In 1969 John Kenneth Galbraith penned a piece for the New York Times titled The Big Defense Firms Are Really Public Firms and Should be Nationalized arguing, among other things, that it was folly for defense contractors to claim that they were private corporations. Such claims made a mockery of free enterprise.
Nearly 40 years hence, Charlie Cray and Lee Drutman have resurrected and energized Galbraith’s argument in their work titled Corporations and the Public Purpose: Restoring the Balance (Seattle Journal for Social Justice, Winter 2005). They make an exceptionally compelling case for putting the defense industrial base (DIB) into the direct service of the American public through a form of nationalization: federal chartering.
Converting the companies to publicly-controlled, nonprofit status would introduce a key change: it would reduce the entities’ impetus for aggressive lobbying and campaign contributions. Chartering the defense contractors at the federal level would in effect allow Congress to ban such activities outright, thereby controlling an industry that is now a driving force rather than a servant of foreign policy objectives. As public firms, they would certainly continue to participate in the policy fora designed to determine the nation’s national security and defense technology needs, but the profit-driven impetus to control the process in order to best serve corporate shareholders would be eliminated. Thus, by turning defense and security firms into full public corporations, we would replace the criteria by which their performance is judged from quarterly earnings targets to criteria that is more consistent with the national interest.
This is a very credible write-up of an interesting idea that deserves to be considered. I like it. Click the headline for the full story.