Manned space exploration in the United States began as a massive, centralized government program. As I write in my latest Bloomberg column, in the mid-1960s the U.S. spent an astonishing $7 out of every $1,000 of national income on NASA’s budget.
But after we put men on the moon, the program become directionless. The need for market forces in space exploration became apparent. A presidential commission came to this conclusion in 2004: “NASA’s role must be limited to only those areas where there is irrefutable demonstration that only government can perform the proposed activity.”
Today there are several dozen active companies in outer space. And . . .
investment in startup “New Space” firms has increased by a factor of five over the past two decades, from less than $500 million per year during the 2000s to roughly $2.5 billion per year in 2015 and 2016. Financing for these companies comes in part from entrepreneurs wealthy enough to handle the high fixed costs that come with entering the market for space commerce, including familiar names like Elon Musk, Jeff Bezos, Richard Branson and Paul Allen.
But this commercial activity raises many important economic questions. Who has property rights in space? Who can enforce taxation? How to deal with space debris? What is the opportunity cost of space commerce and exploration? How can we mine those asteroids?
I flesh this out in my column. Your comments, as always, are very welcome.