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Griffin
NASA administrator Mike Griffin speaks at a meeting of the MIT Enterprise Forum of Baltimore-Washington on September 17. (credit: J. Foust)

Space economies and economics

One of the biggest debates in the first half-century of spaceflight has been regarding the economic rationale for sending spacecraft—robotic or human—into the cosmos. Opponents of spaceflight, particularly human missions, see such efforts as extravagances that waste money that could be better spent “on Earth”, that is, in different areas like the environment, education, and social programs, among others. (Money devoted to space programs is, of course, spent on Earth, although an article in the satirical newspaper The Onion last year touched on this by describing a NASA mission to launch $700 million into deep space.) Proponents of spaceflight describe the benefits created by such programs, be it in direct forms like contracts and jobs, or, indirectly, in technological “spinoffs” that impact the economy and society far beyond the aerospace sector.

As the Space Age turns 50, the economic debate shows no sign of abating. While NASA has carved out a modest but relatively stable wedge in the overall federal budget, some wonder whether that wedge is big enough for the agency to do all it has been tasked to do, from kickstarting an ambitious human exploration program to maintaining its portfolio of science and aeronautics research. Meanwhile, long-term budget pressures, particularly from entitlement programs as the Baby Boomer generation approaches retirement, could make it difficult for NASA to retain even its current share of the budget over the long haul. That requires NASA to both better justify the importance of a government space program while also seek means to work with the private sector to do more for less—approaches that NASA administrator Michael Griffin described in two very different speeches last Monday.

Defining “The Space Economy”

In June, NASA released a new strategic communications plan to better communicate the agency’s mission to a public that was skeptical or simply unaware of the relevance the agency has in their lives (See “NASA’s new outreach plan”, The Space Review, July 2, 2007). Part of that plan was a concept called “The Space Economy” that is intended to demonstrate the full effect of space exploration on the economy: “the full range of activities and use of resources that create and provide value and benefits to human beings in the course of exploring, understanding and utilizing space.”

“Fundamentally, NASA opens new frontiers and creates new opportunities,” Griffin said. “And because of that, we are a critical driver of innovation, but not in a way that just creates jobs. We create new markets, and new possibilities for economic growth, that didn’t previously exist.”

Griffin discussed The Space Economy concept during a luncheon speech before an invited audience of over 100 people from the space industry at a downtown Washington hotel on Monday, September 17. The speech was the first in a new lecture series established by NASA to help celebrate its 50th anniversary next October (a concept also included in the aforementioned strategic communications plan.) In his remarks, he made it clear that his Space Economy idea went beyond simply embracing spinoffs. “I do think there is a very strong link, the strongest possible link, between doing the hardest thing people do, which is flying in space, and how it benefits the rest of our economy, and indeed our whole way of life,” he said.

“Fundamentally, NASA opens new frontiers and creates new opportunities,” he continued. “And because of that, we are a critical driver of innovation, but not in a way that just creates jobs. We create new markets, and new possibilities for economic growth, that didn’t previously exist. We’ve taken at NASA to calling this ‘The Space Economy’. It is an emerging economy, but it a robust one even so.”

Griffin noted that the higher standards of performance companies are held to when working on space projects have an as-yet unmeasured effect on the overall economy. “I often wonder if it might be possible to quantify the value to society of upgrading the standards of precision to which the entire industrial base of that society operates,” he said. “How do we value that asset? I don’t know, but I am absolutely convinced that it is real and, without the space industry, we wouldn’t have it.”

He also discussed competition among nations, not in space per se, but in innovation and economic development. “Economic growth is driven by technological innovation. Societies that foster it lead the pack, and others lag behind. But if technological innovation drives competitiveness and growth, what drives innovation? There are many factors, but the exploration and exploitation of space is one of those.”

Another factor in innovation and economic competitiveness that Griffin said is often overlooked is the image that various nations project to the world. “The nation that appears to be at the top of the technical pyramid has taken a very large step towards being there in fact,” he said. “Developing countries like China recognize the value of space activities as a driver of innovation, a source of national pride, and membership in the most exclusive of clubs, that of spacefaring societies.”

“NASA is uniquely positioned to drive the space economy with both substance and style, because our mission requires us to push the technological envelope every single day and to do it in the most publicly visible manner of any human enterprise.”

In comments during a Q&A session that received more immediate attention than his formal remarks, Griffin extended that theme to include human exploration of the Moon. “I personally believe that China will be back on the Moon before we are,” he said. “I think when that happens, Americans will not like it, but they will just have to not like it. I think we will see, as we have seen with China’s introductory manned space flights so far, we will see again that nations look up to other nations that appear to be at the top of the technical pyramid, and they want to do deals with those nations. It’s one of the things that made us the world’s greatest economic power. So I think we’ll be reinstructed in that lesson in the coming years and I hope that Americans will take that instruction positively and react to it by investing in those things that are the leading edge of what’s possible.”

