A lot of his post is taken up with discussing inadvertent tech contributions by government. NASA likes to call these "spin-offs" and makes a big deal of them. I tend to agree with Ryan that NASA spin-offs aren't a huge contribution to human welfare, if for no other reason than that they're made for environments completely different from this planet. That's why we have such great military spin-offs - because the military is operating here on Earth and has a fairly strong interest in developing technology to keep Americans alive and comfortable here on Earth! A lot of NASA's efforts have been focused on keeping Americans alive in a vacuum or keeping them from burning up in the atmosphere. Most of us don't spend much time in vacuums or blasting through the Earth's atmosphere so while there are some interesting NASA spin-offs, none have really revolutionized our lives in the same way that some other government agencies have.
This is not a new perspective for me. I've complained about how NASA's PR people put way too much emphasis on the spin-offs before (here and here and probably elsewhere too). From an economist's perspective it completely misses the point (you have to keep reading a little longer to get to "the point" - I'm going to address a few more thoughts from Ryan first).
I'll agree with Ryan and maintain that we all understand and can skip over opportunity cost. Nobody thinks we should shutter the courts or take bread from the poor to go to Mars.
Diminishing marginal returns
He mentions diminishing marginal returns in an odd way, I think. Ryan writes:
"Then there is also the issue of diminishing marginal returns, which is just another way of saying that, unless space exploration is “weird” and we need to dump a TON of money into it (in absolute terms, not as a percentage of the economy), we will get fewer returns for the consumer per dollar spent the more we spend on it."So - to put it simply - no. There's no particular reason to think that even standard, ho-hum production functions are globally concave. In fact there are quite good reasons to think that at certain points they aren't concave. But even more importantly, we invoke diminishing returns as economists because we're normally thinking of profit maximizing producers. If a profit maximizing producer hits an increasing returns point of the production function she's going to keep producing until it's not increasing returns anymore. So unless you're interested in optimal firm size and monopolies, you're going to be talking about diminishing returns because that's the relevant zone of the production function if we're dealing with profit maximizers.
Does anyone think NASA or Congress are profit maximizers?
There are two other issues around diminishing returns that I'd raise before moving on. First, we have to think about what production function NASA is currently operating on (I refuse to say "optimizing"). One of the big frustrations with NASA is that it isn't even trying to explore and settle space. So doubling NASA's budget when it's doing what it's currently doing may not double our space exploration because that's not even what NASA is producing right now. It's what it could produce, of course. We need to keep that in mind when we try to think through the state of marginal returns facing NASA. Another way to think about this is to consider what we'd expect if SpaceX had a budget maybe 1.5 times NASA's. Does anyone doubt that we would have human beings walking on the moon, Mars, and an asteroid in a decade or so? NASA looks like it has diminishing marginal returns to human exploration because NASA isn't doing much in the way of human exploration (it's doing a lot of great stuff with robots - there missions are consistently exceeding expectations). The final point I'd make on diminishing marginal returns is just that it's an odd thing to invoke when we're talking about technological development. Spillovers and the nature of information as an economic good usually lead us to think that there may be increasing returns in these types of endeavors. These sorts of models apply to not-particularly-high-tech production too, but it's especially true of the research sector (see: Paul Romer).
Here again I may agree with Ryan, but maybe not. It kind of depends on what we're talking about. If we're talking about planting a flag I tend to agree with him. But if we're talking about making humans an interplanetary species and actively working to make them an interstellar species I think it could genuinely revolutionize the way the human race sees itself. I'm not sure current surveyed psychic benefits are the best way to measure this. How many people dismissed the next information-age product as it was coming out that are now considered essential to our lives? I remember my dad used to trivialize cell phones when they first came out. They were superfluous! People wouldn't pay attention to each other anymore! They were unnecessary - we've already got a land line! I don't want people to bother me twenty four hours a day! Needless to say, he underestimated the value of the technology. I'm not convinced that people who have never experienced a new experience are the best at evaluating the psychic benefit of that experience.
What is the psychic benefit of the European exploration and settlement of North America? What is the psychic benefit of living in America today with institutions that forward-looking liberals set up? Even given all the illiberalism and tragedy that came with the settlement of North America - and those were substantial - we seem to get a lot of psychic benefit from it, and indeed the rest of the world seems to like the fact that the United States and other liberal democracies like Canada and Australia ended up getting founded. Now imagine a bunch of liberals who have moved past slavery and genocide settling a whole planet where there are no natives to abuse in the first place. Isn't it reasonable to assume that the psychic benefits would far exceed those of the exploration and settlement of North America.
I find Ryan's statement that the psychic benefits accrue to the well educated strange and unconvincing. Why am I seeing so much of this lately? It's like "that only helps the rich and educated" is tacked on to every single policy idea libertarians don't like lately, whether it makes a lick of sense or not.
OK, I've kind of alluded to the point along the way, plus I don't think it was particularly unclear in my original post. The point is that in one hundred years humans are living on Mars and the moon and we are thinking about how to get to the stars. As an added bonus, the human species is more robust to catastrophes on Earth. It will be an inflection point in the history of the human species that will be remembered for millennia. The industrial revolution will be considered a minor antecedent to the point when we "slipped the surly bonds of Earth". When I think of what science can do, more gadgets that we enjoy today are always nice, but I think of the millennia of humans to come and how they will live as well. Think of what a big difference it makes that you're alive in 2013 rather than 1913 or (God forbid) 1813. The idea of living in 1013 is unthinkable. The point isn't an Apple product, although that's obviously great (I'm told - I have no Apple products - my wife has one). The point is a new level of human existence and mastery of its surroundings. This, of course, is not necessarily going to motivate a welfare maximizing individual on Earth today, even with relatively low discount rates. That, of course, is part of the problem. Human flourishing is both a product of optimizing behavior and a hostage to optimizing behavior.
Demand for science
The end of Ryan's post is weird too. He writes:
"Reallocating a ton of money into prizes, even though that would ruffle the feathers of entrenched interests, rather than “increasing demand” for science, would make sense first."Maybe I'm missing something, but isn't offering prizes to produce science the same thing as increasing the demand for science? Of course prizes are an important, proven vehicle for generating science. That hardly invalidates my point - in fact it supports my point! There are two points I'd make on prizes. First, they're best for generating activity on something we don't know how to do well. In that sense they're great for space exploration, but they're not necessarily the best for all scientific work. Still, it's an important strategy. If you're curious about why economists like prizes see Wright (1983) and Nalebuff and Stiglitz (1983). The second point I'd make is that the culture of science itself is kind of like a big prize fund. This point has been made before by Richard Freeman and Paula Stephan (can't put my finger on the link right now). When you do science you produce a lot of output for low returns and recognition in hopes of one day being perceived as someone who revolutionized the field. You're not producing widgets where you know what kind of output trajectory to expect. You're exploring the world around you in the hope of discovering something big. Everything that contributes to the narrow availability of recognition contributes to this behavior. The result is that a lot of research gets produced in pursuit of a relatively small prize down the line. This is just to say that I agree with Ryan that prize dynamics are a very important way in which we increase demand for science and they could be more fruitfully applied to space exploration than they currently are.