by guest blogger Ken
Jon’s warned me previously about my really long rambling posts (because he wants shorter, more frequent posts), so I’ll try to keep this one relatively brief, and focused on the topic of public utilities.
I’ll admit that I do read a bit of science fiction, and more than just Moon stories. Recently I stumbled across an odd little number called “For Texas and Zed” about a big but metal poor planet way out in the outer fringes of the Milky Way galaxy. It’s known for the best meat in the Empire, which subsists mostly on food substitutes. The book tries to convey the independent, hard as flint frontier ethos that has defined both the real Texas and the imaginary one in the book. One of the principal characters, trying to convey the planet Texas view of government was that most folks thought it should defend the planet and build public utilities.
Public utilities. The things that are of value to the entire population irrespective of their station in life. Water for sanitation, electricity for comforts, road and other ways for travel. The things that are so important to the commonweal and well-being of a nation that it makes sense for the citizens to fund them collectively. Done right, some of these things can be done privately. French corporations have gotten pretty good at running municipal water plants. A lot of our roadways are maintained under contract. Electricity…well, let’s just say that when the entire foundation of your prosperity is built on the delivery of energy, do you want to put that in the hands of speculators, or should that be the kind of thing that generates a steady 6% rate of return on Century Bonds?
For the record, as a libertarian, I wish that electricity delivery could be trusted to the markets. However, there is imperfect information because of regulations and laws influenced by monied interests and passed by sold-out legislators, which taints the accuracy of the information in the market. I was in California interning at Boeing during the Enron-induced black-outs back in 2001. They were actually considering making us come in at 05:30 in the morning so we’d be out by 14:30, which would be about the time the a/c units would be kicking in to keep the buildings bearable. It seemed that more often than not I’d have to re-set my alarm clock when I got home from work.
Utility for everyone. One of the keys to getting people comfortable with government spending the money extracted from our paychecks. So where does space fit in with all of this?
Good question. I think that most people get that satellites provide utility, be it in the form of weather maps or international calls that the alphabet soup of government agencies gets to listen in on because they said so.
Where then lies the utility of our space efforts? The argument can probably be made that the ISS at least has served as a spearhead in efforts to establish a presence in microgravity and a place to conduct research. I’m not going to go into the merits of how clumsily NASA may have implemented that effort, or the differences between an orbital facility designed by a massive team of government workers compared with the marvelous results obtained by a smart entrepreneur sniffing opportunity and his small team of workers (built upon previous work done by NASA and Boeing).
So having a high-tech R&D platform on orbit can be reasonably seen as a public utility that shows our nation’s high-tech prowess and hopefully will contribute a few advances that can be turned to the public good.
In this regard Bigelow remains unproven. He has shown that he can provide pressurized space on orbit, and it seems to be lasting for a while. The issue is that most of the research equipment to date has been designed around the shuttle/ISS ISPR standard (Mid-Deck Lockers and Spacelab Drawer Racks). I asked Mr. Bigelow a while back if his facilities would be compatible with that equipment. He indicated that they were looking at it, but nothing was decided.
The opportunity cost is the development of a potentially better standard, which could be pioneered in Mr. Bigelow’s facilities. If Mr. Bigelow does adopt what is effectively the NASA standard, then that standard is likely to be carried forward to other orbital facilities, such as at EML-1.
Personally, I think there is an enormous amount of opportunity in the microgravity research & development field, but it’s constrained by the unavailability of regular and reliable access to orbit. Until that hurdle is cleared there’s not much we’re going to be doing anywhere else in space other than continuing to chuck very expensive tools into the void. Once that hurdle is cleared, I do think there will be a greater flow of capital into carving out that particular niche in the economy.
One thing that I do want to sideline on here for a moment is the whole bandying about of what it is that ‘businessmen want’. Some people say we need a “Netscape moment”, others say we need a guaranteed money maker product. They’re all wrong.
