“The Centers for Disease Control and Prevention (CDC) does not recommend that the general public wear N95 respirators to protect themselves from respiratory diseases, including coronavirus (COVID-19). Those are critical supplies that must continue to be reserved for health care workers and other medical first responders, as recommended by current CDC guidance.”
Consider how bad the situation is, that the CDC put out a warning to the general public telling them to not use N95 masks because they should be reserved for healthcare workers. There is clearly a shortage of masks, but why? Why aren’t N95 respirators as common as a box of tissues? Is this some sort of “failure of capitalism” at work or can this be attributed to an anti-capitalistic mentality?
This is not an exhaustive list but here are three reasons why there is a shortage of medical equipment, specifically the N95 Respirators popularly made by 3M:
1) Government Interference
The premier of Ontario Doug Ford said in interviews with media on Monday morning that an order of three million masks had been blocked at the U.S. border on Sunday. Maybe there is enough supply to meet demand but when the President of the United States directs where a publicly traded company can sell its goods and halts supply at the border, this is interventionism, or socialism. There is nothing capitalistic about interfering with the free-market.
Little can be said about the absurdity of this, one would think that free trade would always be the way to manage an economy but few seem to understand this. The problem is that Canada can retaliate and halt production of other goods or services in response. Which, of course, could make the USA do the same. Both countries can either impose tariffs, which are taxes often transferred to consumers, or limit exports which will lead to a decrease in imports. In any such “trade war,” there are no winners and only losers.
There is another kind of absurdity that I alluded to in last weeks article about the airline bailout; if the government is paying $58 billion to the airline industry to “produce nothing,” then would it not at least be a little better if the government gave just a few billion dollars to 3M for the purpose of making the largest mask facility in the world? This may sound crazy, and yes, it is 100% socialism, but so too is giving $2 Trillion to people in order for them to consume goods that are already in short supply.
2) Patents are anti-capitalism
Up until a few days ago I was fooled like many other libertarians who believe that “intellectual property” is actually property. I spent the last several days reading various articles, some on Mises like this one Ideas Are Free: The Case Against Intellectual Property that are really well written. There is also a documentary on Amazon Prime called “The Patent Scam” that talks about the billion dollar “patent troll” industry. With so many resources available, it’s still surprising that many libertarians remain confused when it comes to intellectual property.
When applied to a real-life example the problem becomes clear. Per Bloomberg news:
There are hundreds of patents on things related to N95 respirators, the gold standard used to protect health-care workers from transmission, according to data compiled by Bloomberg. Among the owners are the U.S. government, 3M Co., paper and health-care companies, individuals and universities.
The problem with a patent is that it is a state granted licence to have a monopoly on an idea or invention by an individual or corporation. When one considers the definition of a patent it begins to sound like protectionism and against a competitive, free market. In the case of N95 respirators, to consider that there are hundred of patents on them it seems obvious why this is an anti-competitive measure that reduces the innovation because it blocks competitors from entering the market. One can also assume that a company such as 3M would have various patents on anything else that closely resembles their mask.
The libertarian may think about “property rights” and extend this to intellectual property to being actual property but forget that this “right” allows an individual to own or forbid another person from controlling their own property as they choose. There is nothing free market about a monopoly or controlling others in the use of their own property. And how does one patent an “idea,” or in this case, “a mask?” What about Wi-Fi, toilets, tires or books, didn’t someone invent those as well, so should they not have the monopoly and complete control over the world market? Or in those cases it would be okay because the arbitrarily assigned patent length of 10 to 20 years has long since elapsed?
How can anyone who champions free market capitalism or Anarcho-capitalism be on the side of the State-run patent office? If the hundreds of patents on N95 mask didn’t exist then 3M could still make the masks, but now other businesses across the world could also make their own and even improve on the mask without fear of being sued or shut down due to patent infringement. This would create decentralized free market competition which is the essence of capitalism.
Should the whole world be at the mercy of one corporation because they patented a mask first? Per the 3M Canada website: “At t this time, 3M does not manufacture N95 respirators in any facility in Canada.” The problem becomes more pronounced when one realizes that these masks are not even made in Canada. So if the US government were to stop all shipments to Canada, what option would Canada have but to manufacture the item with “stolen technology”? Under capitalism, the best and most trusted producer will succeed in the market whereas under socialism one just needs to file a patent first and control the price and the supply for the duration of the patent; this is good for the owner but bad for society.
It might be possible that the hundreds of patents around N95 masks and the unknown countless other patents that a multinational conglomerate like 3M has over respirator technology is the reason why there is a supply shortage across the globe.
3) There is too much money and not enough capital
In Man, Economy, and State, with Power and Market in the chapter called “The Formation of Capital,” on the Mises website, Rothbard notes that “all that is available is his own labor and the elements given him by nature.” I highly doubt that there are few people who have the knowledge and desire to build and work in a respirator factory, especially in a time such as this; rather, I would assume that such development has been blocked through patent laws and various monopolies on medical supplies.
The problem could also include the fact that so few people and corporations have savings. In Canada the average person has around $72,950 of household debt, while $23,800 of non-mortgage debt. Per the Federal Reserve, America’s Nonfinancial Corporate Business: Debt Securities and Loans debt stood at over $10 trillion. Even if people or corporations could produce medical supplies, how many actually have the savings required to mobilize factories of production and build something like a medical supply company in short order? The investment required can only come from the few billionaires to millionaires that a nation has or through raising the capital in something like a stock exchange. However, we remain in an era where the destruction of capital is highly prized. We can see it in the trillions of dollars of debt companies have to take on to buyback their shares, where ‘the poor’ want taxes for the rich and ‘the rich’ want to find tax havens, in addition to regulation, patents and other barriers to entry make it difficult for companies to start up in the first place.
If we combine government intervention, patent monopolies and the destruction of capital inherent in socialism, it’s clear that the problem cannot be free-market capitalism because we are obviously not living in a free-market capitalistic society.
 U.S Food & Drug Administration (FDA), April 5, 2020, https://www.fda.gov/medical-devices/personal-protective-equipment-infection-control/n95-respirators-and-surgical-masks-face-masks#s1
Decker, Susan and Christopher Yasiejko, “World War II-Style Mobilization Order May Carry Risk,” Bloomberg, 23 Mar. 2020, https://www.bloomberg.com/news/articles/2020-03-20/world-war-ii-style-production-may-carry-legal-risks-for-patriots. Accessed 6 April 2020.
 The Canadian Press Staff, “Average Canadian debt rose to 2.7 per cent to $72,950, says Equifax Canada,” CTV News, 5 Mar. 2020, https://www.ctvnews.ca/business/average-canadian-debt-rose-2-7-per-cent-to-72-950-says-equifax-canada-1.4840512. Accessed 6 April 2020.