Friday, March 28, 2014

Bob Murphy on public space exploration... not a pretty sight.

There is so much wrong with this post that I can't not respond. He doesn't grapple with the real argument put forward for public space exploration, he botches the socialist calculation debate, and he uses Firefly for evil.

The beginning is mostly factual. The Planetary Society wants high public spending on space exploration. It has Europa in its sights. I vigorously agree. Bob's position is that we should "privatize the whole enterprise".

He writes:
"Bastiat’s famous admonition to look at both the seen and the unseen applies just as much to grandiose space projects as it does to, say, sports stadiums: It’s not enough to ask, “Would humans benefit from a mission to Europa, if it were a free gift?” Rather, the question is, “Would humans benefit more from a mission to Europa, versus the best possible alternative use of the resources such a mission would require?”"
This really makes me wonder precisely what trade-off Bob thinks proponents like me are thinking of. The whole argument is that it is a beneficial use of resources relative to alternative uses. Nobody that I'm aware of has claimed that such endeavors are costless. But how do they compare to many other budget items? How does it compare to a future where space exploration is solely private? That's the question people are talking about. Instead of addressing that, we get opportunity cost explained again.

The next paragraph is really disappointing:
"All of the usual problems with socialist central planning–brilliantly explained by Ludwig von Mises and elaborated by Friedrich Hayek–kick in when it comes to space exploration. Remember, it took the brilliant and brave iconoclast Richard Feynman to get to the bottom of the space shuttle Challenger disaster. And less disastrous but more ridiculous, in 1999 NASA lost a $125 million Mars orbiter because two different teams working on the project had an English units / metric system miscommunication."
So this is not the Mises/Hayek insight on central planning at all. The claim is not that technical problems are unobtainable by public planners. Quite the contrary, it's pretty standard to highlight Soviet technical prowess. The Mises/Hayek point is that a central planner can't make the trade-offs necessary for a functioning economy because it cannot aggregate private information on scarcity, cost, and value the way the price system can. Ironically, the technical issues were in the hands of private contractors for Apollo, Challenger, and every other achievement of the space program. I don't point this out to fault private companies. I, of course, am as vigorous a supporter of private space efforts as I am of public space efforts. It's simply to point out that the tragedies Bob raises have nothing at all to do with Mises and Hayek. (Unless the argument is that a private effort wouldn't hire such problematic contractors???... but something tells me that's not where he's going with this).

Much of the rest of the post makes an excellent case for private space efforts. The only problem is that by failing to engage the externality argument for public space exploration at all Bob presents a false choice. I have yet to come across a single advocate of a public space effort that wouldn't agree with this from Bob:
"There are plenty of commercial applications of modest space exploration efforts, including obvious things like placing satellites into orbit but also more exotic possibilities such as space tourism and mining asteroids. Pure profit-and-loss calculations from retail sales don’t have to be the sole driver, either; the X Prize showed the potential for spurring innovation with a relatively modest amount of donated money."
But that's not the point. Or at least it's not the point that Bob is trying to make here, which is that there's a problem with public space exploration. Let's review - first he reminds us we need to think of opportunity costs which I think everyone agrees on and is definitely not a case against public space programs. Second, he botches the socialist calculation debate which even if accurately rendered is not an argument against a public space program. Third, he makes some good points about valuable private efforts, which is not an argument against a public space program.

So what is the argument?
"In conclusion, my guess is that The Planetary Society’s suggestion that citizens of the United States should effectively spend (in their role as current and future taxpayers) $1.5 billion per year on planetary research is absurd".
His "guess".

Look, that's fair enough. This is not a case where we have hard data to make these assessments. Everyone is making judgments based on a sense they have about the human future and I'm no different. But let's not pretend that opportunity cost, the feasibility of socialism, or the benefits of private exploration have a thing to do with the argument here. We all have this foundation. The question is, is there a reason to think private investment is not optimal. If so, then we can accept the logic of Bastiat, Mises, Hayek, and the X prize and still support a public program. If not, then Bob's position holds completely independent of Bastiat, Mises, Hayek, and the X prize.

Finally, there's the Firefly thing. It lingers in the background of the post, but let's be clear about one thing. The Independents were a loose federation of self-governed planets that resisted tyranny. They were not anarcho-capitalists like Bob. They were federalist liberals like me. And Joss Whedon is no Robert Heinlein (although Heinlein is all over the map relative to the view of him that most libertarians have).

