David R. Henderson  

My Visit to NASA

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Every fall quarter I teach an economics class to Executive MBA students by distance learning. For the first time, we have civilians in the program--in this case 5 students from NASA's Johnson Space Center in Houston.

When I teach 5 or more students in one location, I like to go there once in the quarter and teach in person. So, knowing that I would be in Dallas on Tuesday, I arranged to teach in Houston and broadcast from there on Wednesday.

Afterward, we all went out to dinner and, not surprisingly, the discussion turned to how to fund space exploration. I thought I had earned enough of their trust that I cautiously raised an issue. I told them that I remembered David Friedman having written about selling the moon rocks to raise funds for the Apollo program and that I thought it was a good idea. I thought I would get a lot of push-back but one of the students nodded her head in agreement. [I've asked her permission to mention her reaction.]

One of the other students then said, "I like that idea." He went on to advocate selling corporate sponsorships, advertising, etc. to help defray the cost. He said, "Picture a rocket going up into space with a big Coca-Cola or Nike logo on the side." I agreed with him that that made sense and I was delighted that he, a NASA employee who depended on taxpayer funding, had gone beyond what I advocated.

When I got back, I checked David Friedman's The Machinery of Freedom, written in 1973, and I found I had remembered correctly but incompletely. Remember in what follows to adjust for inflation and real growth in the U.S. economy in the last 39 years. In a short chapter titled, "What Might Have Been," David writes:

Most conservatives seem now to have accepted, and even embraced, the space program and with it the idea that the exploration of space can only be achieved by government. That idea is false. If had not been in such a hurry, we not only could have landed a man on the moon, we could have done it at a profit.

How? Perhaps as a television spectacular. The moon landing alone had an audience of 400 million. If pay TV were legal, that huge audience could have been charged several billion dollars for the series of shows leading up to, including, and following the landing. If the average viewer watched, altogether, twenty hours of Apollo programs, that would be about twenty-five cents an hour for the greatest show off earth.

After the landing everyone from Columbia Gas to Stouffers Foods tried to claim the credit. They could have been charged for the privilege. America's annual expenditure on advertising is about $20 billion. What company wouldn't give 10 percent of its advertising budget to be part of the biggest news story since the crucifixion?

The moon rocks, after being studied, could have been auctioned off. So could stamps cancelled on the moon. The astronauts could have staked out a modest territorial claim to everything within a hundred miles of the landing site and sold it. What would you pay for legal title to an acre of the moon? How about billboards on the moon--with a small freight and installation charge?



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COMMENTS (19 to date)
Tom E. Snyder writes:

And sell sponsorships for astronauts, like the NASCAR racers. Cover those astronaut uniforms with sponsors names.

John Fembup writes:

B-b-b-b-but . . .

What about endangered species on the moon?

If any are discovered, they will surely be endangered. Just because none have been discovered does not mean they aren't there.

There goes private ownership and development of Moon Acres.

J Storrs Hall writes:

The Man Who Sold the Moon, by Robert A Heinlein

N. writes:

Incidentally, corporate sponsors will have nothing to do with endorsing or advertising anything that flies into space -- too risky. Sure, your company logo on the side of a hi-tech rocket sounds great, but think: what happens to your brand if it blows up on launch?

Maybe it won't be this way as space travel becomes safer and more commonplace (because of entrepreneurs with deep pockets and a dream), but it certainly is now.

Tim Worstall writes:

The man who sold the Moon indeed.

Legal title on the Moon? Cannot happen under the UN treaty on space exploration. Private property up there ain't allowed. It's a serious problem for companies like Planetary Resources. One I've raised with them (for a piece to come out soon) but not one they seem to be paying attention to.

Advertising on the side of a rocket? Been done by the Russians. Can't recall if it was Pepsi or Pizza Hut, but one or the other. It was particularly interesting to me that launch as part of the cash came to me. For some bizarre reason I'd ended up being paid to get the US export license for the radiation hardened chips necessary for the payload.

Hans B PUFAL writes:

The idea's been taken up to get to Mars :
mars-one.com

Simon writes:

I think concerns about the Outer Space Treaty forbidding private asteroid mining are overblown.

(The quotes here are only selected more relevant parts, not the whole treaty)

Sure, it does say:

The exploration and use of outer space, including the moon and other celestial bodies, shall be carried out for the benefit and in the interests of all countries, irrespective of their degree of economic or scientific development, and shall be the province of all mankind.

Outer space, including the moon and other celestial bodies, shall be free for exploration and use by all States without discrimination of any kind, on a basis of equality and in accordance with international law, and there shall be free access to all areas of celestial bodies.

But this is kind of vague language, and who's to say that private asteroid mining isn't ultimately in the interest of all states including the less developed? If spy satellites are allowed, surely asteroid mining is still more allowable? (I'm assuming "outer space" includes earth orbit here). Note that it explicitly says that "use" is allowed. Free access means no one can stop Planetary Resources or any other company from going there.

