary good (which baby formula undoubtedly is) with a limited amount of infrastructure then the government should just fucking take it over and transform it into a utility type service.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Munkus Beaver on
Humor can be dissected as a frog can, but dies in the process.
On the SAME day, Republicans both held a press conference blaming Biden for the baby formula shortage *AND* voted against a bill that would ensure access to baby formula amid a shortage.
NEW: The House approves $28 million to respond to the baby formula shortage by a vote of 231-192.
Every NO vote was a Republican.
NEW: The House has voted 222-203 in favor of the Domestic Terrorism Prevention bill. Only one Republican, Adam Kinzinger, voted in favor. All other Republicans voted against it.
Pro-Life party my ass.
No one reads these bills do they. The "Baby Formula" bill had almost nothing to do with baby formula. It gave the FDA $28 million to hire more staff. Who will not be making/buying baby formula. And who had $100 million few weeks ago approved already. So basically they're throwing money around and saying they're doing something while not doing anything but spending money. The GOP did approve a bill to allow people on WIC to get baby formula, something that will actually help.
And the 'Domestic terrorism' bill, well, if you insist on calling trespassing an insurrection and destroying cities protests it's no wonder some people don't have much stock in the need or ability of a "domestic terrorism" anything.
The white guys who leave a manifesto about fears of the Great Replacement then drive three hours to shoot up a majoruty black establishment are the terrorists.
Plus people on WIC already get formula, the problem is there isn't any formula for them to get.
That would be why we are importing a whole bunch of it
Which was made more challenging thanks to NAFTA 2
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
Efficiencies of scale also drive prices down. Two factories each producing half of what the single factory did but each paying the full amount of overhead for running a factory means the cost of production will be higher.
This sounds like a fundamental misunderstanding of how it would work. If those factories are in competition with each other, it would drive the price down. Each would be dealing with the same overhead and would not pass the buck along to the consumer in order to have the more competitive price. You are also throwing in a new assumption into the mix to try and gainstay my point, that you have two factories running at half capacity.
I literally just explained how this is wrong. You have a fundamental misunderstanding of how this works. If factories compete with each other it only drives the price down IF there is a difference between the sales price and the marginal production cost. If there are two factories producing the same total quantity of goods as compared to one factory and the one factory is the efficient number then "overhead" is higher and the "competitive price" is higher under two factories. This produces a monopoly situation but only insomuch as they can keep prices low enough to prevent entry into the market. And there are loads of easy ways... one of which we are currently doing, to efficiently curb that monopoly power.
The company did not build a big huge factory because it was a bad idea. One factory was built because one factory was more efficient than two factories. If two factories was as efficient or more efficient the company would have built two factories in order to make more money (or in this case to defray capital costs and allow more efficient spool up/spool down and also to prevent issues like the one we're seeing).
This is… not strictly true. The mechanism that drives price down in an efficient market is competition sure but this requires that the efficient factory size (or efficient number of factories) is sufficiently small as to allow multiple competing brands. Production over the whole must be constant returns to scale over a large enough segment of the market. *
The natural state of a market where the efficient number of factories is 1 is a monopoly. Competition here does not produce lower overall prices it simply produces a monopoly.
HamHamJ is entirely correct. Anti-trust is not going to turn 1 factory into 2. And making it so that will increase prices so long as prices were reasonably close to marginal production. And they probably were because while there is a potential oligopoly** in supply there was also a monopsony in purchasing (which pushes prices down). If we split 1 factory into 2 the monopsony “cannot” push prices under marginal production so if marginal production goes up (which it will) then so will prices. You might say that the govt monopsony power wasn’t so strong but this probably isn’t the case. The WIC purchase agreement basically determines the market.
*decreasing marginal returns is the mechanism that causes extra factories to be made, and is not a feature inherent in production with multiple factories. The decreasing marginal utility is a necessary assumption in the demand side not a necessity in production. There are lots of good reasons to expect that production functions are CES.
**worth nothing that is is pretty hard to sustain oligopoly with 3 or 4 producers rather than 2.
Antitrust enforcement means that we stop 4 factories from becoming 1. It's a preventative measure first.