What businessmen, real businessmen (not speculators), need is confidence. Every educated investor anticipates a return, but knows that nothing in life is guaranteed (‘Past performance is not indicative of future results’ is tattooed on my brain). One of the factors in whether one particular investment is made over another is the level of confidence the investor has that money will be made.
This doesn’t require a big bang event or product. It requires an ongoing series of successes, or failures that are learned from to find a surer path to success, over time. There are a few things that can help this year:
-someone wins the Lunar Lander Challenge
-Virgin Galactic conducts a drop test or three
-Zero-G buys another plane, or another competitor enters the market
-someone wins the Regolith Excavation Challenge
-more companies and teams show off their hardware at public events
That last is one of the biggies. Regular people need to see this stuff, not just industry insiders. That’s why the X-Prize Cup is so great, and why people need to step up and exhibit at public-oriented conferences like ISDC even if their capital budgets are getting to the point where it’s a bit of a stretch because, you know, there’s actual hardware to build. Still, the American public is really going to be looking for, and desperately needing, things to believe in and be proud of by the end of the year, and the space industry is one that offers hope because we have a competitive advantage
Confidence. Built on small, measured and progressive steps.
They’re not too far off the mark over at the Space Cynics. Things are going to get ugly in the economy. The reason Bear Stearns was sold for $2/share instead of going into bankruptcy is because they can’t go into bankruptcy because of counterparty exposure in derivatives. In a nutshell, normally when a company goes into bankruptcy the court says “Stop!” to all of the creditors while the court sorts out the mess. Thanks to lobbying and such, most derivatives are exempted from this “Automatic Stay”. Thus, while all the creditors of Bear Stearns are standing in line (with any equity holders way out in the boondocks), all of the derivative counterparties would figure out their net exposure to Bear Stearns and start divvying up whatever assets there were. Even secured creditors would have to wait. This is what the government is terrified of since this would be the first test, but it is a creature of Wall Street’s making. Bear Stearns and the industry entirely brought this upon themselves. The solution is a market repricing of assets, which hasn’t happened yet, and will be at a level that most firms don’t want to think about. This gets back to the whole imperfect information thing I was talking about earlier.
Back to space utility, let’s look farther out. The business model seems comfortable with disposable satellites. Is there utility in providing crewed access to space assets in cislunar space? In my view that’s a strong affirmative. Cleaning out the garbage, fixing XM’s satellites for less than the cost of a new one, extending service lives, I can see all kinds of utility in providing human access to space assets.
Where is the utility of the Moon? That’s a much harder question. I’m not going to dwell on Helium-3, for all its promise. I consider it a marginal byproduct of other processes, and not a reason to go to the Moon in and of itself. Oxygen is important, but mainly for cislunar operations, especially transport, and people aren’t yet sold on the utility of cislunar operations. A collision in GEO with a DISH sat might wake them up, but otherwise an effort will need to be made to convey the idea of having a means to fix our tools in space. The ISS spacewalks are actually helping to lay some groundwork in this regard.
My personal preference for the Moon is as a site for Solar Power Satellite raw materials. I don’t think SPSes are a near-term energy delivery solution, but I do think that they are a long-term, if not permanent solution.
Ask around, and I’ll think you’ll find that a lot of people think that when it’s dark at night, the satellite is in the dark as well, running off batteries or whatever. One of the ignorance hurdles that exists for SPS is that people think they’re no better than Earth-based installations. They don’t get that out at GEO with the axial tilt the SPSes are in sunlight almost all of the time.
Sell people on the idea of space-based Solar power and the Moon becomes a logical and imperative destination. A Cislunar Economy can be of powerful utility to the nation.
Mr. Mealling raises a good point in the comments to my last thread, in that over the longer term a gravity-well-centric focus is not the way to go for a true spacefaring civilization. The asteroids are the wealth in the inner and outer Solar system, and represent the real opportunity for security, commerce, and science.