Outer space, including the moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means.
Is asteroid mining "national appropriation by means of use or occupation"? I'm no expert, but I'm guessing that since they made the Moon Treaty specifically include language forbidding prvate ownership and resource extraction, this language must not have been considered sufficient to forbid it.
A State Party to the Treaty on whose registry an object launched into outer space is carried shall retain jurisdiction and control over such object, and over any personnel thereof, while in outer space or on a celestial body. Ownership of objects launched into outer space, including objects landed or constructed on a celestial body, and of their component parts, is not affected by their presence in outer space or on a celestial body or by their return to the Earth. Such objects or component parts found beyond the limits of the State Party to the Treaty on whose registry they are carried shall be returned to that State Party, which shall, upon request, furnish identifying data prior to their return.
So, Planetary Resources retains ownership of any equipment it launches and is regulated by its home country.
If a State Party to the Treaty has reason to believe that an activity or experiment planned by it or its nationals in outer space, including the moon and other celestial bodies, would cause potentially harmful interference with activities of other States Parties in the peaceful exploration and use of outer space, including the moon and other celestial bodies, it shall undertake appropriate international consultations before proceeding with any such activity or experiment. A State Party to the Treaty which has reason to believe that an activity or experiment planned by another State Party in outer space, including the moon and other celestial bodies, would cause potentially harmful interference with activities in the peaceful exploration and use of outer space, including the moon and other celestial bodies, may request consultation concerning the activity or experiment.
So, people from other countries would not be able to interfere with Planetary Resources' peaceful use of outer space without consultation. Does not apply to people from the same country, but their country can regulate that.

I bet Planetary Resources could argue that any other asteroid mine on an asteroid that they started mining would "interfere" with their operation and would require consultation. So, this could give them a limited degree of de facto ownership of an asteroid.

All stations, installations, equipment and space vehicles on the moon and other celestial bodies shall be open to representatives of other States Parties to the Treaty on a basis of reciprocity. Such representatives shall give reasonable advance notice of a projected visit, in order that appropriate consultations may be held and that maximum precautions may betaken to assure safety and to avoid interference with normal operations in the facility to be visited.
So they might have to allow visitors to their asteroid mine - but could insist on precautions to ensure it doesn't interfere with normal operations.

Overall, there doesn't seem to be anything preventing asteroid mining in the outer space treaty and the outer space treaty can provide some, probably adequate, degree of protection from outside interference, which is the most important thing about "ownership" anyway. Legal title is less important. And the outer space treaty doesn't even specifically forbid private ownership of space bodies, although it's hard to see how private ownership would work legally without (forbidden) national claims.

Now, the Moon Treaty is a different matter, but the US hasn't agreed to it, so it only matters if you want to base your asteroid mining company in Australia or another signatory.

Tim Worstall writes:

Simon,

"I think concerns about the Outer Space Treaty forbidding private asteroid mining are overblown."

I don't think the treaty forbids mining.

My worry is that the law forbids exclusion from a claim. And the basis of mining finance is that you get the exclusive right to extract from the deposit you've found.

That's what concerns me. That they do find a lovely platinum rich asteroid at which point everyone and their grandmother is up there digging away at it.

Glen writes:

"If pay TV were legal, that huge audience could have been charged several billion dollars for the series of shows leading up to, including, and following the landing."

I'm confused. I thought the barrier to pay TV was technological, not legal. In 1969, was it even possible to charge people individually for their TV watching?

David R. Henderson writes:

@Carl,
I'm confused. I thought the barrier to pay TV was technological, not legal. In 1969, was it even possible to charge people individually for their TV watching?
Yes, it was. The main barrier was FCC rules that cost us arguably a decade or more of progress. I think Tom Hazlett would know how many decades. I remember hitchhiking across the eastern third of the U.S. in August 1969 and seeing signs on movie theatre marquees that said, "Stop pay TV." In NYC, the signs were more "sophisticated." They said, "Save free TV."

David R. Henderson writes:

Oops. I meant "Glen," not "Carl."

Glen writes:

I had no idea. What would have been the mechanism for excluding non-payers?

john hare writes:

Scarcity being the cause of high unit prices of moon rocks means that your sale price will decline with success. A pound of rock would be one price, a ton another, and a kiloton something else again. If a trillion to pure diamond deposit were found in the US, diamond prices would drop like a rock. Development of the moon will require multiple income streams, as you suggest.

Some of us have blogged the subject a bit over at selenianboondocks.

Mr. Econotarian writes:
Incidentally, corporate sponsors will have nothing to do with endorsing or advertising anything that flies into space -- too risky.

Then explain why Red Bull just spent an estimated $65 million on the Red Bull Stratos space jump, that could have easily gone horribly wrong?

Why do advertisers put their logos on NASCAR vehicles that often crash on live TV? NASCAR averaged 0.8 driver fatalities per year in 2000-2009.

Simon writes:

Tim:

My worry is that the law forbids exclusion from a claim. And the basis of mining finance is that you get the exclusive right to extract from the deposit you've found.

That's why I pointed out the "interference" bit. I think it could be argued to prevent others from extracting from the same deposit.

David R. Henderson writes:

@Glen,
I had no idea. What would have been the mechanism for excluding non-payers?
I don't recall. It was illegal and so I didn't pay a lot of attention.

Essen writes:

Why doesn't econlib have any ads?
Loss of amagi?

Liam McDonald writes:

@N.

I disagree that it's bad news for a corporation if a rocket were to explode with their company logo.

If you remember the Oklahoma City bombing you might remember that McVeigh used a Ryder Truck. And while Ryder was very worried about what would happen to the company margins after the event took place, I remember reading that they saw a dramtic increase in rentals after that happened.

David S writes:

@N. and Liam,

I'm "in the business", as it were, and we already have company logos on rockets.

http://www.armadilloaerospace.com/n.x/Armadillo/Home/News?news_id=331

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