Putin doesn't have to convince the manufacturers that this will be a long term profitable endeavor for their business. It doesn't matter to Putin if a company "overinvests" because the company is not a separate entity.
If the US wants that kind of control we have the Defense Production Act to force businesses to build up capacity.
It's like how during the pandemic, pretty much nobody invested in increased toilet paper or mask production in the US, because "if I invest and the pandemic goes away, I will have "wasted" my investment"
Basically its just another failure of capitalism as theorized. Turns out, it's very uncommon for someone to decide to build brand new capacity in an existing market without extreme incentives because it's too easy for them to be burned. If we want businesses to ramp up production, we need to either convince them it will be profitable, by signing expensive, long term contracts that can't be torpedoed by a future administration getting bitchy about the debt, or force them through law.
I don't think this explains it. As the original article said, The DOD offers manufacturers 15-year contracts to guarantee profitability and that still isn't enough to ramp up capacity fast enough, or even meet demand on a multi-year timeline. I think the problem may lie in a serious deficit of manufacturing capability / expertise in the US.
If the US wants that kind of control we have the Defense Production Act to force businesses to build up capacity.
It's like how during the pandemic, pretty much nobody invested in increased toilet paper or mask production in the US, because "if I invest and the pandemic goes away, I will have "wasted" my investment"
Basically its just another failure of capitalism as theorized. Turns out, it's very uncommon for someone to decide to build brand new capacity in an existing market without extreme incentives because it's too easy for them to be burned. If we want businesses to ramp up production, we need to either convince them it will be profitable, by signing expensive, long term contracts that can't be torpedoed by a future administration getting bitchy about the debt, or force them through law.