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The market will absolutely not sort this out. At least not satisfactorily. What's the market's means for dealing with catastrophe? -- Insurance.
That's not enough where national defense is concerned. One major justification for government is that it fills holes in the market model -- particularly where certain externalities are concerned. The classic example of an externality that will not be provided by the market is the military/national defense. The same is true with port security.
In its last 1500 cases, the government agency which examines foreign investments in the US has denied only one transaction -- and that was the purchase of Unocal by China which got popularized and protested by a few media observers -- Lou Dobbs and the like. This agency, btw, meets in secret, and we are not allowed to know what it considers in its review of foreign investments.
We can be sure lobbyists know, though. Lobbyists like Abramoff, who was one rotten apple, in a basket of 14,000 rotten apples that swarm our capitol every day. Whatever they're buying our government for, you can bet it's not in our primary interest.
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