The Space Program: No Prize
Frederick Giarrusso is a doctoral candidate in Engineering-Economic Systems at Stanford University; Gary C. Hudson is an entrepreneur engineering non-governmental space launch sys tems.
Science writer Dr. Jerry Pournelle claims, “The three great failures of socialism in the 20th century are Soviet agriculture, U.S. education, and NASA.” A review of NASA’s performance reveals the aptness of the last third of his remark.
NASA controls all aspects of the civil space program in the United States. Fifteen billion dollars filter through NASA each year to fund shuttle launches, space station designs, and one of the largest and least cost-effective bureaucracies to grace our land. To most people, NASA is the U.S. space program.
The very term “space program” is problematic, however. A program implies a single, concerted effort, usually by government, to perform some task. Typically, this effort is at odds with a capitalist system, in which profit and individual motivations dictate performance.
Imagine where California would be if its exploration and settlement had occurred under the federal government’s “Gold Rush Program.” Suffice it to say, San Francisco’s football team might well have been called the “‘98ers.”
We have all seen the failures of a command economy in the rest of the world; why is it so difficult to recognize those failures when they occur within our own borders? When a command economy allocates resources, it changes the incentives of the people involved—otherwise there would be no need for the “command”; it would simply be an economy. When a government agency dictates development in a particular industry, it changes the incentive system in that field. The result is profound inefficiency. The lack of an appropriate incentive system can lead to some interesting—and expensive—results.
Consider the pressure suits worn by our astronauts. NASA estimated the cost of designing a new space suit for the planned space station at about $350 million—manufacturing costs not included. These suits are expected to withstand 5-8 psi of internal pressure in a relatively innocuous environment.
Space suits are similar to the rigid, deep-ocean suits worn by divers. While maintaining a single atmosphere environment for the diver, deep ocean suits must withstand external pressures of over 500 psi, as well as operate in a corrosive environment. In addition, they must be very durable. Minor leaks in an astronaut’s space suit would not necessarily kill the astronaut; such failure in a deep ocean suit would certainly doom the diver.
The International Hard Suits company of Vancouver, B.C., manufactures the state-of-the-art one-atmosphere diving suit, the Newtsuit®. The suit is available for approximately $400,000 each, and is presently in full production for military, scientific, and commercial use.
NASA, on the other hand, would have to make over 875 space suits at no cost to justify the expense of their own design. Instead, NASA would expect to make only a handful of suits, with significant manufacturing costs. Although such an existing supplier of space suits would have been more cost-effective, NASA chose to contract out for a new design—essentially to reinvent the wheel. This represents a minimum of $345 million down the drain; $1.38 for every man, woman, and child in the United States, thrown away. And that’s just the space suits.
Costs Continue to Soar
Then there is the story of the Saturn 1B, an expendable rocket. The Saturn 1B cost $3.4 billion to develop and $156 million per flight to operate. It was able to lift about 40,000 pounds into orbit. However, rather than continue to use the Saturn 1B, NASA spent ten times as much money to develop a vehicle that cost twice as much to perform the same job.
The Space Shuttle represents no great payload improvement over the Saturn 1B. Like the Saturn, the Shuttle is able to lift 40,000 pounds into orbit. Yet it cost $34.7 billion to develop and, by NASA’s own rather low estimate, $301 million to operate, per flight. As of 1990 the Shuttle had flown 44 flights, for a total cost of $55 billion. For that same $55 billion, the Saturn 1B could have flown 350 flights, placing in orbit ten times the total Shuttle payload to date (all figures are in constant 1986 dollars).
But what about all of that valuable research performed on the Shuttle?
Put another way, for approximately $5 billion the Saturn lB could have placed the same amount of payload in orbit as the Space Shuttle has. With the remaining $50 billion, the taxpayers could have purchased outright the top ten laboratories and research universities in the world and performed all the research they wanted. Or funded the National Science Foundation for 25 years.
On top of that, the Space Shuttle is considered so unreliable that another branch of the federal government, the Department of Defense, has recently opted to boost its satellites using Titan rockets—a technology developed three decades ago.
The problem with NASA is less NASA itself than the mentality that suggests the United States should even have a “space program.” Capitalism works. Free markets work. Command economies fail and they fail in the most expensive manner possible. If we agree that space development is a worthwhile goal, then the question becomes how best to get there.
