Profiteering off medical equipment and its export unimpeded (COVID-19) | A Pragmatist's Take | Douglas Moran | Palo Alto Online |

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About this blog: Real power doesn't reside with those who make the final decision, but with those who decide what qualifies as the viable choices. I stumbled across this insight as a teenager (in the 1960s). As a grad student, I belonged to an org...  (More)

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Profiteering off medical equipment and its export unimpeded (COVID-19)

Uploaded: Apr 3, 2020
Medical equipment shortages have been in the national headlines for weeks, but a significant part of the problem has been profiteers sending it overseas. Bet most of you haven't seen headlines about this. I am encouraging you to contact our members in Congress with your (presumed) outrage.(foot#1)

Measures to counter this are among the many planning failures of the Federal and state governments, followed by failures to act. The first article I saw came from a video about China's failure to alert the world about the threat of COVID-19. One element was that in January, China had started using its overseas companies to buy up vast quantities of medical supplies -- masks, PPEs (Personal Protective Equipment), ... -- and shipping them to China. The news articles I found were published by the Sydney Morning Herald (Australia), but there were reports of the same behavior in Canada and Europe. From January 24 to February 29, they reported 2.02 billion masks and 25.38 million pieces of protective clothing worth billions of (Australian?) dollars being shipped. These were not just big lots -- the companies involved included property developers that mobilized their accounting departments to scour a wide range of distributors.(foot#2)

The most damning article I saw was "^I Spent A Day In The Coronavirus-Driven Feeding Frenzy Of N95 Mask Sellers And Buyers And This Is What I Learned^" by David DiSalvo - Editor's Pick in Forbes, 2020-03-30. (^archived^): "By the end of the day, roughly 280 million masks from warehouses around the U.S. had been purchased by foreign buyers and were earmarked to leave the country, according to the broker -- and that was in one day."
Details: The article cites a price of $6-7 for models 1860 and 8210 of 3M's N95 masks. At the beginning of the 2018 fire season, I bought the model 8210Plus for $0.70 each in a 20-pack (for myself, friends and my gardening).

The day covered by the article was one week before publication, and part of the article was about the frustrations of state officials being unable to make purchases at any price because their purchasing procedures were too slow. So how long before that was the problem known to officialdom?

Did any other US news outlets pick up the story? There was an article two days later in The Intercept that was so detailed that it likely had been being researched for some time.(foot#3) Although The Intercept is an important news source, it isn't a prominent one -- most of its work becomes visible by being cited elsewhere in the media. From what I can tell, the first after that wasn't a news outlet, but a commentator on Fox News Channel: "^3M is selling lifesaving PPE to foreign countries over US: Florida Official^", a segment on Tucker Carlson's 2020-04-02 show.
One of the routine duties of members of Congress is to help state governments with the Federal bureaucracy. Florida has two Senators (Republicans) and 27 House members (14/13 split), yet it appears that this official has gone on Cable News in an attempt to get some attention to this major problem. The problem isn't the lack of laws, but an apparent unwillingness of the Federal government to use them.
Aside: Since President Trump is reported to routinely watch the Tucker Carlson show, he is presumably now aware of the problem. However, bureaucracies are well-known for "slow walking" instructions from above. Thus the need for demands coming from multiple directions (Congress, even though it is on vacation).
Detail: Although the official declaration of an emergency includes provisions against price gouging, it is rarely used, and then mostly by local officials against local stores. Cynicism: At the level of those able to profiteer on the large scale, there is, of course, no enforcement (= no law) except for the occasional egregious incident that requires someone to be sacrificed to appease public outrage.

If you want an additional dose of outrage: "^Tucker Carlson blasts companies putting profits over Americans in time of crisis^" (7:38) on The Hill's morning show The Rising. This is a news and commentary hosted by a Progressive populist and a Conservative populist who work together well, typically leveraging off each other rather than being shouting bloviators. "Rising" is used in two senses: morning and counter the political establishment.

----My other blogs on coronavirus (COVID-19)----
"Is Palo Alto prepared for a Coronavirus outbreak?", 2020-01-30.
"Coronavirus (COVID-19): Underappreciated Unknowns & inexplicable failures", 2020-02-28.
"Preparing for COVID-19: An epidemic is not a hurricane. Panic buying harmful", 2020-03-03.

"COVID-19: Critiquing News Releases: What's missing + teachable opportunities", 2020-03-19.

"Remember the failures for when it's time for fixes: COVID-19", 2020-03-27

----Footnotes----
1. Contacting our members in Congress:
- ^Congresswoman Anna Eshoo^.
- ^Senator Dianne Feinstein^.
- ^Senator Kamala Harris^.
- Eshoo will be participating in a ^Telephone Town Hall 11am - Noon Sunday April hosted by County Supervisor Joe Simitian^.

