Category Archives: Economics

It’s Not Just A Bad Idea, It’s The Law

There’s a long piece on the the current state of space law over at the ABA Journal. I only have a couple issues with it. First, I don’t know what they mean by this:

Even though the United States eventually outpaced the Soviet Union by putting men on the moon in 1969, the space race continued until the early 1990s.

No, the space race was essentially over by 1968 or so, once the Russians realized that they weren’t going to beat us to the moon, and instead rewrote history to pretend that they’d never even been trying. There was no urgency or racing after that–had there been, NASA budgets would have been higher, and schedules faster. So I don’t know what this sentence means, unless it just a vague reference to the fact that progress, such as it was, continue on both the US and Soviet side, until the fall of the Soviet Union.

On ITAR, I strongly disagree with Pam Meridith:

“I think the hysteria over ITARs is out of proportion,” says Pamela L. Meredith, who co-chairs the space law practice group at Zuckert, Scoutt & Rasen­berger in Washington, D.C. “They’ve been around for a long time now, so people have had time to adjust.”

No matter how much “time people have to adjust,” it still adds time and cost to projects, and prevents many from happening altogether. And it has a disproportionate effect–like most regulations, big space businesses (who despite leftist mythology, are no fans of capitalism or free enterprise) don’t necessarily dislike ITAR, because they can afford to meet the requirements, and they represent a barrier to entry to smaller businesses and newcomers, who generally can’t. (Though there’s also no question that it’s cost Boeing a lot of satellite business.) And as a perfect case in point, consider Mike Gold at Bigelow (in a long, but quite interesting interview):

Res Communis: Can you comment on a company’s cost of implementing ITAR?

Gold: Yes, absolutely. Paying so much for export control is a bit like being asked not just to dig your own grave, but to jump in it as well. Our best estimates are that we pay roughly $130.00 per hour, per person, for every hour that a government official monitors us or reviews our documentation during the day, plus overtime, which can add up on overseas trips. What amazes me is that when we travel to Russia for meetings, we sometimes travel with not one, but two government officials, monitoring every word we say. Then, across the table from us are the Russians, all great folks, who came out of a Communist system, and they have no explicit monitors. If we were to have brought someone down from Mars to attend our meetings, and asked them which of these two nations represented the free country, the Martian would point to the Russians. The U.S. holds itself out as the bastion of freedom. But when I am sitting there at those meetings I have to wonder: which is the free country? Now again, this is a problem of policy not personnel. The monitors we get are often good, smart people, who can even be quite helpful at times. However, what I want is for these monitors to be able to spend their limited time and resources focusing on military sensitive technologies that really matter rather than wasting their efforts on us. The Russians basically do this. They have the unique policy of protecting information that is actually sensitive. They don’t care about metal coffee tables. It makes a lot more sense. And, in regard to the financial costs, you know, the KGB may have spied on you back in the Soviet days, but at least they had the courtesy to do it for free. It is unfathomable to me what we have to pay for export control review and monitoring.

Res Communis: You do cover their travel expenses also?

Gold: Absolutely, including airfare and hotel. Specifically, in 2006, the year of the Genesis I campaign, we paid over $160,000 in monitoring fees alone. In 2007, when the Genesis II launch campaign took place, we paid the government nearly $150,000 for monitoring and reviews. Thanks to Mr. Bigelow’s generosity and commitment, we’re able to afford such fees, but there are a lot of small companies that can’t. This is why the ITAR has stifled innovation and stunted development in the American aerospace sector. The ITAR should be re-named “The Full Employment for European and Foreign Aerospace Workers Act.”

Res Communis: As between a new space company like Bigelow and the big aerospace corporations, is the ITAR burden disproportionate for the new companies?

Gold: Everyone has problems with it, but a large, well established company is better able to absorb the expenses and can pass the cost on to their customers relatively easily. Anecdotally, I have spoken to a number of friends and colleagues at small aerospace businesses and start-ups. They tell me that they don’t even look at international collaboration because they know they can’t afford to work through the export control problems without a hoard of attorneys. Frankly, it took a lot of work and diligence and a little bit of luck on our own part to have been able to survive the ITAR gauntlet with just myself, my deputy, and some limited support from outside counsel.

And because Bigelow is wealthy, and willing to foot the bill, he can afford it. Most startups aren’t in this position. This is just one of the many ways that federal policy has been disastrous, and continues to help bind us to the planet.

It’s Not Just A Bad Idea, It’s The Law

There’s a long piece on the the current state of space law over at the ABA Journal. I only have a couple issues with it. First, I don’t know what they mean by this:

Even though the United States eventually outpaced the Soviet Union by putting men on the moon in 1969, the space race continued until the early 1990s.

No, the space race was essentially over by 1968 or so, once the Russians realized that they weren’t going to beat us to the moon, and instead rewrote history to pretend that they’d never even been trying. There was no urgency or racing after that–had there been, NASA budgets would have been higher, and schedules faster. So I don’t know what this sentence means, unless it just a vague reference to the fact that progress, such as it was, continue on both the US and Soviet side, until the fall of the Soviet Union.

