And Clark Lindsey responds, also explaining why commercial crew really is commercial, honest, even it it is a monopsony (which it won’t be).
13 thoughts on “Mike Griffin Speaks”
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And Clark Lindsey responds, also explaining why commercial crew really is commercial, honest, even it it is a monopsony (which it won’t be).
Comments are closed.
Clark Lindsey:
Contractors in a typical NASA/DoD aerospace project like Constellation are also, of course, commercial.
In other words, NASA projects have been “commercial” all along, according to Clark Lindsey. Just as taxpayers have been the “customers” of the IRS all along. More euphemism creep as governments and government contractors try to pretend that they are just like real competitive markets. Any language we might try to use to distinguish the free markets we fought for in the Cold War from the governmental — including “commercial”, “market”, “privatize”, and “private” itself — gets overloaded to mean something governmental, such as government contracting.
Thus the need for the phrases “real markets”, “real commerce”, “real privatization”, “real customers”, etc. to label what Thatcher and Reagan and company were talking about about when they used terms like “markets” and “privatization”. They certainly weren’t talking about fixed-price government contracting, as Clark Lindsey would have it . They were talking about actual free markets where people voluntarily pay for the services they want with their own money, and both suppliers and customers compete to provide and purchase the goods and services.
As for monopsony, that is indeed the status of HSF and to expect a few more government contracts to change that is the worst sort of economic fantasy. Nearly fifty years after Yuri Gagarin’s stunt, over 99% of the money in HSF still comes from government space agencies: it is still astronauts for the sake of astronauts. We can’t privatize an economic fantasy, (by which I mean real privatization into a real free market, not just relabeled government contracting), we can only shut it down when the taxpayers get tired of subsidizing it.
“In other words, NASA projects have been “commercial” all along, according to Clark Lindsey. Just as taxpayers have been the “customers” of the IRS all along.”
Oh come on. I’m just pointing out the obvious fact that Boeing, L-M, etc., which have actually built NASA’s hardware, are private, for-profit companies, i.e. commercial. That’s not euphemism, that’s standard definition. You also leave out the whole part that follows where I point out that cost-plus contracting in NASA-led projects turns the contractors into pseudo-governmental entities and NASA loses the advantages of a commercial system.
You go on to imply that I and others are redefining commercial but you are in fact giving it a definition of your own. Most people, and most economists, would say that when a company sells a good or service to the government after competitive bidding that this is a commercial, free market transaction. You are claiming that it’s only commercial if sold to a private person or company. You are free to take that view but it’s not one that is widely held.
Furthermore, commercial has to be used in context. The issue in the NASA budget debate is over whether NASA should use a “commercial services” approach rather than using just its own internally designed and developed system made by contractors. The great thing about this services approach is that, as I explained, it maintains the advantages of a competitive commercial system. This not only benefits NASA but will lead to lower cost access to space, which is what is needed to spur purely private HSF activities such as with Bigelow.
If “the taxpayers get tired of subsidizing” HSF I’m sure HSF will survive with private efforts alone. However, it will develop much more slowly than would be the case if there was a govt program that worked with private firms in manner that maximized cost-effective, productive approaches for both.
Private spaceflight must develop in a bootstrapping manner, i.e. develop both low cost transport and destinations simultaneously. As govt has done in many areas, e.g. building infrastructures for autos and aviation, developing the Internet, etc., it is perfectly appropriate for govt to assist with bootstrapping with commercial HSF.
Clark, your most recent link offers terrific insight and describes several obstacles that must be overcome before I am willing to say FY2011 is “commercial”
http://www.spacenews.com/civil/100402-commercial-crew-plan–hinge-risk-sharing.html
I readily agree FY2011 has potential to be far more commercial and many of the architects of FY2011 sincerely desire to be more commercial however whether they will succeed remains to be seen, especially if Andrew Aldrin’s views (see link) have a strong influence on the final result.
Hi Bill,
If Commercial Crew Services devolves into a de facto cost-plus arrangement then I definitely agree that it has lost most of the advantages that come with a genuine commercial deal. NASA needs to stand firm and insist that the companies take a substantial financial risk if they want to participate.
On the other hand, I think that its reasonable that the potential competitors start to negotiate with NASA over how the commercial crew agreement will work.
For example, for crew systems I think NASA would tend to go far beyond the COTS level of oversight and want extensive documentation and triple inspections for every nut and bolt. The companies should insist on a more macro system level approach for flight proven rockets.
Also, in COTS the funding was split roughly 50-50 between private and NASA. The companies may try to get NASA to take a bigger share this time. As long as the companies still have substantial “skin in the game” and the NASA payments are fixed price, milestone driven, I don’t think it’s a big deal.
Most people, and most economists, would say that when a company sells a good or service to the government after competitive bidding that this is a commercial, free market transaction.
Taking billions of dollars in tax money and spending it on political goals is not even in the same ballpark as a free and competitive market where many customers voluntarily purchase goods or services with their own money. If you believe that economists think that these are equivalent or even anywhere close to being equivalent in what goods or services will be produced you have some serious remedial economics reading to do.
As for your belief that HSF could thrive without government spending, put up or shut up. Stop lobbying for government money as a cover for your economic fantasy and let’s see if this claim is anything but the most outrageously inflated hyperbole.
I work a for small, publicly traded defense electronics company. We contract directly with various US government agencies, and we do subcontracts for Boeing, LM, NG, etc. We also work for private companies that have nothing to do with government other than to be regulated by it, e.g., satellite radio. And you know what, we just finished a record year in terms of profit, revenues and backlog, not because we are a “kept woman” policy tool of the US government, but because the company is small, lean, and culturally focused on free-market practices. We work our butts off no matter who the customer is, and consequently, pound-for-pound can run circles around the old aerospace giants.
