Boy, my brother would second some of that. He was on the USS Whidbey Island with the 2nd Marine Division during the first round of action in Afganistan and Iraq. (He's been out of the military for over a year now.) He said their captain could only be described as a "doofus". He's surprised that fool didn't sink the ship in some freak accident. I wonder what happened to create such a decline in such a relatively short period of time?
Seriously, on game options, I think we're still too early for the U.S. Navy. To be even remotely historical, they probably don't belong in here at all.
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Anyway, the privateer options currently in-game seem to convey the idea of military rank and/or function. Generally speaking, the national military of most of those countries did not directly hire commanding officers for their ships. If you wanted to join the Navy, you had to join as a cabin boy and work your way up. Even the ones from powerful families who started as officers would begin as a midshipman, or maybe a navigator - never in command of the entire ship. The only way to join as a command-level officer was as a privateer.
Oddly, we don't seem to have the full impact of the Letter of Marque in this game. It was a powerful document - it said a person had the right to kill on behalf of a given country. More powerful than a police badge, it said a person had the right to kill pretty much whoever and whenever they pleased, and to justify it as a government-approved military action. It would be like a document in the modern world that said you had the right to manufacture and use chemical weapons wherever you saw fit, in the name of counter-terrorism activities. It carried some very powerful rights with it - practical immunity from legal action, among others. It conveyed military rank that would allow one to make demands of military units. We don't seem to have that kind of power captured in the current mod.
It also required a person holding such a letter to provide help in critical situations. A privateer's ship could be required to participate in a given military action under navy command, or be nationalized at any time and for whatever duration was seen as necessary. In time of open war, it could be a serious millstone about the neck.
Maybe, instead of a "join the navy" idea, we just need to do more with the privateer status. That would deliver the message without any major changes to game mechanics - just a few little tweaks in the conversation and reputation numbers. Make people wonder how badly they actually want that Letter of Marque.