Second, if the issue is a current monopoly/oligopoly of a necessary good (which baby formula undoubtedly is) with a limited amount of infrastructure then the government should just fucking take it over and transform it into a utility type service.
No. Anti-trust enforcement means we stop 4 factories being owned by 4 companies to be 4 factories owned by 1 company.
There isn't a large externality or informational issue with baby formula. There is no need for the government to make it into a utility.
Stop being obtuse. It's both.
I am not being obtuse. Anti-trust does not mean we enforce inefficient factories. It means we prevent mergers. If there is only one company in the market because the others went out of business because they could not compete we do not step in to help those companies. (unless the reason they could not compete was anti-competitive behavior but there does not appear to be anti-competitive behavior here AND the primary way in which can can mitigate monopoly is by price fixing... IE almost exactly the monopsony effect WIC purchasing has...)
Edit: We will step in when the situations are separable. In order to prevent vertical integration. And we will potentially step in if one company owns all the production through multiple factories. But we very much do not prevent monopoly as a result of efficient factory size
To be frank, given what I know about Abbot and Nestle, I quite simply don't believe that. And everything else flows from there.
It wouldn't even matter because the WIC purchasing program is literally the solution to that power. A monopoly under price cap cannot exert monopoly power. A soft monopoly under hard monopsony purchasing power does not behave like a monopoly. It cannot. The government will change who it buys formula from and that soft monopoly will quickly be someone else. (as we can see from like... literally that exact thing happening and linked above in the thread)
I'm gonna stop right here and give you the same courtesy you gave me, because you're ignoring the salient point from the start of this conversation regarding anti-trust
No. You are wrong about this. Your point is not salient. This is not an anti-trust issue. It... it just isn't. The market is determined by WIC. Companies do not have monopoly power in this area. The number of factories is determined by the lowest cost per unit production and not because companies are intentionally reducing supply in order to drive prices up. They cannot drive prices up. They are effectively under WIC control because WIC sets prices for their purchasing. And if they attempt to produce less than is necessary and so so inefficiently WIC will purchase from someone else and they will no longer have a business.
The problem with baby formula was not caused because companies intentionally shutting production down in order to cause a shortage and increase prices. The problem with baby formula was caused because import restrictions made contamination a high variance situation and lack of food safety funding made contamination something that was difficult to catch.
Headlines are fucking terrible. In the article itself, the closest it says to saying that is that a lower birthrate naturally means a smaller market
A shrinking market, yet skyrocketing prices.
Those two things go together. A shrinking market will not get investment and supply shortages will only ever get worse. I've seen quite a few articles that oil is now in that phase.
HamHamJ on
While racing light mechs, your Urbanmech comes in second place, but only because it ran out of ammo.
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Which was made more challenging thanks to NAFTA 2
She also voted against the FDA-funding bill that passed.
So, not only willing to hold up progress on aid for starving infants to push what I assume I will find when I’m able to read HR7830 is an eye-watering assortment of attempts to further the “back to the (17)80s!” Agenda, but the gall to lie about it in order to make even this feeble activity play better to us ignorant hayseeds she’s forced to interact with out here in her “district” or whatever.
There’s just not a single reason to remain aligned with the modern GOP I can see as an outside observer that isn’t “I want to make America into another Hungary or Russia because I believe I will be one of the few happy ones who benefits from the impoverishment and savagery visited on the rest!” I just do not understand how you can want that, even for yourself. I wrote her a long reply email and told her so.
Your Ad Here! Reasonable Rates!
At least to that, Biden had the right response by invoking the Defense Act so that duties could be waived on imported formula. The root problem that needs to be addressed is the lack of inspectors at the FDA that is caused by underfunding, which is also being addressed. Short of nationalizing baby food manufacture, I don't think there is a ton more that the government could be doing right now.
Plant leadership and executives should go to jail for this. Unfortunately I'm not confident they will.
Well, antitrust enforcement forcing some of the brands to be spun off as separate standalone companies to create an actually competitive market rather than an oligopoly. Same for input sources. But that's a long term solution to help prevent these conditions from recurring, not a way to get food on the shelves by Tuesday.
