Foreign Fighters

Aerospace giant Northrop Grumman recently won a huge government contract for the military’s next line of air-tankers. This comes as a big surprise, as many conservatives were expecting the 35 million dollar contract to go to American rival Boeing. Northrop Grumman/EADS is a European corporation based in France. Defense-conservatives argue that awarding a European company is an economic and security risk.

I think this assertion is mostly incorrect. Let’s consider the idea of a free market. If the market for air-tankers is open to fair competition, the best contender will always win. This is good because it keeps things efficient, creates the maximum amount of jobs naturally, and entices the best efforts of all competitors.

If we regulate the market for a product (only warding contracts to Americans), the government (i.e. the American people), will not get the maximum bang for their buck. This is because there will be little incentive to produce the best possible tanker, due to the reduced level of competition. The result of an American-only bid will produce not-as-good tankers, which i interpret as a real security risk. I think this is a great example of how government regulation hurts an economy in the long run.

Oh don’t worry about Boeing. The company is the second largest aerospace defense contractor in the US. Boeing will innovate themselves, and compete more fiercely when the next contract comes around.

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Published in: on March 2, 2008 at 5:17 am  Comments (1)  

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One CommentLeave a comment

  1. Not to mention why would be bomb our producers and why would they bomb their customers


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