And why exactly would a government-owned factory be more productive than a private one? If anything, evidence suggests the opposite.
It's not SUPPOSED to be more productive.
The reason it outcompetes is because it's being subsidized.
And the reason we want it is because it breaks the capitalist consumption cycle of encouraging people to be obligated to buy uselessly more luxurious crap forever and continue working 60 hour weeks for no reason. Not because it makes a widget for 10% less resources than the old company (or old ownership if they just sold it). Notice also that it doesn't have to be MUCH tax money. Hell, probably just the taxes paid by that company itself would be sufficient to subsidize its own government competitor to the point of it being hopelessly one-sided.
Also I would predict that in most cases, the capitalist factory owners would simply see the writing on the wall as soon as/if the relevant laws were passed, and merely sell their stuff instantly, versus losing a bunch of money and then selling it for pennies on the dollar later. So you might not have to even spend many tax dollars.
Having maximum efficiency as your goal is a capitalist thought process in the first place. We just want to be happy and have needs met without having to break ourselves, which is different. That doesn't require maximum efficiency. It only requires efficiency above some absolute threshold based on human biological and psychological basic needs.
So even if government is always 25% less efficient than private sector, at some point, when private sector is >25% more efficient than what is needed for our needs, then we can switch to government.If you want above basic needs luxuries for yourself, then you can get together with folks to make nicer things and voluntarily work hours to own them. But you don't have to.
state-ran regional powerhouse until the 70s oil crisis combined with isolation from both major blocs in the area ran it into the ground
This only happens if you foolishly try to start this system before your technology is at a level where you don't need very many imports anymore.
Part of the "waiting for sufficient technology" is things like local self-sustaining technologies, including renewable energies locally and powerful recycling tech, etc.
the government can run things, but not directly, it simply does not have the time to do so
The other main part of the technology to wait for is robotics and mass computerization. It can make its own time at some point, with only occasional human maintenance.
This might be a ways off, but we are already seeing google robotic cars, for instance, and a computer driving around on highways with kids running around in the street etc. much more safely than humans do is a lot more challenging sounding than a computer doing some accounting for a cement factory...