By James Pethokoukis, Tim Fernholz, Sara Seager, Stan Veuger, & Matt Weinzierl

Is a thriving space economy
a real possibility in the future? How will geopolitics impact America’s
involvement in outer orbit? Is returning to the moon a priority, or should
explorers focus on other domains and opportunities? Recently, I explored these
questions in a discussion with Tim
Fernholz, Sara Seager, Stan Veuger, and Matt Weinzierl.

Tim Fernholz is a senior reporter at Quartz, and he is the author of the 2018 book, Rocket Billionaires: Elon Musk, Jeff Bezos, and the New Space Race. Sara Seager is a professor of planetary science and physics at MIT, where she is known for her research on extrasolar planets. Stan Veuger is a resident scholar in economic policy studies at AEI, as well as a visiting lecturer of economics at Harvard University. And Matt Weinzierl is the Joseph and Jacqueline Elbling Professor of Business Administration at Harvard Business School, where he has recently launched a set of research projects focused on the commercialization of the space sector and its economic implications.

Below is an abbreviated transcript of our
conversation. You can read our full discussion here. You can also subscribe to my podcast on Apple Podcasts or Stitcher, or download the podcast on Ricochet.

In the 1960’s, many people envisioned a thriving space economy — it wasn’t just about
exploration or the military. But is there a practical economic model for that?

Weinzierl:
This is perhaps the central question, which has not been solidly
answered. But we do have some possibilities: manufacturing in space, extracting
space resources, and tourism.

One important thing to realize is that economies are based on humans interacting with each other. So part of the reason why we haven’t had a space economy before is that we don’t have a lot of people in space. My hope is that, if we routinely start sending people to space, eventually we’ll start to get that economy and demand organically.

Veuger:
And to the extent that there is a space economy right now, it’s mostly
satellite-based, which is providing services on Earth. So, does that count as a
space economy?

Seager:
Well, we have the perfect example of that unfolding in SpaceX’s Starlink and
Amazon’s OneWeb. Not only are these services providing income for the
companies, but Starlink is also developing the capability that SpaceX will need
on Mars to communicate with each other and back to Earth.

Weinzierl:
Exactly. The main reason that SpaceX is getting into Starlink is because they couldn’t
get enough money in the launch market to fund their dream of settling Mars. Satellite
internet and telecommunications is a lucrative business to pursue in the
meantime that funds their broader ambitions.

Matt mentioned manufacturing and mining.
Do either of these sound like the killer app for the space economy?

Seager:
I think asteroid mining is another promising area for development. While we don’t
yet know how to drill on the asteroid or how to chemically sort the material that
we bring back, we do know how to land on an asteroid and bring material back. So
we can get at least 90 percent of the job done now, and we will absolutely be
able to put all the components together soon. But the investment required for
this is decades-long, which is just so far away that people don’t want to
really engage.

Fernholz:
It would be really great for the in-space manufacturing industry if Merck would
come out and say, “We finally figured out how to crystallize the COVID cure,
and it can only be done in zero-gravity.” But so far, we haven’t had anything
like that.

There’s
a company called Made in Space that’s very excited about its fiber optic cables
and its work on the ISS. And while we haven’t found that real added value yet,
maybe it’s a question of economies of scale. That’s why reusable rockets are
such an emphasis for these people, because that’s how you lower the access cost
to do those things. It’s still an open question.

Weinzierl:
We’ve been looking for that killer manufactured product for decades. Even back
in the ’60s and ’70s, people were saying, “What could we manufacture in space
that we could only manufacture in zero-gravity?” But I think that the real
question is where to get the patient capital.

To me, the answer appears to be the billionaires — they seem willing to put 50 years of patience into this. We should also mention that there have been some recent innovations by the finance sector to try and figure out some of these problems, whether it’s using SPACs, roll-ups, or the Space ETF.

Are you generally comfortable with the
privatization of space and, as a result, perhaps a changing mission for NASA?

Seager:
I’m thrilled about the privatization of space. Private companies’ involvements are
actually bringing down the cost to go to space. And everyone benefits from this,
not just their companies. I recently led a mission called TESS that flew up on
a SpaceX Falcon 9 rocket. The rocket, though much larger than what was needed
for the mission, was still cheaper than other options because of the private
sectors’ technological investments.

Privatization
also makes the idea of sending a small rocket to Venus or Mars more feasible. Right
now, we spend billions of dollars on missions but don’t go very often, nor do
we go with something that everyone has a part of. Privatization would change
that, and thus change the scope of how space science operates.

