Category Archives: Economics

Back At It

Brink Lindsey is blogging again, to help promote his new book, which looks quite interesting. He’s thumbing his nose at the socialists on their holiday by celebrating freedom.

[Update in the evening]

Take back the day. Here’s a web site dedicated to the remembrance of the millions of people who died in the hoped-for furtherance of a naive and well-intentioned but ultimately vile and evil (hmmmmm…I just noticed that those two words are anagrams) totalitarian ideology, and one that stood in utter defiance to human nature, and was therefore the most inhuman of all.

Helping Poor People

By eliminating federal disaster relief.

An interesting argument. I know that a lot of people are being priced out of the housing market here in south Florida by outrageous and rising insurance costs. Basically, it’s another form of outlawing gambling. Of course, the mortgage companies are driving this as well, for obvious reasons. The question is whether or not they’re properly assessing the actuarial risk, and how much federal regulation is preventing the market from working by not allowing an insurance company to take a flier by offering offering lower rates. Or maybe, the market is finally recognizing the risk of building in such places.

Free Market for Loans

New York Times says in an editorial that student loans should be subject to sunshine laws, careful policing and ethics rules that make it a crime to take money for access to colleges. This is misguided. Colleges will voluntarily step forward to show that their processes are clean now that there is focus on the issue. Those that don’t should be spared the regulatory burden. Students will go to the school that gives them the best overall package. Competition will steer students to the schools with the best policy–taking into account both student loan rates and what the school does less of due to the way it administers the loans.

Dawn of Modular Spaceflight Revolution

John Carmack’s announcement of a modular rocket that can reach suborbital space for $25,000 per module is revolutionary. Each module can independently reach suborbital space. Group the modules together and any size or shaped payload can reach suborbital space. The cost to get to space is $250 per module in fuel costs.

In a video that John said will be posted to his web site, he showed the modules being hooked together in a square arrays. These arrays can then be stacked for staging.

He predicts that he will produce the Armadillo orbital “Sputnik” which John also referred to as Mitchell Burnside-Clapp’s DYANN–Do You All Notice Now?

There are two revolutions here. The first is an open source garage revolution. With a small warehouse and a budget closer to Charlie Farmer’s in Farmer Astronaut than COTS winners RpK and SpaceX, Armadillo in a humble, matter-of-fact tone is brashly announcing an orbital program.

The second is the price of the revolution. At $25,000 per module, the capital cost per delta V is unprecedented and substantially lower than RpK or SpaceX.

This revolution was incrementally developed in plain sight and demonstrated in plain sight. No one thought Carmack’s Pixel and Texel were minimum concept proofs for a 64-module version. No one thought that by looking at the specifications they were seeing the ultimate cheap first stage and second stage and third stage.

Carmack thinks he can get the mass ratio down from 27 to 15 with some low cost evolutionary modifications. At 15-1, he can loft “Pixel 2” onto a suborbital trajectory with a 64-module first-stage lifter made up of 16 Pixels arrayed in a 4-4 grid or 8×8 single modules. Pixel 2 will be full of fuel and be the second stage. On top of Pixel will be a single module with a 25 lb. payload that will make it all the way to orbit. The cost for this delivery? The capital costs would be about $1.7 million if he can stay under $25,000 per module. If only the first stage is reusable, the cost per flight would be $150,000. If the first and second stage are reusable, the cost per flight would be $60,000. For a three stage system, that is a not very revolutionary price of $2400 per pound to orbit (albeit revolutionary vs. old space of $10,000+ per pound though.)

If they achieve a two-stage to orbit system where the second stage is also reusable, that would deliver a 100 lb payload to orbit for $35,000. That is roughly half fuel and oxidizer and half capital assuming a 100 flight lifetime. $350/lb is revolutionary. If this could be scaled up to Spacex Falcon IX payload size of 22,770 lbs., that’s $8 million or $22 million for a Falcon IX heavy sized payload of 62,500 lbs. An array of 100×100 modules supporting a second stage array of 25×25 modules boggles the mind and would cost $265 million in capital costs at $25,000 each. The flight rate assumptions would not be invalidated, however, because the vehicle could be broken up to support the suborbital tourism industry and smaller orbital payloads.

On the optimistic side, this price is before mass production. This mass ratio is before switching to methane (a 10% improvement in ISP over alcohol and a 50+% fuel price drop too). Google revolutionized servers by using modular white box CPUs. Now Carmack is making a bid to do the same thing. Nevertheless, Henry Vanderbilt cautions me that there is a long way to go from a view graph to orbit.

———Update 3/24/07 7:00 MST———

A wide plane requires a bunch of successively stronger connectors moving inward and results in very little additional payload delivered by the outside modules. This is especially true with a square grid which require more connections moving in from the corners than a hexagonal one. Other possibilities are more stages so connections are shorter and more vertical and larger, taller modules for lower stages.

Carbon LOX Stock and Barrel

Clean coal which was a $10 billion subsidy issue in the last election is developing. It involves capturing carbon dioxide by first burning it with liquid oxygen. Buy LOX stock. I like Air Liquide. There are two technologies: one rich: they inject steam, use heat to split off the oxygen to burn the coal and use the hydrogen to generate more electricity. The other lean: just use more LOX.

Both are idiotic from an economic standpoint. To add a hydrogen system and make the coal crazy hot enough to split water will use a lot of LOX at $1/gallon or so. Clean coal is an attempt to minimize the carbon output per electricity instead of the carbon output per money. Better than producing 1,000,000 barrels of CO2 via clean coal, would be to generate 3,000,000 barrels of carbon dioxide enriched air. Underground storage of air is a lot cheaper than buying hundreds-of-dollars-a-ton of LOX to burn $20/ton coal. We ought to be able to achieve sequestration for under $5/ton of CO2. And the plant modification is low-tech. Just direct the exhaust into a pipeline to inject it into the ground.

Going To School

…with Arnold Kling. One example:

Few people appreciate what a profound and disturbing puzzle the Depression posed. The non-economist has no trouble getting her mind around the notion of a shortage of jobs. But for an economist, such a shortage is nonsense. If there is an excess supply of, say, construction workers, then the wage of construction workers should adjust downward. As the wage rate sinks, the demand for construction workers rises, and the supply of people willing to work in construction falls. As the competitive process unfolds, bidding down wage rates, eventually supply and demand will balance.

In theory, at any rate, unemployment — an excess supply of labor — should accordingly be self-correcting. But evidently, as the Great Depression showed, the labor market lacks in practice the adjustment mechanisms that are supposed to work in theory.

There are hundreds of theories that try to explain the apparent inflexibility of labor markets. But I have never forgotten a suggestion made by Robert Solow. He pointed out that you never see an unemployed worker walk up to an employer and say, “If you let me have that guy’s job, I’ll work for 10 percent less money.” There are self-imposed ethical limits on competition.

If you think about it, there are probably countless self-imposed ethical precepts that affect our economic behavior. Chances are, without the habits incorporating these ethical precepts, our market system would collapse altogether. Like the water in which a fish swims, our commercial morality is invisible to us. But it is essential.