engineers who work for defense contractors are quasi-government employees. there is nothing wrong with that, but its not a "market forces" job. and the demand is very limited, just a few companies do defense related work.
innovation will take place in the countries where investments are made, and engineers are employed. if that's not the US, then you can kiss innovation goodbye.
Your statement is incorrect, there are literally millions of defense contracting companies. There are market forces involved as well (the U.S. is not the sole employer of defense contractors), plus most large contractors also have plenty of nongovernmental commercial ventures as well.
As to the status of a defense contractor as a quasi-government employee, that is patently false. Other than working at a government facility, a contractor has no ability to influence the government agency he works for substantively. Contractors do not have the sames rights as a government employee nor do they share the same protections. Defense Contractors are elements of the free market as much as accountants at Microsoft or IBM.
Cheers,
CSG
<> Dead-on correct. Having worked both in DoD and commercial industry, I've witnessed the lack of "market forces" to provide a selection pressure for excellence. The bureaucracy and political non-sense can't provide the cycles of learning that are possible in a commercial enterprise. It's better if the industry in question can make both swords and plowshares.