In terms of NASA, you hear that, historically, they used to be less risk-averse. Now, NASA is much more conservative — nobody wants to see anything go wrong. So opening it up to letting private companies take on part of this will allow for more risky and innovative ideas to flourish. It’s very complimentary, actually.

Veuger:
As more parties get involved, will the peaceful nature of these projects be jeopardized?
Surely there will be a national security dimension to much of this, so might we
become very protectionist? Will creating this private space economy lead to
those kinds of tensions and ultimately backfire?

Weinzierl:
I’m optimistic because I think that there’s a lot of shared interest in
capturing the surplus that can be had by successfully building the space
economy, so there’s incentive for people to get around the table and figure it
out. However, we have a lot of work to do in bolstering current international
treaties, because questions regarding property rights, taxation, and rule of
law still need to be figured out.

What are everyone’s current thoughts
about exploring the moon, Mars, and Venus?

Weinzierl:
Many see the moon as a practice location for Mars. Given that it’s a different
environment, how much they’ll really learn is up for debate, but there are
certainly benefits.  

Fernholz:
I think a top reason for going to the moon, previously, has been good jobs in
Huntsville, Alabama. Going forward, an obvious one is water. There are a lot of
people who think harvesting that water could be an enabler for businesses in
low-Earth orbit or for longer-term stays on the moon. There’s also interest in
doing radio telescope observations from the far side of the moon.

Ultimately,
I think the exploration driver is going to be geopolitics. Under the current
regime of lunar laws, you can’t interfere with what someone is already doing. This
means that the first country to put a telescope on the moon will essentially prohibit
others from landing there. This could create a land grab on the moon. And if
China is serious about landing people on the moon and continues to head in that
direction, US leadership will have to respond. So geopolitics, alongside the
ambitions of the private space sector, will be the main drivers of moon
exploration.

Seager:
In terms of telescopes, the moon would really only be useful for radio astronomy.
Because of the regolith, it isn’t an effective place for other telescopes, say
visible wavelength ones.

My main interest is in Venus. We’re on a big tangent in this — what used to be crazy — idea that there could be microbial-type life floating around in the Venus clouds. Last fall, I was on a team that made a big announcement about phosphine — a gas only produced by humans or bacteria in oxygen-free environments — on the planet. And while there’s been controversy and pushback about the reports, the discovery shone a light back on Venus.

We
haven’t truly gone down into the Venus atmosphere in about four decades,
meaning it is really time to go back. And now we have a small, handpicked,
privately funded team designing a series of missions that could go to Venus in
2023 and look for signs of life in the atmosphere.

What’s
the best case for being interested in space and devoting a lot of effort to
exploring it, especially when there are a lot of problems right here on Earth?

Seager:
Isn’t part of being human doing great art, music, and exploration? It’s also a
jobs program — it takes money and redistributes it, which eventually trickles
out.

Weinzierl:
Relatedly, there’s a lot of concern about secular stagnation among some
economists. But if you think about some of the things people point to — the
lack of a frontier and capital-intensive investment, or the need to push really
hard with high-fixed costs — space has all of that going for it. There’re huge opportunities
out there for future human flourishing and experimentation that we don’t have any
more on Earth because we lack the frontier.

Fernholz:
Never before in history have people’s daily economic fortunes been linked to
space like they are today. Whether it’s GPS, increasing internet access, or remote
sensing, all of these things are making people’s lives better right now and
will hopefully continue to do so. It’s also a good technology development
system for a lot of fundamental research and science that’s important, aside
from the science that it’s actually designed to do.

Veuger: I agree with Sara — part of our purpose as a species is to explore the universe and discover its meanings. The side advantages of scientific progress and adding to aggregate demand are helpful, but the first and foremost purpose is the generation of knowledge about the world that surrounds us.

James Pethokoukis is the Dewitt Wallace Fellow at the American Enterprise Institute, where he writes and edits the AEIdeas blog and hosts a weekly podcast, “Political Economy with James Pethokoukis.” Tim Fernholz is a senior reporter at Quartz, and he is the author of the 2018 book, Rocket Billionaires: Elon Musk, Jeff Bezos, and the New Space Race. Sara Seager is a professor of planetary science and physics at MIT, where she is known for her research on extrasolar planets. Stan Veuger is a resident scholar in economic policy studies at AEI, as well as a visiting lecturer of economics at Harvard University. And Matt Weinzierl is the Joseph and Jacqueline Elbling Professor of Business Administration at Harvard Business School, where he has recently launched a set of research projects focused on the commercialization of the space sector and its economic implications.

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