Do we really need to regulate space travel?

The FAA has released proposed rules for space travel. They are fairly extensive. And they worry me. I believe that continued U.S. leadership in the global economy depends on expanding commercial space industries, especially human space flight. The regulatory regime proposed is not one designed to get the commercial space industry off the ground.

And we need commercial space flight. Not just because I want to dancing on the Moon (to quote an old song I know). Since the end of WWII, the United States has been able to maintain economic dominance and political hegemony as a consequence. Our overall high standard of living relies on this.

But folks in the rest of the world are not stupid. They study and catch up. In the post-WWII area, the United States became the dominant industrial manufacturer, a dominant food exporter, and a provider of raw materials. But other countries studied our manufacturing and agricultural techniques. They bought the modified crop seed that produced higher yields, pesticides to control crop loss, etc. They bought modern manufacturing equipment and learned how to combine robotics and quality control in ways we lacked. And, as hungry new entrants eager to provide what customers wanted, they out competed us in our own home markets. Then we started running out of raw materials (as I always say about the oil shortage — “what part of non-renewable did you not understand?”).

So by the mid to late Seventies, the U.S. was destined to go the way of the former colonial powers and get washed off the world stage. Other countries were about to eat our lunch and become our new economic overlords.

But then we revolutionized the financial services market and the speculative capital markets and reinvigorated our dominance. The 1980s saw the invention of new financial instruments, such as junk bonds and mutual funds. The world couldn’t wait to use our banks and financial service specialists to invest in our capital markets, trade our bonds, and generally marvel at the power of money to literally make money by arbitrage.

But, again, the rest of the world is not stupid and other countries began to catch up in the financial services market. And our success had created rampant speculation and lack of oversight with problems of its own. Insider trading, junk bond collapse, and the Savings & Loan scandal combined to trip us up just as our lack of real competition in heavy industry had caused us to overlook the importance of technological upgrades (like robotics), quality, and actually servicing customers rather than dictating to them. As the recesion of the early 1990s hit, we once again looked doomed to have other countries eat our lunch and become our new economic overlords.

But then a new economic sector emerged. High tech and internet/telecom created trillions of dollars in real new economic activity, with spillover effects in the entertainment industry (which began to make huge profits from both oversees sales and sales of video tapes and DVDs for home consumer devices) and other industries. Once again, the United States emerged as the dominant actor in the “digital economy.”

And, once again, other countries studied, learned and caught up. Now we read every day how China and India can match us for “knowledge workers” and expertise, allowing them to use the advantage of their lower wages/cost of living to eat our lunch and become our new economic overlords.

But now, coming over the horizon, is the potential dawn of a new age in commercial space travel. New Mexico recently entered into a deal to build a commercial space port. We have interest in space tourism and commercial reasons to want to establish a permanent manned presence in space. (To take one simple example, the commercial satellite industry could save a bundle if we could construct and service satellites in space rather than build them on the ground and shoot them up in space and hope nothing happens to them.) When Dennis Tito appeared at a Congressional hearing to talk about his adventures as the first “space tourist,” he was greeted by a crowd of cheering admirers. Virgin Space, Virgin Atlantic’s space company, has a waiting list of folks willing to pay $100K to go up into space for a few minutes and land safely. The conditions are right for U.S. entreprenurialism, wanderlust, and our intrepid goofiness that makes us wanna do stuff no sane and mature person would want to do, to create a new market in commercial space industries and maintain economic dominance.

Because, when you get down to it, I like living in the country with the highest overall standard of living in the world. I love this country and think it has a tremendously valuable set of ideals (even if we frequently fall short). I don’t want the doomsayers to be right and discover that we really do have new economic overlords.

Which is why I get worried about this FAA proposed rulemaking. I don’t shy away from regulation where necessary. But the goal in the first days of commercial space flight cannot be to make space flight as safe as domestic airlines are today. You will never get an industry off the ground that way. If we had legislated adoption of the ITU packet-switched network scheme in the late 1980s/early 1990s as the safe, reliable system that most resembled the phone network — rather than this dorky “best efforts” TCP/IP protocol suite developed by a bunch of contractors and academics and random people who used voluntary standards — I would be paying $5/minute to connect and I wouldn’t be blogging because the phone company had decided I didn’t need a blog so they wouldn’t offer it as a feature of their network.

The saddest thing about this administration is it is only “deregulatory” when it is outsourcing authority to big industry friends. When it comes to genuine limits on government power that encourage wild, unconstrained, and possibly revolutionary innovations, it wants more restrictions than any “nanny state” Democrat.

Stay tuned . . .

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