2. Sydney Morning Herald articles on China stripping medical supplies from other countries
- The first article I could find was originally titled "Second Developer Flies 82 tonnes of medical supplies to China" indicating that there were earlier articles. The articles here are overlapping.
- "^Coronavirus Australia: Chinese owned property developer Risland flies more than 82 tonnes of medical supplies to Wuhan^" - The Sydney Morning Herald, 2020-03-26 (^archived^).
- "^Former Chinese military man behind export of tonnes of medical supplies^" - The Sydney Morning Herald, 2020-03-30 (^archived^).
- "^Billions of face masks sent to China during Australian bushfire crisis^" - The Sydney Morning Herald, 2020-04-02. ^archived^

3. "^Key Medical Supplies Were Shipped From U.S. Manufacturers to Foreign Buyers, Records Show^" by Lee Fang, The Intercept, 2020-04-01.


----
An ^abbreviated index by topic and chronologically^ is available.


----Boilerplate on Commenting----
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Comments

 +   3 people like this
Posted by Douglas Moran, a Palo Alto Online blogger,
on Apr 3, 2020 at 7:01 pm

Douglas Moran is a registered user.

Update: "3M pushes back after Trump orders company to stop exporting N95 masks" - NYPost, 2020-04-03, updated 1:41pm (EDT?).

Notice that the earlier articles discuss sales through distributors and brokers, with masks potentially passing through multiple layers (ownership but not necessarily physical possession).
This article addresses only 3M's direct sales to other countries.

Update: A very similar article in Forbes: 3M Blasts Back At Trump: Company Says Not Selling Masks To Canada Could Spark Retaliation.


 +   12 people like this
Posted by CeCi Kettendorf RN, a resident of Adobe-Meadow,
on Apr 3, 2020 at 7:45 pm

When I was trained in Droplet Isolation Procedure, I was trained to discard an N95 after removing it, in the red bin, because the exterior of the mask was now contaminated. Now the CDC guidelines dictate we can wear a single mask for an entire shift, donning and doffing the same mask repeatedly. Of course, that is because of insufficient availability of N95 masks, not because the risk is any less. Thank you, Doug, for the indepth research. I am not surprised that there are no guardians of those on the frontline or the citizenry.


 +   4 people like this
Posted by Free Marketeer, a resident of Meadow Park,
on Apr 4, 2020 at 10:34 am

The Free Market will find the correct balance. States cannot interfere in what 3M does.


 +   11 people like this
Posted by Roger Overnaut, a resident of Evergreen Park,
on Apr 4, 2020 at 9:51 pm

"and part of the article was about the frustrations of state officials being unable to make purchases at any price because their purchasing procedures were too slow. So how long before that was the problem known to officialdom?"

Does that mean those purchasing procedures were too slow to allow participating in high-velocity live auctions? Maybe they saved taxpayer resources from being squandered enriching the operators of price flipping schemes.

Above all our federal government has to account for its failure to begin organizing the US response in January, when our intel services first raised their warnings about a virulent virus spreading in China. The official administration CYA line is to fault China for allegedly concealing the threat, but our own resources did their job yet were ignored. Certain American officials have to answer for their gross incompetence and malfeasance


 +   2 people like this
Posted by Sophie88, a resident of another community,
on Apr 5, 2020 at 7:36 am

In later January when my company's China office reported the VIRUS status, our headquarter based in Massachusetts coordinated among all US and EU offices to ship masks and protective clothes to China for charitable cause because company want to demonstrate humanity and no one would have known this VIRUS has been highly contagious and spreading globally.


 +   2 people like this
Posted by Free Marketeer, a resident of Meadow Park,
on Apr 5, 2020 at 11:21 am

" and no one would have known this VIRUS has been highly contagious and spreading globally"

What? All the top politicians had had intelligence briefings by then. Many started their insider trading of stocks soon thereafter.

Instead, they should have informed the Free Market and allowed companies to start increasing production in January.

[[Blogger: RE: "highly contagious": China was initially claiming that there was no human-to-human transmission and the World Health Organization (WHO) accepted and distributed that info.]]


 +   1 person likes this
Posted by Mark Weiss, a resident of Downtown North,
on Apr 6, 2020 at 10:04 am

Mark Weiss is a registered user.

Keith Bradsher the Shanghai Bureau chief of The New York Times has an excellent article reinforcing many of Doug's points. It says that China bought up roughly 2 months of the world output in masks (but is also increasing manufacturing of such by 10-fold). Mask wholesale prices have quadrupled. There's an American art broker in China rebranding himself as a mask broker. This could be the next Austin Powers movie.
Web Link


 +   1 person likes this
Posted by Mark Weiss, a resident of Downtown North,
on Apr 6, 2020 at 5:25 pm

Mark Weiss is a registered user.

Sort of the same general line but a deeper dig at eastern bloc countries and their expenditures on healthcare, and how it fares for democracy (from Michael McFaul's Twitter feed):
Web Link


 +   4 people like this
Posted by mauricio, a resident of Embarcadero Oaks/Leland,
on Apr 7, 2020 at 4:17 pm

mauricio is a registered user.

[[Deleted: Based upon a proven falsehood.]]


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