You can't use anti-trust to just transform one factory into two. And you should really consider if the across the board price increase would be worth it even if you could.
Price increase? What? Competition drives price down. That's like, the one central tenant of capitalism. And why enforcing anti-trust is important. Ideally anti-trust would be enforced before this became an issue. And if it is an issue of a single supplier monopoly, then it either needs a ton of regulation or needs to become a public good.
I'm really not following your points here. Formula manufacturing plants are not naturally occurring resources. They were constructed by companies in order to produce formula to sell to consumers. Requiring the breakup of the current oligopoly would in turn mean new companies constructing new plants to make new infant formula under their nameplate. It doesn't require transmutation or transformation at all, just hardhats.
Also, competitive markets reduce price thanks to that competition. Oligopolistic ones collude on pricing in order to maximize profit that the market will bear, which is then pocketed by management and shareholders. Every time M&A activity occurs claiming that the increased efficiencies from consolidation will be passed along to the consumer... it isn't. Or, if it does, that only lasts for so long as the DOJ's terms of approval require it to before screwing folks.
This is… not strictly true. The mechanism that drives price down in an efficient market is competition sure but this requires that the efficient factory size (or efficient number of factories) is sufficiently small as to allow multiple competing brands. Production over the whole must be constant returns to scale over a large enough segment of the market. *
The natural state of a market where the efficient number of factories is 1 is a monopoly. Competition here does not produce lower overall prices it simply produces a monopoly.
HamHamJ is entirely correct. Anti-trust is not going to turn 1 factory into 2. And making it so that will increase prices so long as prices were reasonably close to marginal production. And they probably were because while there is a potential oligopoly** in supply there was also a monopsony in purchasing (which pushes prices down). If we split 1 factory into 2 the monopsony “cannot” push prices under marginal production so if marginal production goes up (which it will) then so will prices. You might say that the govt monopsony power wasn’t so strong but this probably isn’t the case. The WIC purchase agreement basically determines the market.
*decreasing marginal returns is the mechanism that causes extra factories to be made, and is not a feature inherent in production with multiple factories. The decreasing marginal utility is a necessary assumption in the demand side not a necessity in production. There are lots of good reasons to expect that production functions are CES.
**worth nothing that is is pretty hard to sustain oligopoly with 3 or 4 producers rather than 2.
Well, there is regulation. The factory was breaking it. That's why the FDA shut it down.
Better enforcement of regulations means that you can stop infractions before they become monumental.
Seeing how there is currently more than 1 factory, and in the past there were even more of them prior to various consolidations in the industry, your argument that infant formula naturally points towards monopoly just doesn't strike me as withstanding scrutiny. Similarly WIC covers ~44% of newborns, which is a significant market influence, but I guess I'd like to see the math to bolster the claim it has a full monopsonistic rate setting over pricing.
Are other geographic markets as similarly consolidated as ours?
Well, yes, that's the point I was getting at.
Antitrust enforcement means that we stop 4 factories from becoming 1. It's a preventative measure first.
Second, if the issue is a current monopoly/oligopoly of a necessary good (which baby formula undoubtedly is) with a limited amount of infrastructure then the government should just fucking take it over and transform it into a utility type service.
Oh, but surely the Invisible Hand of the Market will sort out all of those issues, with no need for onerous regulations.
Wait, that's how we got here?
Well, shit.
No. Anti-trust enforcement means we stop 4 factories being owned by 4 companies to be 4 factories owned by 1 company.
There isn't a large externality or informational issue with baby formula. There is no need for the government to make it into a utility. What was needed was better enforcement of FDA regulations...
"Math" is in the party thread
Seeing as there are currently more than 1 factory does not mean that forcing the building of a new factory would not suddenly change the efficient factory size. (also there is kind of only one factory for this specific type of formula... the shut down of which was kind of the problem. If there were a large number of factories then this would not have been a problem)
Efficiencies of scale also drive prices down. Two factories each producing half of what the single factory did but each paying the full amount of overhead for running a factory means the cost of production will be higher.
This sounds like a fundamental misunderstanding of how it would work. If those factories are in competition with each other, it would drive the price down. Each would be dealing with the same overhead and would not pass the buck along to the consumer in order to have the more competitive price. You are also throwing in a new assumption into the mix to try and gainstay my point, that you have two factories running at half capacity.