There are at least two options. Assuming a continuing drive for some form of federally funded space effort, the maximum leverage of taxpayer dollars might come from a system of prizes. In combination with this approach, tax incentives for investment and tax breaks for profits earned from commercial space ventures could stimulate the flow of significant private dollars for high- risk projects. We should recognize that the free market has been distorted by tax policy which inhibits investment in high-risk, high-payoff industries. Indexing capital gains, or better still, following the Japanese lead and eliminating all tax on long-term investments would be a useful start. While we prefer a hands-off policy, these options would help to undo the decades-old damage of the present space program.
Burt Rutan, designer of Voyager, which circled the globe unrefueled in 1986, has suggested an incentive-based system to develop one NASA/USAF project: the National AeroSpace Plane (NASP). To date, more than a billion dollars has been spent for this plane, with the expectation that ten billion dollars might be spent on the actual manufacturing and flight tests. Rutan’s sug gestion is to take out an ad in Aviation Week, at a cost of a few thousand dollars, offering a billion-dollar prize to the first company to fly a plane coast-to-coast in under an hour—NASP’s ultimate goal.
This idea is far from new; using just such an incentive system the British Crown established a prize for the means of discovering the longitude of a sailing vessel. A similar competition for $25,000 prompted Charles Lindbergh to make his famous solo flight across the Atlantic in 1927. Prizes work to stimulate innovation. An incentive would encourage companies to compete in a cost-effective manner and, where appropriate, to team together to overcome common problems and share risks.
To date, the conventional attempt to commercialize space activities has been a failure. Most firms participating in this much ballyhooed effort are simply selling their products to the same old buyer: the U.S. government. If there is to be a true industrial revolution in space commerce, we must open new markets. The record of our government in creating such markets is dismal.
Which federal government manager would envision, for example, that space tourism might well become a ten billion-dollar annual global market in just fifteen years? Dr. Patrick Collins of the Japanese National Aerospace Laboratory has suggested just that—and you can be certain Japanese firms are listening. A recent visit to Shimizu Corporation, the largest construction company in the world, elicited color brochures depicting space hotels, lunar set tlements, and “space weddings.” Whether such visions are practical or not, this example serves to illustrate that, as with so much else, federal government policies have forced innovation and vision away from our shores. It is past time to change the way we address the promise of the space frontier. We should scrap policies that inhibit our ability to profit from this opportunity.
We won’t get to the high frontier with a modern-day “Gold Rush Program.” But we might get there with a modern-day gold rush.
Pingback by Obama Says Manned Space Missions Will Continue | The Freeman | Ideas On Liberty on 16 April 2010:
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Comment by Daniel Shapiro on 16 April 2010:
NASA is a joke! The whole thing was contrived for political proganda purposes – a spin-off of ICBM. Richard Nixon’s name is on a plaque on the surface of the moon- sickening! Wouldn’t Isaac Newton be the most appropriate name? NASA is all about flag waving and USA is better than the commie Ruskies and to somehow demonstrate to the people that only bureaucratic management can protect us and do grand things such as space exploration. NASA = wrong people for the wrong reasons.
Comment by Daniel Shapiro on 16 April 2010:
I should add to the above that as a scientist I recognize that mankinds destiny is to leave this planet to explore and inhabit the cosmos. However, stealing people’s money through taxation and bureaucratic management is not the way to accomplish this or any other worthwhile goal. In fact this way of doing things in general is the greatest threat to mankind continued existence.
Comment by Johnny on 19 April 2010:
I know everyobdy loves their cell phones, GPS, TV and what ever else bouces a signal out of space. But conquering outer space doesn’t impress me. I would like to see the human race master the space between its ears. Until we make good use of what is here, whatever is on Mars seems irrelevant.
Comment by James Madison Fan on 19 April 2010:
Mr. Shapiro,
Nice to see you again. I’ve been off on a misadventure and missed our exchanges in the other article.