17 comments:

  1. You're right on the money wrt the differences between technical and economic efficiency.

    But, I think there is an application of the calculation debate here. It's just that it doesn't rule out a public space program, it just helps frame when a public space program is the best alternative. One could ask whether the Federal government has the local information to run a space program well, or whether there are incentives to punish over-investment and reward good investment. I think these are costs, which we can think about as transaction costs, that we should consider when weighing the option of a public space program. But, we (those who oppose government investment) also have to recognize that if space exploration suffers from an externality, there is room to consider the role of government -- it's an empirical question.

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    1. Btw, many libertarians (including) economists made the same mistake with Obamacare. They interpreted the failures with the website as a vindication of the socialist calculation argument...and it's not.

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    2. re: "But, I think there is an application of the calculation debate here. It's just that it doesn't rule out a public space program, it just helps frame when a public space program is the best alternative. One could ask whether the Federal government has the local information to run a space program well, or whether there are incentives to punish over-investment and reward good investment."

      Right. SCD can be used to dispute any public program, but you have to confront the externality argument to give it any traction, which is the one thing Bob didn't do. SCD could be thought of as the generalization of the point that public calculation tends to be not very good. In a socialist commonwealth, that's disastrous. In a society with liberal institutions and feedback loops that may help policy be guided towards high need areas??? You'll still have problems - I think we all agree on that - but it's a much harder case that is not solved just by citing the SCD.

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    3. How do externalities change anything? If a scenario precludes rational weighing of costs and benefits for some reason, it doesn't matter that there are externalities because by assumption, they can't be rationally accounted for.

      Besides there's a huge negative externality to state run programs. If I start my own space program and overspend, I bear the full costs of my errors. If politicians overspend on some program, they experience almost none of those costs personally. Maybe someone should devise a mechanism to internalize the costs of the decisions made by politicians.

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  2. Calm down. You may be right. You may not... Read his Transformers post. You'll feel better.

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  3. "$1.5 billion per year on planetary research"

    Is the proverbial mouse fart in a windstorm.

    What we know is that government sponsored research and development in the 40s, 50s and 60s led to enormous unforeseen spin off benefits. Even the Bessemer process, which I consider the economically most important invention since the steam engine was motivated by a desire to sell steel to the English government. The Haber-Bosch process, which is extremely important, seems to have been at least partially motivated by a desire to sell explosives to the German government. We could benefit from greatly increased research spending. If we have to say the reason for the research is space exploration to justify the expense then so be it. The benefits will not be in sending a robot to Ceres.

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  4. Even worse than space programs, there's this damnable submarine-launched-missile thing. Since the 1950's, the US government has wasted literally hundreds of billions of dollars building these underwater thingies that go all over the world. carrying dozens of nuclear bombs on little rockets that can't reach earth orbit. And the blasted things have never made a single penny for the taxpayers.

    We ought to give up this silliness immediately, and transfer these submarines and their useless cargo to real businessmen, to entrepreneurs capable of seeing and grasping opportunity, who will have the courage to reap the rewards they so richly deserve, along with our heartfelt admiration!

    Can I be a professional economist now?

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    1. Good point Mike Shupp, but I think this guy beat you to it.

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    2. A single modern aircraft carrier costs about ten billion dollars to build.

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  5. Bogart:
    I figure that NASA has cost me about $2800 with $2000 coming from taxes and $800 being debt contracted in my name. So I want the money. I do not believe that NASA is worth the billions spent on it and I don't care what some Pro-Space Exploration group says. You can write the check if you want. I am sure that NASA won't. What is worse is that the debt is stolen from currency that I have earned.

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    1. NASA purchasing was important to the early transistor industry. You probably got your monies' worth and more just from the financial support NASA gave to the improvement to transistors. Some of the money spent on NASA was probably really military research in disguise and would have been done even without the space program.

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  6. This comment has been removed by the author.

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  7. Public investment isn't optimal because there is very little public support for this sort of thing and it is unlikely that much support will be coming NASA's way in the foreseeable future.

    If you want to see a much more useful and cogent back and forth on the subject of the public funding of science see here: http://www.cato-unbound.org/issues/august-2013/who-pays-science

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    1. As far as I know, public opinion polls don't say anything about the optimality of a policy. I could be wrong - what are you getting at?

      I've seen this Cato Unbound issue before. Kealey is a thoughtful guy, but I think there's a lot that he misses about the economics of the issue.

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  8. But they do say something about how tax dollars are spent.

    Well, if you view the Orthodox Baconian view as the right view then I am sure that is the case. His argument is much more extended and built up in his book on the subject.

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    1. I am somewhat afraid to ask why you are bringing the "Orthodox Baconian view" into this.

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  9. Because that's the view that he expounds on as the erroneous one.

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