Still, I don’t think we’re as confident with regards to asteroids as we are with regards to the Moon. Going back to the Moon and building a cislunar economy will build a huge amount of confidence to take that step, and the first one or several missions probably will be government-run while that’s happening.
That being said, one of ideas that needs to be conveyed is that of asteroids as a resource. The public is sensitized to the idea of asteroids as a threat, but not as a utility, though that can be changed. Selling people on that utility goes hand-in-hand with making a business case for cislunar space, where the asteroid’s materials will be used, in some cases for value-added products sent back to Earth.
Moving out to Mars, I have to honestly say that most of the economic value-added I see in the early days is going to be cultural/entertainment, the kind of stuff that can be easily digitized and sent back home, but can you colonize Mars on a Hollywood budget? On the materials side I’m having a hard time figuring anything out. Things like deuterium just don’t resonate with me because of the huge supply line/time back to cislunar space. And this is why I think Mars never really resonated with me.
So when folks say that ‘Mars is the Goal’, I can only say that ‘Mars is your goal, not mine. My goal is the American economy on the Moon. The only real question is how can we work together towards each of us achieving our goals?’ (Goals that are hopefully of utility to Mankind)
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In response to your statement:
Moving out to Mars, I have to honestly say that most of the economic value-added I see in the early days is going to be cultural/entertainment, the kind of stuff that can be easily digitized and sent back home, but can you colonize Mars on a Hollywood budget?
I agree that Mars would be much more difficult to colonize, mainly due to the lack of “mega resources” (as in worth in the billions).
However, I do think the only thing Mars could offer the solar system would be its water, which may be easier to extract from the surface to the asteroid belt (since its much closer and its gravity is weaker than Earth’s).
Provided Ceres is discovered to be as dry as a bone that is. 😉
I think Lunar GPS/early comm network could be a good candidate for a public utility.
I like what you said about public utilities that it’s nice if they can be provided by private markets, but they have a high reliability requirement that can’t always be met by private markets because of imperfect information.
But I disagree with you about the source of the imperfect information problem. I think it’s a fundamental aspect of the product being traded, not something imposed from the outside by bad regulations.
Reliability is a property with very poor visibility. Usually, you don’t know if something is reliable or not until it is too late. If I switch electricity providers will it increase my chances of suffering from blackouts next summer? That’s a hard question to answer with any accuracy. But deciding if I will pay less on my next electric bill is easy.
So there’s a motivation for the seller to skimp on the invisible property to improve the visible property even if the invisible property would be more valuable to the customer because the customer can’t tell.
Back to space stuff. I think in the near- to mid-term the primary value-added on Mars is going to be immigration. People going there to live because they want to.
Given Ceres’ density, it’s a reasonable guess that it has vast ice deposits. At least one scientist suggests it may have a liquid ocean deep underground, like Europa. We’ve also seen a number of main-belt asteroids that turn out to be “comets” in the sense that they’ve been seen to spew out volatiles. All much easier to haul water from than the Martian surface.
You actually want a private monopoly, for the first decade or two, because that greatly increases the return to investors, and thus the incentive to invest in the building it in the first place. We have patents to create artificial monopolies for this reason, but we can get the same effect without patents for natural monopolies such as those you posit here.
That said, no space industries currently are and very few in the future will be a natural monopoly. Mining, solar power satellites, etc., nothing you’ve mentioned is a natural monopoly. The only true public utility I can think of is a sunshade to combat global warming.
“For Texas and Zed”
I loved that book.
Didn’t it start with some guy from Texas inventing an anti-gravity device and when no one paid any attention he installed it in a 1956 Buick and hovered over the Pentagon?
That, and “Pandora’s Planet”
Pulp fiction at its finest.
That’s not what it started with. It started with the protagonist kidnapping the Emporer’s cousin because she had made sweet love to him so must have wanted to marry him so off to Texas. The Chevy over the Pentagon was a bit further in.
Definitely a fun read.