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Blog > Issues > Economic Liberty > Using the Defense Production Act to commandeer medical supplies manufacturing will discourage production

Using the Defense Production Act to commandeer medical supplies manufacturing will discourage production

April 24, 2020 I By DANIEL ORTNER

The COVID-19 pandemic is causing shocking shortages of critical medical supplies such as N95 masks and ventilators. In the face of these alarming headlines, many have called on the president to invoke the Defense Production Act (DPA) to order their production.

President Trump himself has swung wildly from refusing to use the DPA to rhetorically invoking it in a quasi-dictatorial fashion. But regardless of where the calls are coming from, utilizing the DPA to control private companies and industries would be a mistake.

The Defense Production Act was enacted during the Korean War to give the president the authority to quickly build up military defense. Since then, it has been expanded to grant the government emergency power to respond to a variety of circumstances, from terrorist attacks to pandemics.

Some of the power the DPA grants is relatively uncontroversial. For instance, it allows the federal government to negotiate needed national security contracts, which suppliers are expected to prioritize above other contracts. It also allows the government to provide loans to stimulate production, and to guarantee the purchase of products on a long-term basis to ensure a steady supply. All of these functions of the DPA are routinely and reasonably invoked by the Department of Defense and many other federal departments.

But what some are calling for goes far beyond the responsible uses of the DPA. There have been numerous calls for the federal government to force unwilling private companies to produce goods that they lack the knowledge or expertise to produce. The president arguably has such power at the outer edge of the DPA’s broad grant of authority, but this kind of constitutionally dubious, top-down market commandeering is not only contrary to our nation’s longstanding commitment to liberty, but it also would hinder much of the private market’s ability to innovate and adapt.

Private enterprise has already admirably stepped up to the challenge even without government compulsion. 3M has dramatically ramped up production of medical masks, companies like Fruit of the Loom have shifted production away from underwear and toward producing surgical masks, distilleries have repurposed their equipment to make hand sanitizer, and GM announced it would work with medical supply companies to produce ventilators (before Trump threatened to invoke the DPA to force them). Also, private companies know their own capacity far better than federal bureaucrats. For instance, Ford has chosen to manufacture ventilators that have fewer, smaller parts because those models are better suited to Ford’s production capacity. Government bureaucrats would never have insights like those.

Putting such unchecked power into the hands of the federal government would also invariably result in graft, favoritism, and corruption. Industries that curry the president’s favor would get rewarded at the expense of others. States that align with the president politically would receive favorable treatment while those who have opposed the president would be treated poorly.

The DPA is not a magic wand that can be waved to instantly produce needed goods. Federal and state government should be looking for ways to eliminate costly red tape for the private companies providing vital supplies in the most efficient manner possible. Cooperating with, rather than commandeering, private enterprise is likely to produce the best results.

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