All posts by Sam Dinkin

Uncategorized

Ethanol and Food

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Judging from the carbon emitted from eating food in the US, food represents about 5% of the carbon usage. It’s a higher percentage in developing countries, but the power uses of carbon are very valuable and inelastic. By figuring out how to turn food into fuel and doing so for the most expensive fuel at $4.00/gallon, we drive up the price of food to $6 per bushel as a bushel of corn can produce 2.8 gallons of ethanol and $1.42 in ethanol subsidies which has the energy content of 2 gallons of gasoline of which 2/3 of the cost is the petroleum.

So people living on $1/day can only afford 9 pounds of corn if they can find it wholesale in such small lots. 1 pound is 2400 calories. I guess the high corn price is exposing poor financing, competition, distribution and economic incentives in countries with food riots, rather than simply first world corn consumption subsidies.

Economics, Space

Long Term Space Budgeting

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In Monday’s part 1 of “VSE and the Retirement of Baby Boomers,” Charles Miller and Jeff Foust port the conventional wisdom about budgeting to the space discussion. These are two of the most well-read, connected and smart people on space topics. I’d like to give folks addressing this issue some more texture to add some items that are not part of the conventional intergenerational budget debate which can be summarized perennially as “vote for me or things will all go to hell pretty soon if they aren’t already there”, but every year real personal income rises and real government spending minus interest payments rise; life expectancy goes up and almost all the Cassandras are proven wrong, but by then they’ve long since moved on to the next pending calamity. Here are the unconventional texture points:

  • Personal income is continuing to rise ahead of inflation such that every generation earns about twice as much per capita as the one before
  • That is, a falling percent of the federal budget should still buy more robotics, rockets, science, human spaceflight, exploration (and settlement?!) even as it buys fewer staffers and is a lower share of GDP
  • Bracket creep, estate tax and alternative minimum tax are going to increase receipts above historical revenues and changes that fix these are likely to fix macro spending issues at the same time
  • The boomers are likely to work part time or full time during retirement years
  • The boomers are more comfortable with the stock market and are likely to earn higher returns there than previous generations of pensioners
  • The boomer echo will put more workers in the worker to retiree ratio again as the boomers die off before the boomer echo generation retires
  • Between Federal, State, County and Local taxes, we are taxed together at above the monopoly rate; if there were a coordinated decrease, revenues would increase for each
  • Private spending on human spaceflight will rise and is already about 0.3% of NASA spending; depending on how you count capital spending by people like Bigelow, it’s in the single digit percent
  • First-party State, County and Local spending and incentives for space flight will increase as more states cross the income threshold of the US and USSR economies in the late 1950s which was about 1/8 what it is now for the US. California has already crossed this. Texas and New York will in the next 20 years. If space gets cheaper, Florida may enter the ranks of states that could have their own space programs. Initiative by a vocal minority may rocket this issue into the fore. Oklahoma and New Mexico are more like the USSR in the space race looking at space as a way to look far bigger than their economies suggest and to leap frog other states in an emerging industry. The Soyuz is still flying and is now profitable even as Russia has an economy 1/6 the size of the US (USSR had 1/2 the US economy in 1960) so the space portion of their strategy is validated. And may even work for New Mexico which has about 1/12 the size of the 1960 USSR economy now
  • Boomers dying will likely dry up support for a cargo-cult do-nothing NASA as memories of Apollo die with them; Obama can be seen as a coming attraction of how the next generation will treat NASA
  • Support for ITAR and missile counter proliferation will wane, but existing techniques will ossify as civilian launches start to dwarf military ones as long as there is no space 9/11 which has a mixed effect on cost of flight
  • Competition and achievement from the private sector will put pressure on budgets to achieve more value for the dollar, but at the same time make obtaining that value easier
Space

Sam on Suborbital

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Virgin

It occurs to me that with hundreds of millions being spent on crewing Virgin’s air fleet that spending a few tens of millions to build and operate Space Ship Two might be justified on personnel policy grounds. Giving the Virgin airlines pilots a chance to go to an elite school to learn to be White Knight pilots or Space Ship Two pilots might make them happier, more productive workers who spread good cheer and promote good labor relations. The same could be true for customer and aircraft ground personnel. So the Virgin Galactic investment might make sense for labor morale and not just for marketing and to keep the owner happy.

XCOR

I like Lynx (see The Space Review this week). At $17 million, it needs operating profit of $4.25 million to achieve a 25% return for investors. I don’t think XCOR has been seeking debt financing (contrary to the philosophy of take the smallest possible risk) so strategic investors can invest with their heart and be happy seeking a slightly lower monetary return. $4.25 million assuming 1/3 going to the space line and 1/3 going to cost would leave 1/3 to pay investors so XCOR would need to capture $12.75 million/year of the market. At $100,000/flight that’s 128 flights or about 5% of their annual capacity assuming three vehicles and 50% up-time for each vehicle and 4 flights/day.

With some predicting a 15,000 seat market ($3 billion/year at $200,000 which is closest to EADS’s estimate) and Futron at 500 seats growing to thousands of seats over a couple of decades ending at about $700 million/year in 2021, XCOR’s required fraction of the market to achieve a 25% investor return is about 25% of seats or 14% of money given their initial price point in a 500-seat/year market 2% of the money in a $700 million/year market or 1% of a 15,000 seat market (0.5% of the money).