The space race wasn’t just propaganda any more than the Manhattan Project was propaganda. Dropping “The Bomb” on Hiroshima and Nagasaki sent a message to Stalin to keep his hands off of Europe. The space missions sent a message to Khrushchev and company that Sputnik didn’t frighten us and we could drop rockets on the Moon so dropping a missile on Moscow wasn’t going to be a problem. While we were making trips back and forth the Russian rockets were blowing up on the ground with the same regularity. It is one of the few times in human history where an international pissing match resulted in a massive technological buildup that benefited mankind rather than killing millions. I wish the Islamic nutters presented an equally cerebral challenge.
What I love about Mr. Hudson’s article is that he attacks NASA using the Saturn V when NASA is the one that made the S5 possible in the first place. “We should have gone with NASA rather than listening to NASA.” Brilliant argument that.
The shuttle was designed with a different mission in mind. You don’t need men in space if all you’re going to do is launch satellites for Direct TV. The International Space Station ushers out the age of space exploration with a whimper. We’re more interested in caressing the remote than the reaching for the stars. Entire generations of cubicle hamsters wandering around in a gilded Habitrail of our own construction. How can kids value freedom when they’ve never tasted it?
Mr. Hudson talks about tax credits and incentives but these come from taxes he doesn’t think should exist in the first place. So rather than building something that shows national and international unity like Apollo and Freedom he want’s the “Virgin Space Station” beaming down MP3 and WAV files at $1.00 per download. I wish someone would explain to me why a corporate master is any better than a dictator on a throne? One controls you with a gun and the other controls you with a paycheck. “Do as I say or I’ll fire” versus “Do as I say or you’re fired.”
Of course he’s assuming that Big Business has any interest in space. What’s on the Moon besides rocks? The only money in space is mining asteroids and tourism. The first will require an investment on a level that would make Gates squeal and the second is a novelty for the ridiculously rich.
The closest star is 25 trillion miles away. Even at the speed of light it would take more than four years to get there so we either need a way to get around General Relativity (good luck) or we need to do something with cryogenics besides freezing frogs, corpses, and disembodied heads.
There is a reason why every manmade wonder of the world is a public work. There is no reason for business to build the pyramids and no way to make profit on them even if they did but here they stand 5,000 years after they were imagined and we are still in awe.
Basic economics as well as Corporate Law indicates that you do not take risk without being firm that the reward justifys the risk. Space exploration offers no such guarantee until we are firmly established rather than looking across an unimaginably large void of uncertainty.
Comment by Daniel Shapiro on 19 April 2010:
James Madison fan,
Since our last exchange I see, from the comments you made above, that you are still stuck in the 1 dimensional political diaelectic and you’ve swallowed and regurgitate all the political propoganda flawlessly. I’ll bet you got A’s in college studying liberal arts and other forms of socialist mysticism. Wouldn’t be surprised if you’re a lawyer.
I would tear every statement you made to sheds, but it would be a waste of my time and yours. You clearly have not read any of the books I recommended in our last discussion regarding political intervention and tweeking of the economy and my rational arguments apparently have falled on deaf ears.
Have a good life in Fools Paradise while you still can.
Comment by James Madison Fan on 21 April 2010:
If you consider Jefferson, Madison, Franklin, Paine, Hancock and the other men that forged the Constitution to be “fools” then I am indeed blissful in my supposed ignorance.
I would rather wallow in the “propaganda” of these men than live an “enlightened” life as an Objectivist that think you have no obligations to society as a whole and the only worthy pursuit is the expansion of your own wallet almost regardless of effect.
Even Smith didn’t support this so where these “free market” literalists get such Machiavellian ideals is beyond me but it certainly isn’t from Wealth of Nations.
The one single most important thing that separates Man from Beast is our development of Society and our dedication to achieving goals as a group that we could never hope to undertake alone. I see greatness in the Wonders of the World while purists such as you only see government intrusion and waste. You’re right. I don’t have time to deal with that kind of egocentrism.
Here’s a debate I had with a poster named Scott in regard to Health Care. You think I’m a lib. He thinks I’m a con.
http://www.thefreemanonline.org/columns/not-so-fast/see-repealing-the-law-of-scarcity-is-easy/
My major was Management Information Systems/Computer Information Systems with a Minor in History.
Comment by Daniel Shapiro on 22 April 2010:
James Madison fan:
Most of your statements corroborate Hegel’s statement: “All man learns from history is that he learns nothing from history.”
