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13 April 2021


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Interesting article, as I expect from you.

I was surprised that you didn’t mention/consider second order effects. The (often reasonable) expectation of some form of bailout incentivizes risk-taking, which increases the probability that some form of bailout will be required.

There is an alternative to bailout, which is buyout. I’m not in favor of government production in general, but the threat of buyout (in special cases) might both mitigate concerns about the industrial base and counter incentives for industry that might otherwise seek to “gamble for redemption.”

Re: government ownership: I don’t see evidence firms like Fincantieri (50% Italian government owned) are less profitable/efficient than fully private-owned peers. Do you have any insight into that?

Seth! Great to hear from you. Thanks for the comment. I will follow up in these pages later.

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James Hasik is a political economist. He serves as a senior research fellow in the School of Business at George Mason University, and a non-resident senior fellow in the Defense Technology program at the Center for European Policy Analysis. Since September 2001, he has been studying global security challenges and the economic enterprises that provide the tools to address them.