The consumer market is not really in competition that much though because people don't generally just buy the cheapest formula whatever it is. They buy WIC contract formula overwhelmingly and a state WIC contract switch drags the non-WIC market with it. Even those not getting WIC will probably get that formula in the hospital and such and if it works why change? The competition really seems to be in getting WIC contracts
That's not necessarily true. Because the overhead for 2 factories is not necessarily half as much as for 1 factory producing the same amount as those 2 combined. Fixed costs or costs that don't vary 1:1 with production can mean it's more efficient to produce everything at one factory then to produce the exact same amount at multiple factories. This means that if you divide that production over multiple companies with multiple factories, prices go up because it costs more per unit output to make the stuff.
I literally just explained how this is wrong. You have a fundamental misunderstanding of how this works. If factories compete with each other it only drives the price down IF there is a difference between the sales price and the marginal production cost. If there are two factories producing the same total quantity of goods as compared to one factory and the one factory is the efficient number then "overhead" is higher and the "competitive price" is higher under two factories. This produces a monopoly situation but only insomuch as they can keep prices low enough to prevent entry into the market. And there are loads of easy ways... one of which we are currently doing, to efficiently curb that monopoly power.
The company did not build a big huge factory because it was a bad idea. One factory was built because one factory was more efficient than two factories. If two factories was as efficient or more efficient the company would have built two factories in order to make more money (or in this case to defray capital costs and allow more efficient spool up/spool down and also to prevent issues like the one we're seeing).
I am not being obtuse. Anti-trust does not mean we enforce inefficient factories. It means we prevent mergers. If there is only one company in the market because the others went out of business because they could not compete we do not step in to help those companies. (unless the reason they could not compete was anti-competitive behavior but there does not appear to be anti-competitive behavior here AND the primary way in which can can mitigate monopoly is by price fixing... IE almost exactly the monopsony effect WIC purchasing has...)
Edit: We will step in when the situations are separable. In order to prevent vertical integration. And we will potentially step in if one company owns all the production through multiple factories. But we very much do not prevent monopoly as a result of efficient factory size
Actual article title, from 3 days ago:
America is running out of baby formula because 3 companies control the market and babies aren’t that profitable
Rock Band DLC | GW:OttW - arrcd | WLD - Thortar
Honestly this makes a good argument for just nationalizing it or otherwise stepping in. It's a critical component and the free market has had a massive failure that is impacting our ability to feed our children with a declining market that means investment will only be as needed by manufacturers.
This looks to me like the free market can only fail here since it will want to cut margins to the bone to maximize the available profit, which means there's nothing left for when something interrupts supply like, oh, right now.
Excess supply has a shelf life and will get thrown out, so any margin means almost literally lighting that money on fire. Businesses will be loathe to do that.
The point is, production inefficiency is not the only kind of inefficiency.
It's a shrinking market, so of course any investment will only be what is strictly necessary and margins will be cut as far as they can.
I don't see how the free market solves this one.
Again, this line is base on an assumption pulled out of thin air about how it would work. Let's assume that both factories can run at full capacity. Wow, that fixed the problem! Because I pulled an assumption out of my ass.
Dude. It happens all the time in mergers where they shut down factories and junk equipment because it's no longer 'necessary' for them. You are being obtuse because you're refusing to acknowledge this simple fact.
The issue here is cutting corners in order to 'maximize' profits. Which is absolutely ghoulish considering that baby formula is a medical necessity for many.
The government should be able to take control in situations such as these.
To be frank, given what I know about Abbot and Nestle, I quite simply don't believe that. And everything else flows from there.
By eliminating tariffs and allowing free trade so that the smaller national markets merge into one larger market that can support more production and will be more resilient because regulatory deficiencies in one country won't impact others.
Being self-sufficient for critical goods like uh infant formula seems like a useful thing to me.
Yes, that is the argument companies always present to DOJ. And then miraculously the cost efficiencies never make it to the consumer. There's a large stock buyback next quarter for completely unrelated reasons, though.