I’m afraid you’re stuck in political alchemy; I’ve abandoned alchemy and discovered chemistry and rationality. We are intellectually in different worlds.
If you take some pleasure in dancing around and trying comprehend and solve an unsolvable paradoxical enigma, that’s your choice. I’ve been there and have moved on. By the way I’m not an Objectivist. I’m a scientist who determines right from wrong, practical from upotian, possible from impossible based on rationality; not by counting noses.
Perhaps someday you realize that the US Constitution was a failed experiment in providing the most necessary function of goverment. In was doomed from the start. A universal social contract was a nice idea that is impossible. “We the People..” The document that I see as significant was the Declaration of Independence; especially the beginning statements which are principles regarding the purpose of government. This document (actually written by Thomas Paine) was more than independence from England; it was the independence of man from the state. The US Constitution created a state which has accumulated more coercive power than any monarch in history.
Yes man has demonstrated the ability to work together to accomplish great things. This comes from science, technology, and enterprise; not politics which is the destroyer and enslaver. As I said above:
“I recognize that mankinds destiny is to leave this planet to explore and inhabit the cosmos. However, stealing people’s money through taxation and bureaucratic management is not the way to accomplish this or any other worthwhile goal. In fact this way of doing things in general is the greatest threat to mankind continued existence.”
I’ll leave you with the following:
“We can’t solve problems by using the same kind of thinking we used when we created them.” – Albert Einstein
Comment by James Madison Fan on 26 April 2010:
A committee of five wrote the Declaration. Jefferson wrote the first draft and it was polished as a collective work. The three I can remember are Adams, Jefferson, and Franklin. Adams had less than flattering opinions on Common Sense and was not Paine’s biggest fan.
Quite often in reading articles in the Freeman I see the words “natural laws” in reference to the Declaration. Nature does not guarantee the right to “life, liberty, and the pursuit of happiness.” Nature has one law: Survival of the Fittest. The Universe does not care if you are happy, free, or alive. These are concepts that Man cares about, not Nature.
I’m a computer scientist so logic is my daily domain but that doesn’t mean I should emulate the computers I work on by denying “Man’s better Angels” and embracing Darwinesque beliefs as a substitute. I think there is a happy medium between ethics and economics. It is trying to determine where this intersection resides that I find difficult.
The Constitution has failed. Great. That’s a lovely assertion but where is the weight? As I’ve pointed out in our previous discussion there is not a single instance in history where the typical citizen has been so free and so prosperous. The concepts that fueled the Revolution in this nations spread to Europe and toppled or modified just about every government on the continent.
Since you can’t provide an actual example I would be satisfied with a theoretical framework that had some potential to replace this “failed experiment” but have yet to read one that doesn’t sound like anarchy wrapped in egocentrism.
It seems that nearly the full measure of your difficulty with the Constitution resides in the fact that We (the People) have empowered to government to lay taxes and impose laws for the legal, orderly, and non-predatory operation of society and (genuflect three times) business.
Business has laws for the same reason men do because business is made up of men not cherubim looking to further your rights or financial future any more than big government is. You seem to think I’m being fooled by constitutional propaganda but the only solution you offer to the tyranny of big government is replacing it with the tyranny of big business when it has been upheld time and time again that the Bill of Rights ends at my employer’s threshold. Some petty bureaucrat at work has far more control over my life than the president himself. If we don’t like what the president does we get rid of him after four years. If I don’t like what my boss does I can’t do a damn thing unless I want to put my financial future at risk by walking out the front door and likely ending up working under the same petty bureaucrat with different name. You call that freedom?
“If men were angels, no government would be necessary.” – James Madison
Comment by craigers on 27 April 2010:
“I would like to see the human race master the space between its ears. Until we make good use of what is here, whatever is on Mars seems irrelevant.”
Johnny suffers form a common mental illness, the inability to see reality as it is. If his advice had been followed we would still be in the cave. it is in mans evolutionary progress to understand what is between his ears that gives us the evolution of the species in itself. The journey to understand ones self, ones species and ones place and purpose in the universe is an unfolding process, modern philosophical moronic nihilism blinds the thinker to seeing reality as it is.
