Montreal, November 15, 2004  /  No 148  
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Dr. Edward Younkins is a Professor of Accountancy and Business Administration at Wheeling Jesuit University in West Virginia. He is the author of Capitalism and Commerce.
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by Edward W.Younkins
          The existence of NASA, a taxpayer-funded monopolist of space transportation, historically has stifled the development of a private space transportation industry.  
          Space is a commercial frontier as evidenced by its potential uses, including: the use of space as a waste-disposal site; private-sector operation of reusable launch vehicles; commercial passenger-carrying space transportation vehicles (e.g., space tourism in Low-Earth-Orbit), use of the U.S. portion of the International Space Station as platforms for developing new products and services; the establishment of hotels, labs, or factories in Low-Earth-Orbit; in-orbit use of the Shuttle fleets, external tanks as habitable environment for lab space and other activities; and the generation of low-cost electrical power using orbiting microwave or optical "mirrors" or satellites outfitted with large photo voltaic cell arrays.
          Recognizing the need to back the government out of civilian space activities and to allow imaginative private sector ideas to flourish, Congress passed the Commercial Space Act of 1998. This step toward privatization: (1) allows the Federal Aviation Administration (FAA) to license the launch and landing of reusable launch vehicles and commercial payloads; (2) mandates the use of commercial launch services for most government payloads; (3) requires government to purchase space science data from private companies; (4) requires NASA to study commercial possibilities for the International Space Station and further privatization of the Space Shuttle; and (5) streamlines licensing requirements for remote sensing satellites. 
          A contest was set up in 1996 to promote the development of an efficient, low-cost, craft for space tourism in a similar way that prize competition spurred commercial aviation in the early 20th century. The best known of these early contests took place in 1927 when Charles Lindbergh made the first solo, non-stop, trans-Atlantic flight from New York to Paris to claim the $25,000 Orteig Prize. The privately-funded $10-million Ansari X Prize was to go to the first private party to put a craft capable of carrying three persons into space twice within a 2-week period. Twenty-six teams were motivated to register for the X Prize competition. 
          On October 4, 2004, the 47th anniversary of the launch of Sputnik, SpaceShipOne (SSO) became the first private vehicle capable of carrying three passengers to fly into space twice within a two-week period. The $10 million prize will be paid by an insurance company that provided the X Prize Foundation with a "hole-in-one" type of insurance policy. 
          SpaceShipOne was funded by Microsoft co-founder Paul G. Allen, designed by aviation legend Burt Rutan, and constructed by Rutan's company, Scaled Composites. The technology is owned by a Paul Allen company called Mojave Aerospace Ventures (MAV). 
          The first privately-manned test flight took place last June 21 when Mike Melvill piloted SSO to a height of 100 kilometers (62 miles). The October 4th flight was piloted by Brian Binnie and Melvill flew the flight the previous week. These flights mark the beginning of the private spaceflight revolution. 
     “The private sector understands the moneymaking nature of space travel. Free-enterprising people, spending their own money, would find cost-effective ways to get to space.”
          On September 27, 2004, Sir Richard Branson, the British entrepreneur, announced that Virgin Group had contracted to license the technology to provide privately-funded spacecraft for carrying commercial passengers on space flights. Virgin created Virgin Galactic which will become the world's first commercial space tourism operation. Rutan will build rocket planes like SSO for Branson who will offer suborbital and eventually orbital flights into space. The suborbital flights will be priced between $190,000 and $205,000. 
The romantic frontier 
          As a symbol of freedom and adventure, space is also a romantic frontier. The 1999 film, October Sky, based on Homer Hickam's biographical novel, Rocket Boys, illustrates the excitement, motivation, and sense of personal potential and achievement that can result when private individuals set out on their own to conquer the final frontier. Just after Sputnik I was launched on October 4, 1957, three boys from a poor dying mining town in southern West Virginia decide that they are not about to turn over outer space to the Communists. Over a three-year period, Hickam and his friends learn a great deal about rocketry, successfully launch numerous rockets in front of large supportive crowds, and eventually win the National Science Fair. 
          NASA, a government bureaucracy founded in 1958, has little reason to develop inexpensive space transportation. Whereas entrepreneurs are rewarded when they cut costs, public managers are rewarded when they increase the size and scope of their programs and increase their budgets. In addition, public managers avoid risk by inflating their costs – errors could lead Congress to cut NASA's budget. 
          Unlike the trial and error approaches of private entrepreneurs, NASA's program is run as a centralized bureaucracy. After carefully studying all of its options and considering the political aspects of the program, bureaucrats choose the one best approach to an opportunity or a problem and massively fund the program until it works. 
          Space travel is not too costly for the private sector. The free market is capable of funding safe space exploration and tourism. For the last fifty years, advocates of a government run space program have maintained that the enormous amount of capital and resources required can best be obtained by government and that the cost was just too high for the private sector. Of course, it was the government's emphasis on a space "program" that entailed a single concerted effort by a bureaucratic empire-building institution such as NASA using tax dollars to fund its projects. It was government that kept the cost high and that enhanced NASA's monopoly through subsidization, legislation, and regulation. NASA has come to be viewed by many as a vast, nationalized, high-tech jobs program. 
          NASA spends money that is taken from taxpayers. If space exploration had occurred in the private sector, funds would not have been diverted from uses that would have better met consumer preferences. The private sector understands the moneymaking nature of space travel. Free-enterprising people, spending their own money, would find cost-effective ways to get to space. In a free market, individuals search for and adopt the best methods. There would be more flexibility with competing private companies using a variety of approaches and launch vehicles. 
          Space entrepreneurs view space as a place for people to work, vacation, study, and live. Manufacturing, tourism, and exploration in space can be better provided by the free market than by centralized planning by a bureaucratic machine. There can be an exciting future for science, business, and industry in space. Of course, for this to occur, we need to further remove bureaucratic barriers to private space development and to establish a system to secure and protect property rights and claims in space that is recognized by all nations.