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If either of these teams is to begin test flights in 2010 and service in 2011 or 2012, I’d look for announcements like “fully funded”, regulatory hurdles met, various announcements about engineering hurdles, then an actual test flight program. It would be nice if they gave a public timeline of minimum time from each event to first paying participant flight. I don’t think more secrecy than is necessary for mystery and buzz is beneficial with each team taking a different approach and offering a well-differentiated product that requires extensive disclosure to meet regulatory hurdles and attract customers.

Uncategorized

Unlatched

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I was having a pretty good day, just having finished a successful auction, found my missing coat that I left at a restaurant, narrowly avoided a parking ticket, and was passed by a highway patrolman who was after someone else. I got the last seat on an early flight home to Austin on American from Bradley Airport through Dallas.

About 45 minutes out from DFW, the captain explained that the luggage door in the back of the plane was unlatched. The captain said, in effect, “While this isn’t a problem now due to the pressurization holding the door in place, it will be once the plane is about to land.” So we were told to expect some emergency vehicles on the tarmac to spot any luggage so it wouldn’t get in the way of other planes.

I never trust pilots to tell the truth to passengers in an emergency-landing situation so I called my wife to tell her I loved her just in case (I did this before it was fashionable on one other emergency landing due to a tail screw problem about 10 years ago). No one else seemed nervous. The flight attendants seemed pretty upbeat. I pondered the seat back that was not upright in front of me, but I would rather die than commit a faux pas, so I waited for the flight attendant to attend to it.

When we landed, I counted 9 emergency vehicles on the right side of the plane. We stopped on the tarmac for about 5 minutes and they circled us. Then we headed for the gate. When we made a turn, I could see about six of them following behind the plane. We arrived at the terminal safely. We had probably delayed all of DFW traffic for a time.

On my flight to Austin, the next pilot missed our gate and had to do a 360 turn to get back to it. That was a pretty weird trip.

Political Commentary, Social Commentary

First African American Presidential Candidate from a Major Party?

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Thomas Jefferson and the other major party candidates for the election of 1800. Washington didn’t approve of political parties. At least according to my read of the census definition:

A person having origins in any of the Black racial groups of Africa….

My understanding of current thinking on evolution is that we all have origins in Black racial groups of Africa. And that this is our only origin in a period spanning tens of thousands to millions of years.

Political Commentary

Clinton for Dem

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My father, Professor Robert Dinkin, the presidential election historian thinks that Clinton will likely emerge the Democratic Party nominee due to her organization and ties to prominent Democratic Party leaders. This despite having recently voted for Obama in the Florida so-called–delegateless–primary. Here is where they stand as of your page load in trading for who will be nominee (security of winner pays $1) on Intrade:

Clinton:

Obama:

Economics, Political Commentary

A Belated Defense of Giuliani’s Tax Policy

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My pick for the Presidential race, Giuliani, has bowed out. I like his tax policies. Not that I thought that he could get them adopted, just that I thought that he could achieve what Bush achieved–slightly lower marginal and average taxes for 10 more years. Before you write me off as an elitist who doesn’t like graduated income taxes (which I don’t deny–but bear with me), I agree with Laffer on this point. Taxes are above the monopoly rate. This is expected since there are four (or more) toll takers: Federal income taxes, state income or sales taxes, county sales and/or property taxes, and city sales, income and/or property taxes. When you add up the various employer and employee taxes (federal only) on receiving the last dollar (ignoring the sales and capital gains taxes associated with saving or spending it), they add up in the top bracket to 35% federal + 2.9% Medicare including employer match. That is, if I get $100 in gross in the top tax bracket, I’ll have to pay $36.45 in tax and my employer will have to pay $1.45. If we frame the percentage like sales tax, I am taking home $63.55 and together, my employer and I are paying $37.90. That is a equivalent to a 59.6% sales tax on everything I buy. In other words, to get a dollar, we have to pay 59.6 cents to the government. I assert that this portion of total taxation alone is above the monopoly rate. Tax cutters would have a very easy time getting tax rates cut (and, perhaps counter intuitively, taxes increased) if they could re-frame the tax code to show tax as a percentage of net income at the margin instead of gross.

Do we really despise envy so much that we would rather have the rich indulge in additional leisure than provide the maximum amount to the Treasury?

Space

Debating Human Spaceflight

I interviewed Steven Weinberg who has replaced James Van Allen as the most prestigious and eloquent direct critic of human spaceflight (unlike Barack Obama who may be the most effective passive-aggressive de-funder of space activities since Nixon).

I faced a fundamental media ethics issue. Weinberg’s opinion on the likelihood of nuclear war with Russia in the next twenty years (“more likely than not”) puts him in a tiny minority. By publicizing his view on this, it delegitimizes him as a spokesman against human spaceflight without discrediting directly his arguments against human spaceflight on the merits. I chose to carefully transcribe his words on this point, confirm that he stood by them, then released them.

What would you have done?

Continue reading Debating Human Spaceflight →