As far as the argument between John Madison and Daniel, you are both right and both mistaken. NASA as first envisioned and managed was a great wonder, it has rotted out into the neo-socialist economic fascist failure it is today either through the States inability to manage anything long term or on purpose as the “powers that be” do not want us to have ideals, dreams, goals and accomplishments. Power is in fear of new frontiers as all new frontiers are a future challenge to the hegemony of power. Why did the Confucians order the Chinese fleet destroyed in the 15th century? Why did Nixon kill the Apollo program before we could go to Mars by 1980? You cannot control a people full of dreams and fervent desire. Since Nixon killed Nasa, Nasa is a hamster wheel of failure burning through tax dollars for the benefit of large aerospace corporations. Very little bang for the huge bucks thrown at it.
At every turn engineers and scientists have designed better vehicles that Nasa should have built, instead we got the opposite. What was proposed instead for the space shuttle was scuttled, what was designed originally as the space station was shelved. The new vehicles that would have gotten us to the moon and Mars at a far cheaper cost was shot down and the Orion vehicle et al was put forth. NASA doest want to go anywhere anymore, it wants to benefit corporations while creating boredom among the American people and to sustain the ideology that America cant do anything alone anymore and whats a better way to do that then to constantly fail? We originally went to the moon in 8 years inventing all the new technology along the way, but today it will take 15 years to go back. Now that IS progress! No one is this incompetent by accident.
Nasa no longer leads, it is time to outsource it and give the keys back to the dreamers, engineers and scientists who do want to accomplish great things
Comment by James Madison Fan on 28 April 2010:
Craig,
Amen to most of that but, to be fair, NASA is not burning through tax dollars the way you describe. I go to the JPL annual open house periodically and a friend of mine goes every year. Space and flight are well nigh a religion to him. I’ve talked with the dreamers, engineers, and scientists and they point the finger at the American people that seem to have lost any interest in maintaining our leadership role when it comes to technology and space. “We already went to the Moon. Why go back?”
NASA is constantly faced with a hostile Congress and President. It may seem strange but the party of Kennedy sees more benefit in spending money servicing social programs than expanding the sum of human knowledge without realizing the technologies we discover as a result of this quest allow us to provide for the underclass better than if we are stone cold ignorant. A rising technological tide literally raises all ships.
It has become a bizarro world where people ask not what they can do for their country but what their country can do for them. Instead of helping people by giving them a job and the opportunity to help themselves we’re going to hand out money like we can print it. Oh, wait. We can. I guess Obama never read about post WWI Germany and the fall of the Weimar Republic where bread was going for half-a-million Marks at lunch and was double that by dinner. Learn from history? Why do that when we can revisit economic tragedies of the past.
The problem NASA is faced with is having the budget slashed every time there is an economic downturn and rarely, if ever getting it back. Obama just took a meat cleaver to their funding as did Clinton. So NASA has X number of missions that are projected to occur in 2012, 2013, 2014, and 2015 which are budgeted for Y dollars in 2007 so they put together the project, ask for bids, vendors reply and everything looks peaches until 2010 when Barry says that Y is too much so they’ll have to make do with two-thirds Y. So that means either scaling back missions, putting off missions, cancelling missions, or “retasking” missions so they do additional experiments not originally intended or designed to do. In some cases the experiments are time sensitive once the vendor delivers certain material and contamination becomes an issue. Warehousing components can lead to equipment failures due to lubricants becoming less viscous or pooling (the systems are designed to work in space not sit in warehouse). Look at Galileo. It was originally intended to have multiple probes but that got the chop. It was kept in storage after they grounded the shuttle after Challenger and this resulted in the antenna failing to properly deploy as well as other issues. That’s what happens when the Prez, Congress, and the People think your program is an extravagance rather than a necessity.
This is not to say that NASA is perfect but in talking to these men I promise you that for most of them the dream is still alive but you can’t fly to the Moon without a budget. Unfortunately for most people in this nation it seems to have died with Kennedy. Until we find a man with similar vision NASA is going to be operating on a shoe string budget subsisting on the fringe rather than helping us put more wrinkles in the noodle sitting behind our eyes.
Comment by Daniel Shapiro on 30 April 2010:
http://www.v-50.com/
Comment by New England Patriots on 4 February 2012:
Appreciate it for that superb writeup. Anyway, how might all of us talk?