Thinking Clearly About Space Part IV: The Virtuous Cycle

This is part four of a four-part series.

The temptation to slip from hurrying the future to hustling it is always present. You can see the latest variation at every space conference, on every space forum and weblog:

• "What will make us a space-faring civilization is people making money on space tourism and orbital hotels; on solar-power satellites or on helium-3 from the moon or asteroid mining."

• "NASA and the big aerospace vendors and the politicians are all in the same bureaucratic swamp, maintaining their turf and their constituencies. Look at Spaceship One! Only private enterprise is lean and innovative enough to get us out."

• "Sure, rockets have always been expensive, but that's only because we make so few of them and fly them so rarely. With high flight rates and the streamlined operations that will bring, costs will drop to a fraction of what they are today."

The common thread is that we don't need more federal spending or new technology to speed our progress into space. All we need is the proven power of market economics to transform what is new, rare and expensive (electricity 1850, automobiles 1900, computers or jet aircraft 1950) into the routine and affordable.

Like any effective hustle, this one contains a lot of truth. Profit is a powerful and enduring motivation, at least as old as the urge to explore. NASA does share some dysfunctional, business-as-usual traits with other government agencies, especially those that buy expensive technologies with a long lead time (paging Donald Rumsfeld). Higher flight rates would reduce cost per pound to orbit--first by spreading development and support costs (often larger than hardware costs) over more flights, then by helping us learn to develop and support more efficiently.

But let's look more closely, because sometimes the most insidious hustle is the one that implies, "You've seen through the old scams. This is the real stuff." By this point you may be skeptical about a political or technological Next Big Thing in space. What are the prospects for one driven by market economics?

Economics textbooks show the curves of declining cost and increasing demand for innovative products and services. They explain the "virtuous circle" of learning, economies of scale, and competition that shapes those curves. All this has been a powerful mechanism for the creation of new wealth since we signed up for science, capitalism and the industrial revolution. But read on, and you'll also learn about the central role of market elasticity. When the price drops by 10%, does demand increase by more than 10% (elastic demand) or less than 10% (inelastic demand)? And when demand rises, how much does supply increase to meet it? It's elasticity that determines when the virtuous circle begins for a given industry, and how quickly it turns.

Elasticity is challenging to measure, even more so to predict. But it is indisputably lower in general for very expensive goods and services: there are few price wars for diamond watches or aircraft carriers. And the one money-making business in space with a track record--communications and imaging satellites, and launch services for them--has shown only faint and inconsistent signs of elasticity over four decades. Investors haven't forgotten that space suffered its own version of the dot.com bust in the late 1990s with Iridium, Teledesic, and Globalstar.

Maybe that's about to change. Maybe a surge of demand for Virgin Galactic's sub-orbital tourism, or SpaceX's Falcon rockets to orbit, or private contracts to supply the ISS, or something else in the new constellation of alt.space will kick-start the virtuous circle. Maybe in 2045 we'll be much farther along than anyone would guess based on the slow progress from 1965 to 2005.

But if that happens, it will be an empirical fact, not an inevitable result. It's not an outcome that's guaranteed by the limitless resources in space. As long as resources here are cheaper, we won't go after them.

It's not guaranteed by the superiority of private enterprise over Big Bad Bureaucracy. That view has more to do with political and ideological trends since 1980 than with NASA's vices or Scaled Composites' virtues. It is reinforced by a deep American preference: we tend to root for maverick entrepreneurs with the Right Stuff over any agency ever funded.

It's not guaranteed because lean, mean teams always do better than big organizations under the dead hand of government. Robert Goddard worked with a handful of technicians in New Mexico, and never got a rocket two miles high. During the same period, Wernher von Braun directed a technical and testing staff of thousands within a nightmare bureaucracy. The result: 3500 state-of-the-art rockets were launched in nine months, brushing the edge of space on their way to Antwerp or London.

What about the cost projections that inspire some alt.spacers? The ones showing that X hundred reusable spacecraft, each orbiting Y tons Z times a week, would make money at 20% or 10% or 5% of the current cost per pound to Low Earth Orbit? That those numbers may add up does not guarantee that there is a profitable path from here to there--nor, if there is, that any of the current players will find it before bankruptcy finds them. Market economics, like natural selection, has a brisk and ruthless way with losers. That's not a regrettable side effect of the system's power. It's the source of its power. Let a thousand business plans bloom, and the death of 997 will free resources for a few survivors.

There are sound reasons to believe that private enterprise can make a big difference... eventually. But, it won't be easy, and it won't be cheap, to make access to orbit cheap.

So be wary the next time you hear someone talking as if it's a done deal, as if private enterprise in space must deliver our future in space faster than government programs have. That person is hustling the future... even (or especially) if that person is you.

Monte Davis is a science and business writer living near Philadelphia. He helped launch OMNI and Discover magazines, and has observed the path from lab to market for twenty years as a communications strategist and writer for leading corporations in IT, telecomm, engineering, and pharmaceuticals.

Visit SPACE.com/Ad Astra Online for more news, views and scientific inquiry from the National Space Society.