Thursday, February 3, 2011

Ditch Ag Subsidies - Double NASA's Budget

A little while ago I proposed that we should be able to get decently broad agreement on at least one deficit neutral budget proposal: eliminating all agricultural subsidies and doubling the size of NASA's budget. They're roughly the same size, and the contrast in their justifiability is stark.

Agricultural subsidies make everyone furious. They hurt the developing world. They hurt relations with our developed trade partners. They hurt small farmers. They hurt the environment. Oh, and they're completely insane when it comes to the economics of the question. I'm not aware of a single economist - left, right, or center - that likes agricultural subsidies. But they have concentrated benefits and dispersed costs, which makes the whole mess work out politically.

Space exploration and colonization is exactly the opposite - it has concentrated costs and dispersed benefits. That means it's the sort of thing government should consider doing, which is ultimately why the government is doing space exploration. But it also means it's going to have a very different set of incentives. Government has created concentrated benefits in the space programs with jobs (if you are from Florida, Alabama, or Texas you like NASA no matter what party you're from). But for the most part, the benefits accrue to future generations. Future generations don't vote, nor do they participate in the market. That means we underinvest - both publicly and privately - in space exploration and colonization. It's a market failure and a government failure, if you like to use that terminology.

I put together a few graphs, which I highly encourage people to repost, share, comment on and write their own posts on if you agree with me. The data is from Wikipedia and an agricultural subsidy data resource, which in turn derive it from OMB sources. One day I'd like to get into the original data myself, but for now this will do.

First - you'll see that nominal spending on agricultural subsidies and NASA are roughly on the same order of magnitude. Agricultural subsidies are somewhat more erratic, because they are influenced by price levels.

Sources for NASA here and USDA subsidies here.

What could a doubling of the NASA budget do? All kinds of things. It would be a good down-payment on Mars (even more so if we keep that spending level up). We are seeing a movement towards private space exploration, which is a very important trend. We could establish lots of prize funds with an extra $15 billion or so.

The last time NASA's budget was doubled from its steady state level we did great things. Here is the budget of NASA since 1958 in constant 2007 dollars:

When we made it to the moon in the late sixties, we were essentially doing it from scratch. We have much more groundwork laid today. If we could make this switch from subsidizing activity we have done for thousands of years to subsidizing frontier-expanding activity and maintain that higher level of spending in a deficit neutral way, we wouldn't have an Apollo program spike. We would have year after year of effort approaching what this endeavor deserves.

Eliminate all agricultural subsidies and double NASA's budget - spread the word, people.

Nobody has expressed the logic of overcoming externalities more eloquently than Armstrong: "one small step for man, one giant leap for mankind".


  1. Why do you think it's necessary (and desirable) for government to invest in space exploration? In almost all areas, the private sector has been the cause of breakthrough technologies. It leads the public sector in research and development by leaps and bounds. One reason might be that public organizations do not have the same incentive to find results quickly.

    Furthermore, you should consider the question: If NASA was disbanded, why is it a problem if nobody in the private sector invests in space exploration? If it's an unprofitable enterprise, that should lead you to see that consumer's do not value the results coming from the project.

    I don't want to get in a big public goods/externalities argument. I still think you're wrong (for various reasons). It's just food for thought.

  2. Mattheus -

    1. I think I've explained here and in past posts why it's necessary and desirable to make these investments - click the "Mars", "space", and "externalities" labels to the right and you'll find several treatments of it. I also talk about it here.

    2. I hope you're not reading me to be prefering the public to the private sector or downplaying the private sector. That would be a gross misreading of what I'm saying.

    3. When you read my reasons for thinking it's important to make these investments you'll understand why profitability is a poor measure of desirability in this case. I can assure you I am well aware of the role, importance, and mechanics of profit and loss systems.

  3. *I've explained why I think it's necesary, and of course, why its necessity is never something that can be nailed down conclusively. Not by me, not by you, and not by profit and loss either. It's an uncertain claim, but not a meaningless claim.

  4. What do you expect to gain from further space exploration conducted by Nasa?

  5. A colony would have already been established if the US would just balls up and back private property on the moon. It would probably involve developing some sort of mechanism to bid off property, but it would be a hell of a lot cheaper. And not to mention a lot more efficient than NASA. This would no doubt deviate from a strict "no government" principle, but space exploration is a difficult hurdle for individuals to jump when they live in statist world.

  6. EdP - You don't think anyone that goes up there and sets up a settlement wouldn't have broadly recognized homesteading rights? And you don't think commercial space companies know this?

    Would it be nice to define property rights in space better? Sure. But I can imagine that raises a lot of red flags among other space-faring countries. I think it's absurd to act like that's some kind of obstacle - people didn't fail to settle the West until that was figured out, and it's not preventing them from settling space.


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