Words to fear
by Bob Clarebrough
|The new space industry has a number of competing technologies and no one, not even a bureaucrat with a state-of-the art crystal ball, can predict the winner: only the market can make that choice.|
Like other national space agencies, the ESA is taxpayer funded and managed by bureaucrats. More worrying is the fact that this organization is charged with implementing a space policy set by the European Commission. This is the executive branch of the government of the European Union with freedom to propose whatever legislation it sees fit. It is not, however, a democratically elected body, instead being populated by political appointees from the various member states. Critics argue that they are often failed politicians who have been pensioned off to serve on the Commission. The same critics point out that since the proposed European constitution was killed off by the voters of France and the Netherlands, the Commission has no legal basis for setting space policy. Perhaps the biggest roadblock of all is the Commission itself!
Assuming that the ESA and the European Commission proceed with their scheme, the question arises: How qualified are they to evaluate new and competing technologies and the business plans for developing them?
The aspect of technology is illustrated by the early years of the automobile industry. In 1900 there were around 8,000 automobiles in the United States, most of them steam-powered—a reliable technology that was well understood by manufacturers and customers alike. There were also some electric cars and, rarest of all, a few gasoline autos. Yet, ten years later the gas-powered car had completely dominated the market. The new space industry also has a number of competing technologies and no one, not even a bureaucrat with a state-of-the art crystal ball, can predict the winner: only the market can make that choice.
As for business plans, these work well enough when there is an existing industry with known boundaries, familiar competitors, a good understanding of customer demand, and a reasonably predictable future. However, when an entrepreneur starts out to produce an entirely new-to-the-world offering for a market that may or may not appear, then any plan is a work of fiction ranking up there with Harry Potter—success or failure are equally possible. As Intuit founder Scott Cook noted: “…teams developing new products should ignore forecasts in the early days. For every one of our failures, we had spreadsheets that looked awesome.” Evaluating a plan is fiendishly difficult for experienced business leaders and hard-bitten venture capitalists. Will government officials be any smarter at choosing whether to back gasoline or steam?
There are other problems afflicting Europe that will make it hard for the ESA/European Commission to kick-start the commercial space industry. By way of introduction, here are some more words of wisdom from the Great Communicator on big-government economic policy: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
|The Gettysburg Address ran to 264 words, the Declaration of Independence required 1,332, yet the European Union regulations on the sale of cabbages need 23,826 words. Call me intuitive, but my gut tells me that launching stuff into space might need even more complex rules than trading vegetables.|
If it moves tax it. Over the last 60 years, the countries of Old Europe have created hugely expensive, taxpayer-funded state welfare systems providing a dazzling range of lavish benefits. Even as the architects of this “No citizen left behind” policy admire their own achievements, the Law of Unintended Consequences has kicked in. When the ever-rising cost of welfare benefits, leading to yet more taxation, is combined with stringent employment regulations, the effect is to weaken Europe’s competitiveness and stifle innovation. Exceptions to costly labor laws and tax breaks to help new firms are virtually impossible to introduce: change the rules for one section of the economy and soon all companies will demand the same. In turn, this prospect has caused voters to be scared of innovation in case it leads to the unraveling of their precious welfare state, and politicians won’t make radical changes that would upset their constituents. The result is paralysis. Space entrepreneurs will not find it any easier or less costly to get started than other innovators do.
If it keeps moving regulate it. Let’s assume that in spite of these problems some space entrepreneurs do appear and, with help from the ESA, get their businesses off the ground. What other difficulties will they encounter? Two related issues are sure to arise, the European love of complex regulations and the problem of finding suitable launch sites.
To understand the first issue, consider this: the Gettysburg Address ran to 264 words, the Declaration of Independence required 1,332, yet the European Union regulations on the sale of cabbages need 23,826 words. It’s hard to believe that commercial space operators will enjoy the light-touch regulatory approach adopted so far by the FAA. Call me intuitive, but my gut tells me that launching stuff into space might need even more complex rules than trading vegetables—or am I missing something?
The second issue is related to the first, namely that Europe has adopted byzantine planning processes and is home to a vast army of environmentalists. Two sites are being touted for spaceports, Kiruna in Sweden and northern Scotland, both of which are remote from the densely-populated heart and crowded skies of Europe. The Swedish contender already has space-related facilities and transportation infrastructure in place, so that may be a winner (although I wonder how many well-heeled space travellers choose to hang out 150 kilometers above the Arctic Circle). Northern Scotland, on the other hand, is sparsely populated with minimal infrastructure and hosts a variety of world-class wildlife habitats. Anywhere in Britain, building even a short relief road to bypass a traffic-choked village can take several decades, thanks to complicated planning processes, vigorous campaigns by environmentalists, and endless re-prioritizing of government spending plans. Gaining approvals and funding to construct a spaceport, transportation links, hotels, and housing for workers in a pristine wilderness will take forever. But the last word will come from Britain’s Health and Safety Executive. This government department recently advised the police not to pursue escaping criminals in case they endangered the felons’ safety! When the HSE writes the rules for space operations their weight will exceed any rocket’s lifting capacity.
If it stops moving, subsidize it. Years from now, when American pioneers are hailed as the new Boeings and Lockheed Martins, Europe will wake up and wonder why it isn’t participating fully in this new advanced-technology industry. Then, courtesy of the taxpayers, the government will create a consortium to build some space hardware and start competing. With stunning originality, it’s sure to be named… Spacebus! If that happens, the disgrace will be that making real concessions now to help space entrepreneurs get established will cost taxpayers less than the eventual price of subsidizing a game of catch up. Meanwhile, Europe will have lost jobs by once again failing to build a wealth-creating, knowledge-enhancing, high-technology industry just as it failed to grasp the great opportunities of the IT revolution. Europe has many talented, innovative people but they are ill-served by voters and governments who have lost the will to compete and smother those who could.
|Do Europeans really care about space? Do they have anything close to Americans’ visceral feel for the notion of “frontier” and the boundless opportunities waiting on the other side?|
To understand fully how European statism chokes off the future, consider this French attempt to create a “Silicon Valley”. Following the Californian model, a university was chosen to be the anchor just as Stanford anchors Silicon Valley. With financial inducements, several high-tech firms were attracted to the area. The best brains from the university joined these corporate R&D centers—and stayed put. Hardly any of them opted to start their own companies to develop their ideas into marketable products. The anticipated flood of innovation failed to materialize because these highly talented people were commanding premium salaries in the big-name R&D centers and, if the operation closed, they would receive a boatload of cash in compensation as dictated by law. Why risk losing everything to start a business that might fail when the state guarantees you a comfortable life?
Even if all the hurdles described above are overcome, the issue of funding remains. The ESA grants amount to a little over $500,000—a trivial sum if the intention is to kick-start a whole new industry. On top of that, there is a distinct lack of interest by private investors in the new space industry. With the exception of Richard Branson, Europe’s mega-rich have not stepped up to the plate. The continent is not short of wealthy people, but so far no equivalent of Paul Allen, Elon Musk, or Jeff Bezos has appeared with a passion for space and a willingness to fund the means of getting there. It’s sad that even those Europeans, who once built great businesses and can afford to pursue a dream, are no longer attracted by the high-risk game of being innovative pioneers. That leaves these fundamental questions: Do Europeans really care about space? Do they have anything close to Americans’ visceral feel for the notion of “frontier” and the boundless opportunities waiting on the other side? Instead, the nations of Old Europe have hung a sign on the frontier that reads, “Do not disturb.”
Then again, it may just be a problem of translating the language. Though Reagan issued warnings, they’ve been interpreted as valid prescriptions for European economic policy.