Zubrin is also one of the "evil empire", though one of the more friendly persons there, but he describes the problems pretty well.
Oh sure, he's crazy, but that doesn't mean he's wrong. I disagree with many of his conclusions (regarding the electromobiles, the Outer Space treaty and other things), but he's usually right about the 'common sense' stuff, if you know what I mean. He's not afraid to say things that need to be said.
They do innovate - but in big leaps of high technological risks. Why? Because even if the big expensive project fails, the patents for the small detail solutions can be used commercially.
Yes. And of course, it doesn't matter if some project is cancelled, because they still make a lot of money out of it. See Orion/Constellation - even though it is dead, they're still getting money and continuing in its development.
But for instance, there is no wish in the established aerospace industry to develop a real, reusable SSTO - simply because it would render most of today's commercial rockets effectively obsolete, as a result of which they'd lose more money than they'd earn.
That is likely not intentional, but rather caused by the other points.
Zubrin mentions the "Cost Plus" scheme. As I understand his argument, he claims that the way US government places commercial orders is deeply flawed in that there are no fixed costs agreed in advance - as in, "we want you to develop and build the vehicle XY for 1 billion dollars. If you make it cheaper, you still get the one billion, but if you can't, you'll pay for the cost overruns.
Also, there is some sort of rule that these companies can't make more than 10% profit from government orders. As a result, the companies keep inflating the costs of development in order to make more money. 10% of 5 billion is more than 10% of 1 billion, you see. Ergo, there is absolutely no incentive for them to keep the development costs low.
Also, NASA's red tape is really making the whole development process terribly inefficient. SpaceX proved that once you're free of NASA's smothering oversight, you can do things much cheaper and faster.
Exactly - they are rivals among each others, but allies against the rest of the world.
Not even that - see United Launch Alliance. But you're right that the US government rules really do suffocate international competition. If the Russians or the Chinese were allowed to launch US satellites on equal terms with the US companies, the costs would surely decrease.
On an unrelated note, I really fear for Arianespace. They should really think about the future of the launch market, otherwise they're going to lose it.
Maybe they should invest into Skylon... (just sayin'
That is wrong - They want to have cheap launches for their own commercial launch services. But government controlled spaceflight needs to be made expensive, by adding more and more red tape to it.
There is a sort of feedback loop here. Costly launchers are making everything else in the space business costlier. The problem is that the "strategic national interests" continue to distort the space launch market. If the US air force is willing to spend 300 million dollars a launch, why should the providers do it cheaper?
One more note on the heavy lift business - I am a bit sceptical about SpaceX's plans there. I don't think that there is a real demand for an HLV outside the government programmes. It would be hard to make a truly commercial HLV profitable enough to sustain its production line.