Thinking Clearly About Space Part IV: The Virtuous Cycle

This is part four of a four-part series.

Thetemptation to slip from hurrying the future to hustling it is always present.You can see the latest variation at every space conference, on every spaceforum 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 commonthread is that we don't need more federal spending or new technology to speedour progress into space. All we need is the proven power of market economics totransform what is new, rare and expensive (electricity 1850, automobiles 1900, computersor jet aircraft 1950) into the routine and affordable.

Like anyeffective hustle, this one contains a lot of truth. Profit is a powerfuland enduring motivation, at least as old as the urge to explore. NASA doesshare some dysfunctional, business-as-usual traits with other governmentagencies, especially those that buy expensive technologies with a long leadtime (paging Donald Rumsfeld). Higher flight rates would reduce cost perpound to orbit--first by spreading development and support costs (often largerthan hardware costs) over more flights, then by helping us learn to develop andsupport more efficiently.

But let'slook more closely, because sometimes the most insidious hustle is the one thatimplies, "You've seen through the old scams. This is the real stuff." Bythis point you may be skeptical about a political or technological Next BigThing in space. What are the prospects for one driven by market economics?

Economicstextbooks show the curves of declining cost and increasing demand forinnovative products and services. They explain the "virtuous circle" of learning,economies of scale, and competition that shapes those curves. All this has beena powerful mechanism for the creation of new wealth since we signed up forscience, capitalism and the industrial revolution. But read on, and you'll alsolearn about the central role of market elasticity. When the price dropsby 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 tomeet it? It's elasticity that determines when the virtuous circle begins for agiven industry, and how quickly it turns.

Elasticityis challenging to measure, even more so to predict. But it is indisputablylower in general for very expensive goods and services: there are few pricewars for diamond watches or aircraft carriers. And the one money-makingbusiness in space with a track record--communications and imaging satellites,and launch services for them--has shown only faint and inconsistent signs ofelasticity over four decades. Investors haven't forgotten that space sufferedits own version of the dot.com bust in the late 1990s with Iridium, Teledesic, andGlobalstar.

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

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

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

It's notguaranteed because lean, mean teams always do better than big organizationsunder the dead hand of government. Robert Goddard worked with a handful oftechnicians in New Mexico, and never got a rocket two miles high. During thesame period, Wernher von Braun directed a technical and testing staff ofthousands within a nightmare bureaucracy. The result: 3500 state-of-the-artrockets were launched in nine months, brushing the edge of space on their wayto Antwerp or London.

What aboutthe cost projections that inspire some alt.spacers? The ones showing that Xhundred reusable spacecraft, each orbiting Y tons Z times a week, would makemoney at 20% or 10% or 5% of the current cost per pound to Low Earth Orbit? Thatthose numbers may add up does not guarantee that there is a profitable pathfrom here to there--nor, if there is, that any of the current players will findit before bankruptcy finds them. Market economics, like natural selection, hasa brisk and ruthless way with losers. That's not a regrettable side effect ofthe system's power. It's the source of its power. Let a thousandbusiness plans bloom, and the death of 997 will free resources for a fewsurvivors.

There aresound 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 toorbit cheap.

So be warythe next time you hear someone talking as if it's a done deal, as if privateenterprise in space must deliver our future in space faster thangovernment programs have. That person is hustling the future... even (orespecially) 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.

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