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Free Enterprise and “New Space”

Is "New Space" free enterprise?

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Enterprise in space: Free markets or government subsidies?

Free Enterprise:  Business governed by the laws of supply and demand, not restrained by government interference, regulation or subsidy – also called free market.

Rick Tumlinson of the Space Frontier Foundation published a “free-enterprise” critique of the Republican platform in regard to the American civil space program. Indeed, the text of the space plank is vague (no doubt intentionally, so as to give the candidate maximum flexibility to structure the space program to align with his vision and goals for the country).  But what I found most interesting was the underlying premise and assumptions in Tumlinson’s article, a worldview that I find striking.

In brief, Tumlinson approves of the current administration’s direction for our civil space program.  The U.S. has stepped back from pushing toward the Moon, Mars and beyond and redirected NASA on a quest for “game-changing” technologies (to make spaceflight easier and less costly), while simultaneously transitioning launch to low Earth orbit (LEO) operations to private “commercial space” companies selected by our government to compete for research and development funding and contracts.  Many see this as gutting NASA and the U.S. national space program.  To be clear, the term “commercial space” in this context does not refer to the long-established commercial aerospace industry (e.g., Lockheed-Martin, Boeing) but to a collection of startup companies dubbed “New Space” (typically, companies founded by internet billionaires who have spoken much and often about lofty space plans, but have actually flown in space very little).

Tumlinson criticizes the Republican space plank because it does not explicitly declare that a new administration would continue the current policy.  In his view, the very idea of a federal government space program, including a NASA-developed and operated launch and flight system, is a throwback to 1960’s Cold War thinking.  Instead, he envisions space as a field for new, flexible and innovative companies, untainted by stodgy engineering traditions or bloated bureaucracy.  Many space advocates on the web hold this viewpoint – “If only government would get out of the way and give New Space a chance, there will be a renaissance in space travel!”  But travel to where?  And why?

The idea that LEO flight operations should be transitioned to the commercial sector is not new.  It was a recommendation of the 2004 Aldridge Commission report on implementing the Vision for Space Exploration (VSE).  NASA itself started the Commercial Orbital Transportation Services program (COTS) in 2006, designed to nurture a nascent spaceflight industry by offering subsidies to companies to develop and fly vehicles that could provision and exchange crew aboard the International Space Station.  That effort was envisioned as an adjunct to – not a replacement of – federal government spaceflight capability.

The termination of the VSE and the announcement of the “new direction” in space received high cover from the 2009 Augustine committee report, which concluded that the current “program of record” (e.g., Constellation) was unaffordable.  The Augustine Committee received presentations with options to reconfigure Constellation whereby America could have returned to the Moon (to learn how to use resources found in space) under the existing budgetary cap, but they elected to start from first principles.  Hence, we have something called Flexible Path, which doesn’t set a destination or a mission but calls on us “to develop technology” to go anywhere (unspecified) sometime in the future (also unspecified).  With target dates of 2025 for a “possible” human mission to a near-Earth asteroid and a trip to Mars “sometime in the 2030’s,” timelines and milestones for the Flexible Path offer no clarity or purpose.  Try getting a loan or finding investors using a “flexible” business plan.

Tumlinson argues that both political parties should embrace this new direction because New Space will create greater capability for lower cost sooner.  He also makes much about the philosophical inclinations of the Republican Party (the “conservative” major party in American politics) – Why don’t the Republicans support free enterprise in space?  Why are they putting obstacles in the way of all these new trailblazing entrepreneurs?  As to those obstacles, it is unclear exactly what they are.  True enough, there are regulatory and liability issues with private launch services, but not of such magnitude that they cannot be handled through the traditional means of indemnification (e.g., launch insurance).

The COTS program record of the past decade largely has not been a contract let for services, but a government grant for the technical development of launch vehicles and spacecraft.   Close reading reveals the real issue:  Tumlinson wants more of NASA’s shrinking budget to finance New Space companies. He is concerned that a new administration might cut off this flow of funding.  However, what will cut off the flow of funding is having no market, no direction, and no architectural commitment – regardless of who occupies the White House.

The belief of many New Space advocates is that once they are established to supply and crew the ISS, abundant and robust private commercial markets will emerge for their transportation services.  Although many possible services are envisioned, space tourism is the activity most often mentioned.  Whether such a market emerges is problematic.  Although Richard Branson’s Virgin Galactic has a back-listed manifest of dozens of people desiring a suborbital thrill ride (at a cost of a few hundred thousand dollars), those journeys are infinitely more affordable than a possible orbital trek (which will cost several tens of millions of dollars, at least initially).  Nevertheless, there will no doubt be takers for a ticket.  But what will happen to a commercial space tourism market after the first fatal accident?  New Space advocates often tout their indifference to danger, but such bravado is neither a common nor wise attitude in today’s lawsuit-happy society (not to mention, the inevitable loss of confidence from a limited customer base).  My opinion is that after the first major accident with loss of life, a nascent space tourism industry will become immersed in an avalanche of litigation and will probably fully or partly collapse under the ensuing financial burden.  We are no longer the barnstorming America of the 1920’s and spaceflight is much more difficult than aviation.

Despite labeling themselves “free marketers,” New Space (in its current configuration) looks no different than any other contractor furiously lobbying for government sponsorship through continuation of its subsidies.  True free-market capitalists do not seek government funding to develop a product.  Rather, they devise an answer to an unmet need, identify a market, seek investors and invest their own capital, provide a product or service and only remain viable by making a profit through the sale of their goods and services.

Tumlinson bemoans the attitude of some politicians, ascribing venal and petty motives as to why they do not fully embrace the administration’s new direction, e.g., the oft-thrown label “space pork” to describe support for NASA’s Space Launch System.  In regard to New Space companies, Tumlinson asserts that, “ have to both give them a chance and get out of the way.”  But in fact, he does not want government to “get out of the way” – at least not while they’re still shoveling millions into New Space company coffers – nor when they need (and they will) a ruling on, or protection of, their property rights in space.  Any entity that accepts government money is making a “deal with the devil,” whereby it is understood that such money comes with oversight requirements (as well it should, consisting of taxpayer dollars).

Questions about the vision boil down to whether we want to incorporate the Solar System in our economic sphere, or not.” – Presidential Science Advisor John Marburger, 2006

Successful commercialization of space has occurred in the past (e.g., COMSAT) and will occur in the future.  But the creation of a select, subsidized, quasi-governmental industry is not by any stretch of the imagination what we commonly understand free market capitalism to mean.  It is more akin to oligarchical corporatism, a common feature of the post-Soviet, Russian economy.  True private sector space will be created and welcomed, but not through this mechanism, whose most worrisome accomplishment to date has been to effectively distract Americans from noticing the dismantling of their civil space program and preeminence in space.

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About Paul D. Spudis
Paul D. Spudis

Paul D. Spudis is a senior staff scientist at the Lunar and Planetary Institute in Houston, Texas. His website can be found at www.spudislunarresources.com. The opinions expressed here are his own and do not reflect the views of the Smithsonian Institution or his employer.

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