On ITAR, I strongly disagree with Pam Meridith:

“I think the hysteria over ITARs is out of proportion,” says Pamela L. Meredith, who co-chairs the space law practice group at Zuckert, Scoutt & Rasen­berger in Washington, D.C. “They’ve been around for a long time now, so people have had time to adjust.”

No matter how much “time people have to adjust,” it still adds time and cost to projects, and prevents many from happening altogether. And it has a disproportionate effect–like most regulations, big space businesses (who despite leftist mythology, are no fans of capitalism or free enterprise) don’t necessarily dislike ITAR, because they can afford to meet the requirements, and they represent a barrier to entry to smaller businesses and newcomers, who generally can’t. (Though there’s also no question that it’s cost Boeing a lot of satellite business.) And as a perfect case in point, consider Mike Gold at Bigelow (in a long, but quite interesting interview):

Res Communis: Can you comment on a company’s cost of implementing ITAR?

Gold: Yes, absolutely. Paying so much for export control is a bit like being asked not just to dig your own grave, but to jump in it as well. Our best estimates are that we pay roughly $130.00 per hour, per person, for every hour that a government official monitors us or reviews our documentation during the day, plus overtime, which can add up on overseas trips. What amazes me is that when we travel to Russia for meetings, we sometimes travel with not one, but two government officials, monitoring every word we say. Then, across the table from us are the Russians, all great folks, who came out of a Communist system, and they have no explicit monitors. If we were to have brought someone down from Mars to attend our meetings, and asked them which of these two nations represented the free country, the Martian would point to the Russians. The U.S. holds itself out as the bastion of freedom. But when I am sitting there at those meetings I have to wonder: which is the free country? Now again, this is a problem of policy not personnel. The monitors we get are often good, smart people, who can even be quite helpful at times. However, what I want is for these monitors to be able to spend their limited time and resources focusing on military sensitive technologies that really matter rather than wasting their efforts on us. The Russians basically do this. They have the unique policy of protecting information that is actually sensitive. They don’t care about metal coffee tables. It makes a lot more sense. And, in regard to the financial costs, you know, the KGB may have spied on you back in the Soviet days, but at least they had the courtesy to do it for free. It is unfathomable to me what we have to pay for export control review and monitoring.

Res Communis: You do cover their travel expenses also?

Gold: Absolutely, including airfare and hotel. Specifically, in 2006, the year of the Genesis I campaign, we paid over $160,000 in monitoring fees alone. In 2007, when the Genesis II launch campaign took place, we paid the government nearly $150,000 for monitoring and reviews. Thanks to Mr. Bigelow’s generosity and commitment, we’re able to afford such fees, but there are a lot of small companies that can’t. This is why the ITAR has stifled innovation and stunted development in the American aerospace sector. The ITAR should be re-named “The Full Employment for European and Foreign Aerospace Workers Act.”

Res Communis: As between a new space company like Bigelow and the big aerospace corporations, is the ITAR burden disproportionate for the new companies?

Gold: Everyone has problems with it, but a large, well established company is better able to absorb the expenses and can pass the cost on to their customers relatively easily. Anecdotally, I have spoken to a number of friends and colleagues at small aerospace businesses and start-ups. They tell me that they don’t even look at international collaboration because they know they can’t afford to work through the export control problems without a hoard of attorneys. Frankly, it took a lot of work and diligence and a little bit of luck on our own part to have been able to survive the ITAR gauntlet with just myself, my deputy, and some limited support from outside counsel.

And because Bigelow is wealthy, and willing to foot the bill, he can afford it. Most startups aren’t in this position. This is just one of the many ways that federal policy has been disastrous, and continues to help bind us to the planet.

Time For Space Solar Power?

There’s certainly no reason to think that much has changed based on this latest call for it:

PV technology has improved considerably since this idea was developed adding to the argument that this source of energy should be revisited. In addition, the economics of the cost of energy have changed. According to Dr. Neville Marzwell and his colleagues at the Jet Propulsion Lab, an SSP system could generate energy at a cost including cost of construction of 60 to 80 cents per kilowatt-hour at the outset. He believes that “in 15 to 25 years we can lower that cost to 7 to 10 cents per kWh.” The average cost of residential electricity was 9.86 cents per kWh in the U.S. in 2006.

The problem (as always) is that this doesn’t account for the costs of competing energy sources dropping even more. And of course, the notion of building SPS with the existing space transportation infrastructure remains ludicrous. Get the costs of access down (a good idea for a lot of other reasons), and then see if it makes sense. Unfortunately, current space policy (or at least the vast amount of expenditures on space transportation) seems aimed at increasing the cost of access to space.