SpaceX looks very similar to our company. Anyone familiar with SpaceX’s history could not possibly believe it is set on “lobbying for government money as a cover for an economic fantasy.” Googaw, if that were Musk’s intent, he would have stayed in the software business. No muss, no fuss, no risk of sudden, nationally televised violent death, and the less efficient the software and the more expensive it is, the more likely the government will buy it, and buy support for it until the end of time.
You run down Clark Lindsey, a man of intelligence and obvious good will and a passionate supporter of free-market principles in the space business, and lecture him for economic ignorance–which, for me at least, puts your credibility in the toilet, and incidentally makes you sound like a pissed-off teenager who just discovered Ayn Rand.
NASA projects have been “commercial” all along
Not what I read. The companies selling to NASA can be considered commercial even if NASA is there only customer if they meet the criteria Clark points out. I think the points are sound.
The 1998 Commercial Space Act definition was simply “more than 50% owned by US Nationals”.. and had some other vague acceptable definitions like contributing to US employment for those that failed the 50% owned test. In other words, unless the government owns it, it’s commercial. The problem here is that we’re using “commercial” as a euphemism for “not pork”, and its own possible because Musk has come to the table with an offering of lamb.
“Taking billions of dollars in tax money and spending it on political goals… If you believe that economists think that these are equivalent or even anywhere close to being equivalent…”
Since that is not close to what I said or believe your subsequent remarks are irrelevant. As Patrick indicates, and as every economist would agree, selling goods and services to the government does not make those transactions or the company non-commercial.
As long as the public continues to elect officials like Ronald Reagan who support a government HSF program, there will be a govt. HSF program. In turn, it is the obligation of the govt to seek out the most cost-effective ways to implement it. Using a commercial services approach so far appears to be a great way to achieve that.
“… HSF could thrive without government spending, put up or shut up….”
Firstly, someone who not only hides under an anonymous cover but uses an alias like googaw is not in a position to challenge anyone on anything.
Secondly, nearly 1.5 billion dollars has already been put up so far twoards human commercial spaceflight See.
http://www.commercialspaceflight.org/industry_metrics.shtml
Bigelow alone has spent $180M and plans to spend several hundred million more. Virgin Galactic and its partners have spent and committed several hundred million dollars. Both COTS contractors had to put up private money for match the government contribution and a commercial crew services program will involve similar private contributions. Etc. Substantial private investement in commercial HSF is not a fantasy but a demonstrated fact.
If the US govt HSF program was zeroed out, it would slow hardware development but not stop it. Private money, most likely in even greater amounts, would continue to enter commercial HSF as it is now doing.
Nearly fifty years after Yuri Gagarin’s stunt, the revenue from orbital HSF is still over 99% from government space agencies who launch astronauts for the sake of launching astronauts. There is nothing within orders of magnitude of economic reality in orbital HSF to privatize. As for the private investment Clark crows about, of course investors are going to be throwing in large amounts of money when there are nearly $10 billion worth of NASA HSF contracts every year to be won. Duh. That says nothing at all about the prospects of reducing the 99% artificiality (really 100% artificial when we realize the other 1% comes from selling the marginal cost of the marginal cost of seats the government already paid to develop) to something that is even within an order of magnitude of being economically rational.
Suborbital HSF is a very different story and I am a big fan of Virgin Galactic and Burt Rutan’s work.
As for SpaceX, good intentions and two bucks will buy you a cup of coffee at Starbuck’s. Orbital Sciences started out as a very entrepreneurial company eager to conquer commercial space too, and after a couple decades of playing the government prime contractor game look at it now. I have previously shown how if SpaceX wins Commercial Crew NASA will quite likely account for over 2/3 of its revenue and practically all of its profit. SpaceX will have strong financial incentives to undertake whatever bureaucracy NASA wants and to play whatever political games need to be played in order to satisfy its dominant customer and the politicians who fund it, at the expense of its other customers (who will account for a tiny fraction if any of its profits) and of the goal of reducing launch costs. The situation with “Commercial” Crew could hardly be more unlike the preposterous analogy to governments buying tickets on commercial airlines, whose airliners have already been developed and who already fly thousands of other customers. SpaceX still has a chance of avoiding becoming a government prime contractor zombie like Orbital if they decline to participate in “Commercial” Crew and focus on their real commerce customers, i.e. satellite launch which they if they stop getting tangled up with NASA HSF they still have a good chance of revolutionizing.
Bigelow alone has spent $180M
The purveyors of the economic fantasy of “commercial” orbital HSF sooner or later have to fall back on the supposed authority of how Bob Bigelow spends his money. Let’s look at how he spends his money:
http://www.csicop.org/si/show/bigelows_aerospace_and_saucer_emporium/
SpaceX still has a chance of avoiding becoming a government prime contractor zombie like Orbital if they decline to participate in “Commercial” Crew and focus on their real commerce customers
I believe you’ve set up a false choice. Why can’t they just take the money and continue to grow in all profitable directions?
Googaw, what do you want? I would like to understand what you want to see in terms of human spaceflight, and your proposal for how to achieve it and on what schedule.
Patrick, it is futile to want something out of HSF at this point in history, because it is largely useless. An exception is suborbital tourism which I imagine will be quite entertaining and not too terribly unaffordable for the tourists.
Real space commerce, on the other hand, is eminently worth working on if one is interested in space development rather than astronauts.