American states, hospital systems, and businesses bid for the same stuff in a seller’s market.
It’s been three months since the coronavirus was first spotted in the United States.
And it’s been five weeks since President Trump nominally invoked the Defense Production Act, which allows the executive branch of the federal government to direct industries to manufacture items critical to national security.
But Trump hasn’t used the DPA in that way. And as they’re flooded with COVID-19 patients, hospital systems nationwide are still reporting shortages of personal protective equipment (PPE) – the stuff healthcare workers wear to avoid this highly infectious disease.
There’s not a lot of existing capacity for PPE production in the United States, so everyone’s instead getting it from China, the PPE manufacturer to the world. But the rush to get hold of this stuff has created a crazy market, in which state governments, private hospital systems and businesses are all bidding against each other. Here’s what an Illinois official told the Wall Street Journal:
"'You are often dealing with middlemen or a shell [company] within a shell within a shell,' said Illinois Deputy Gov. Christian Mitchell, who has approved the purchase of more than 10 million pieces of PPE from China while overseeing procurement for the Midwestern state. 'You have to accept the level of risk that you normally would not do on the taxpayer dollar.'"
So it’s incredibly competitive to buy PPE in bulk right now. But that’s not all; there have also been complaints about low-quality PPE sent to some European countries, and the Chinese government’s restrictions on inbound flights by foreign airlines has significantly reduced the amount of cargo that can be moved in the underbellies of passenger planes – another factor keeping demand high.
In China’s defense, the government has tightened customs controls to address the quality problems. And those airline restrictions are meant to avoid the virus’s spread. China is where the outbreak began, and it’s trying to limit new cases from entering the country and causing new outbreaks.
But it’s also using the contagion restrictions to its advantage, rounding up democratic activists in Hong Kong and fundamentally undermining the constitution that gives the city a degree of autonomy from the central government in Beijing.
Hey, never let a crisis go to waste! President Trump certainly isn’t; He may not be using the Defense Production Act not to streamline production of these scarce materials – you know, in a useful way – and is instead floating the idea that Americans should drink bleach to ward off this virus. But he’s also threatening to withhold funds from the U.S. Postal Service unless it raises the rates it charges Amazon. So buy stamps now! They may be a collector’s item someday.
Anyway, here’s an advertisement of him selling steaks via the Sharper Image only a few years ago, which presidential historians have identified as the beginning of Trump's political rise to the highest office in the land.
There have been nearly 53,000 deaths in the United States caused by COVID-19 as of this writing.