[Via Ken Silber]

[Early evening update]

Mark Whittington:

Rand’s approach is just clearly wrong. There are no market incentives to decrease the cost of space travel, outside the COTS competition.

Nope, none at all. How will we ever do it without the government?

Oh, wait! How about the millions of people who want to take a trip, and can afford to do so if the price comes down? Mark ignores that one, though, because it doesn’t require NASA getting billions of dollars, or giving them out for a few flights via COTS, that will do very little to significantly reduce the cost of access.

Green Fascism

There’s an interesting post over at New Scientist on the new eugenicists. What’s even more interesting, though, are the numerous comments, which repeat many of the myths about population growth and control, and feasibility of mitigating it through space technology, including space (to use the politically incorrect word) colonization.

I don’t really have time to critique in any detail, other than to note that anyone who makes feasibility arguments on the latter subject by referring to Shuttle costs is completely clueless. Sadly though, years ago, Carl Sagan did exactly that.

Fascists Of The Corn

David Freddoso is still angry about our insane and, in my opinion, criminal ethanol and sugar policies:

The problem is that our sugar industry has even better lobbyists than big ethanol. They enjoy price supports, which we pay for both through the Treasury and in the supermarket. The price of our sugar is usually twice that of the world market. The sugar growers love it — even if they cannot sell all of their sugar, they have a guaranteed government buyer at an inflated price. The corn growers love it too, because high U.S. sugar prices push our food industries to use high-fructose corn syrup (ever seen that on a product label?) as an alternative sweetener — yet another artificial support for the world price of corn.

Not to mention wreaking havoc on the Everglades. Price-supported sugar cane is using up a lot of the water that both south Floridian humans and animals need, and they do this with the same political clout that they use to get the subsidies and tariffs, for an industry that is not all that big in terms of the economy.

Even if we want ethanol, we can’t solve the problem by importing sugar, because there are tariffs in place. We can’t import the ethanol itself because there’s a high tariff against that, too. Wherever you turn, there’s no way out — Americans don’t enjoy economic freedom, we live in a managed economy.

It makes me especially proud of my country when I see Sen. Chuck Grassley (R-Iowa) call foreign delegates’ concerns over a potential doubling of world hunger “a joke…”

Let’s call these people out for what they are–Republicans and Democrats alike–fascists. Not that there’s anything wrong with that.

[Update a few minutes later]

Biofool.

[Update early evening]

Oh, wonderful:

Key House and Senate farm bill negotiators reached agreement today on the main elements of the farm bill…[T]he five-year bill would raise the target prices and loan rates for northern crops beginning in 2010, raise the sugar loan rate three-quarters of a cent and include a sugar-to-ethanol program.

Oh, that’s just great. We have a program that makes us overpay for sugar, and now we’re going to start a new program to subsidize the ethanol we create from it — because without the subsidy, the inflated sugar price we’ve created will make the ethanol unprofitable.

Just when you think it can’t get any worse, they always find a way.

A Policy Disaster

Deroy Murdock writes on the ethanol scam, and its global effects on food and fuel prices.

[Update a few minutes later]

If this pans out, ethanol will make a lot more sense, won’t be competing with food, and won’t require any subsidies:

Along with cellulose, the cyanobacteria developed by Professor R. Malcolm Brown Jr. and Dr. David Nobles Jr. secrete glucose and sucrose. These simple sugars are the major sources used to produce ethanol.

“The cyanobacterium is potentially a very inexpensive source for sugars to use for ethanol and designer fuels,” says Nobles, a research associate in the Section of Microbiology and Molecular Genetics.

Brown and Nobles say their cyanobacteria can be grown in production facilities on non-agricultural lands using salty water unsuitable for human consumption or crops.

Bring it on.

[Evening update]

David Freddoso has an appropriately outraged follow-up to the Murdock piece:

Our government’s negligence and perhaps even malicious misdirection of societal resources toward a worthless, unwanted product — ethanol — will cause millions of people to go hungry tonight.

The way things are going, this could become the worst chapter yet in the sad, ruinous history of our bipartisan agricultural welfare programs. For those who write in and protest that free-market capitalism is an uncompassionate, un-Christian economic system, I submit that you are currently witnessing the alternative.

Indeed. End the tariffs, end the subsidies. Let the market work.

Feel-Good Disaster

Virginia Postrel writes about the economic ignorance of the global warm-mongers, a group that unfortunately includes all three presidential candidates. I just hope that Phil Gramm or someone can get McCain to come to his senses on the issue once he’s actually in office.

The connection between higher prices for energy and reduced carbon dioxide emissions may not have hit the national consciousness yet, but the LAT’s Margo Roosevelt reports that California utilities–and eventually their customers–are beginning to realize this isn’t just a symbolic issue.

…The DWP, to whom I pay my electric bills, wants out of the carbon dioxide caps. It apparently thinks the law shouldn’t apply to socialist enterprises.

Isn’t that always the way? The laws are for “the little people.”