ARPA Laminates were recently bought out by Formica, I believe. Might have been Trespa, I forget because there's also a lot of consolidation in building materials. ~80% of their line, that they were producing profitably, was eliminated or moved from standard to 'made to order' which basically means they'll dust off the IP from storage and do a special run for you if you're willing to pay. Both companies were doing just fine prior to the acquisition and more than capable of making a buck. They just wanted to eliminate the competition rather than actually have to compete with them. And then they did.
So... Sometimes factories and equipment are not used because they're inefficient yes. But i do not see what this has to do with the issue. We do not break up companies when they only run one factory. We tend to let more mergers happen if the merging party can show that the merger will lower consumer prices(I.E. because the factories are not producing at capacity and could meet the same production at lower costs by only running one). And we tend to be more skeptical of mergers when they modify the number of players in the market below 4. [The saying at the FTC at least used to be 4 to 3, we'll see. 3 to 2, we'll sue]. But this is a merger situation and we are not dealing with a merger.
We are dealing with potentially breaking up a company that has one factory simply because it runs one factory and for no other reasons that that factory is "too large".
And we don't do that. And we shouldn't do that.
No. It is you who is assuming that the sky is green. Look. There is an efficient number of factories. A company will tend to want to run factories efficiently. So if company A owns all the market and the market would support two factories company A would run 2 factories. And if the market would support 10 factories then company A would run 10 factories.
If company A only runs 1 factory what does that tell you about the efficient number of factories? A: Its probably one. If it was two, they would be running two factories. If it was three they would be running three factories. But they're not. They're running one. They think this makes them the most money and it will always make them the most money if it produces the sales output amount of formula for the least cost.
So if we move from 1 factory to 2 factories the most reasonable assumption is that this will cause a decrease in efficiency and an increase in prices unless there is strict monopoly power increasing the price of the goods and no competing factors.
And there does not appear to be so. And even if there was so there is good evidence for monopsony power in government purchasing. Which is more or less the idealized way to deal with monopoly power when it is true that the government wants to subsidize the good.(if the govt does not want to subsidize/provide the good then a price cap is the idealized way to curb power)
The problem does not seem to be the market structure. The problem seems to be
1) The FDA is underfunded and so problems at one factory can get out of hand and not get fixed before they become an issue.
2) import restrictions (and lack of money for inspections) imposed by the trump administration mean that the US does not have access to production from other nations. (Bigger market -> more factories -> easier to overproduce marginally in order to fulfill temporary shortages) which effectively segregated the market (one way in which to artificially impose a monopoly is to restrict trade such that the efficient number of factories to serve a particular area is 1, though this would not terribly have that effect here and we shouldn't be that worried about it due to WIC power but we should absolutely be worried about supply variance as a result)
I'm gonna stop right here and give you the same courtesy you gave me, because you're ignoring the salient point from the start of this conversation regarding anti-trust
It wouldn't even matter because the WIC purchasing program is literally the solution to that power. A monopoly under price cap cannot exert monopoly power. A soft monopoly under hard monopsony purchasing power does not behave like a monopoly. It cannot. The government will change who it buys formula from and that soft monopoly will quickly be someone else. (as we can see from like... literally that exact thing happening and linked above in the thread)
A shrinking market, yet skyrocketing prices.
Rock Band DLC | GW:OttW - arrcd | WLD - Thortar
No. You are wrong about this. Your point is not salient. This is not an anti-trust issue. It... it just isn't. The market is determined by WIC. Companies do not have monopoly power in this area. The number of factories is determined by the lowest cost per unit production and not because companies are intentionally reducing supply in order to drive prices up. They cannot drive prices up. They are effectively under WIC control because WIC sets prices for their purchasing. And if they attempt to produce less than is necessary and so so inefficiently WIC will purchase from someone else and they will no longer have a business.
The problem with baby formula was not caused because companies intentionally shutting production down in order to cause a shortage and increase prices. The problem with baby formula was caused because import restrictions made contamination a high variance situation and lack of food safety funding made contamination something that was difficult to catch.
Those two things go together. A shrinking market will not get investment and supply shortages will only ever get worse. I've seen quite a few articles that oil is now in that phase.