And Griffin believes that NASA is well positioned to be at that leading edge. “NASA is uniquely positioned to drive the space economy with both substance and style, because our mission requires us to push the technological envelope every single day and to do it in the most publicly visible manner of any human enterprise.”

The economies of space

Near the end of his luncheon, Griffin talked about the role of government in helping enable new markets in space, specifically citing the Commercial Orbital Transportation Services (COTS) efforts currently underway. “To me, this is exactly analogous to the way that government policy—enlightened public policy—spurred the aviation industry of the 20th century,” he said, noting the huge strides aviation made in its first century thanks to such policy. “It’s a stunning achievement, and we want to do it in space.”

Griffin made similar comments about COTS and the role of the public and private sectors about six hours later, during a speech at a meeting of the MIT Enterprise Forum in Arlington, Virginia on “Emerging Space-Dependent Companies”. However, speaking to a group of businesspeople, many of whom not involved in space ventures at all (and thus with virtually no overlap with his luncheon audience), Griffin focused not on the “Space Economy” concept but instead on the emerging markets and technologies in space and the role government should play to enable them.

Some markets, like communications, are already mature and lucrative: “A license to a communications satellite slot is a license to print money,” he said. Commercial remote sensing has emerged more recently; he said he was “optimistic” about the prospects there despite some concerns about the long-term commercial viability of some of the companies in the market who depend on government funding.

Griffin was more skeptical about other space markets. He described navigation as a utility that has become critical to so many applications on the Earth. However, because of the importance placed on satellite navigation, he doubts that it will be a commercially provided service in the foreseeable future. “Their absence would be so catastrophic that I think no reasonable government will risk that absence” by depending on a commercial service. Regarding small satellites, or microsats, Griffin acknowledged their potential, but noted that these spacecraft are still looking for a “killer app” needed to really revolutionize the market. “Too many people, in my estimation, look upon small satellites almost as a religion,” he said.

“I personally think that there is at least some likelihood that efficient orbital transportation will derive from a successful suborbital transportation provider, rather than the other way around,” Griffin said.

One market that Griffin was remarkably bullish about is suborbital spaceflight. “Is there a market for suborbital transportation?” he asked. “I think there is.” Space tourism is the market most often associated with suborbital vehicles, and Griffin said such a market most likely exists, even if it is not necessarily a large one. Another customer, though, might be the government, who could purchase such flights for astronaut training or, later, point-to-point package delivery. The government, Griffin said, might well be a major, even lead, customer for such services.

“It might well be that the commercial space tourism market follows on the heels of the government’s desire to hire suborbital transportation for the purposes of, say, training astronauts,” he said. “If I was still at the helm of NASA when such a service became available, I would guarantee you that we would use it to begin entry-level training of astronauts.”

Another aspect of suborbital spaceflight that Griffin emphasized is its potential role in helping develop low-cost orbital spaceflight. “I personally think that there is at least some likelihood that efficient orbital transportation will derive from a successful suborbital transportation provider, rather than the other way around,” he said. “The efficiencies learned by operating such a fleet [of suborbital vehicles] in the commercial marketplace would in fact carry over to the orbital marketplace.”

That emphasis on space transportation goes back to COTS, and the proper roles of the public and private sectors. Griffin said there was a need for a “public policy shift” in order to embrace a model of government support for space transportation and the overall space industry similar to how the government supported the fledgling aviation industry in the 1920s. The White House and Congress, he said, “need to decide that their grandparents got it right and set aside significant amounts of money to fulfill requirements so that this capability can be advanced.”

“From a public policy perspective, government investment in stimulating new capabilities by industry never fails to pay off,” he said. “We don’t live in a time when a significant majority of the Congress believes this to be the case. You don’t see legislation being introduced with this as a goal.”

He did warn, though, about going too far in the direction of incentives like prizes. “The people who suggest that we should put up a $100-billion prize for the first company to take us to Mars are idiots,” he said. “We need an appropriate balance between government sector activity and private sector activity. My point is that, for fifty years in the space business, we have not had that appropriate balance. We need to move more towards the middle.”

Right now, COTS is the pathfinder for that aviation-like model of support for the space industry, and the pressure is on. “I have threaded a very narrow path through the procurement regulations available to NASA to bankroll certain entrepreneurs, and may do so with others,” he said. “Now, I need one or two of them to be successful. Otherwise, I look like an idiot. If it’s successful I look like a genius. There’s a real thin line between those two.”


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