Competing Federal & State Agencies Driving Up PPE Prices
During the COVID-19 pandemic, one thing is certain: we are not prepared. Desperate to contain the spread of COVID-19, federal and state governments have enacted a little too late, seemingly draconian stay at home orders to try to prevent further infection. In the meantime, the federal government has given little guideline on how each state is to handle its own quarantine program, nor has it allowed for states to request supplies from the national stockpile. The result is utter chaos. Several states have accused FEMA of misappropriating or re-routing shipments. In Massachusetts, 3 million masks were confiscated. In Maryland, Gov. Larry Hogan is mobilizing the state police in an effort to protect a recent order of PPE from FEMA. Other various sources from ports around the world accuse the US government of simply showing up at port with bag loads of cash to buy other people's shipments.
Due to the confusion and misguidance, the government has actually hampered the flow of supplies into the United States from overseas. By disrupting supply chains, the federal government has sewn distrust into markets. Buyers and sellers become more weary to conduct business. As a result, vetting processes take longer, which delays shipments into countries, regions and areas that needed the supplies yesterday. Furthermore, the injection of cash payments for other people's goods artificially raise the price of the supplies since more demand is suddenly introduced into the market.
The artificial increase of the demand curve puts pressure on supplies to manufacture even more products to make up for the loss. This added pressure forces prices upwards, thereby pricing out some clients who may not be able afford the new prices.
Furthermore, the last nail in the coffin occurs when states are forced to compete with other states as well as government agencies. States and the federal government artificially drive up prices because they bid against themselves to secure limited goods.
Although state and federal agencies all have the positive intention of providing PPE to their respective citizens, employees, etc. the net result as a whole is a reduced supply of masks at higher than average prices.