All posts by Sam Dinkin

Political Commentary

K Street a Bargain

In today’s New York Times, the article “Go Ahead, Try to Stop K Street,” an argument is quoted from Newt Gingrich that you have to shrink government to curb lobbyists. “There is $2.6 trillion spent in Washington, with the authority to regulate everything in your life,” he said. “Guess what? People will spend unheard-of amounts of money to influence that. The underlying problems are big government and big money.”

Curbing the budget will only reduce the acceleration of lobbying, not reduce lobbying. It is a bargain. The Indian tribes are just smart to get in on it (if not in their choice of representation). In my joint paper with Livingston and Jurist, we say the following:

National lobbying of Congress and the President in 2004 totaled $1 billion. That may seem like a lot, but it is a pittance compared to the $2.3 trillion in Federal outlays. Congress and the President also pass laws and make executive orders that implicitly subsidize through loan guarantees, forbid activities altogether, impose work and investment rules that implicitly tax certain activities, and establish through the courts and federal agencies how property rights are defined. Thus, it is possible that Congress and the President influence perhaps twice as much of the economy as the Federal Government spends. Given that, $1 billion to buy influence on Capitol Hill is surely a bargain. With 589 bills passing both houses of Congress (enrolled) in the 108th Congress, that works out to about $3.3 million of lobbying per enrolled bill. Adding in campaign contributions per enrolled bill (about $400 million per session for the President

Space

Countdown to Lunar Surface Tourism

Last February, Alan Boyle predicted a 100 year wait for Lunar surface tourism.

I think 100 years to Lunar surface tourism is pessimistic. SA is already offering Lunar orbit tourism. You only have to a little more than eight times the $100 million Lunar-orbit seat price to get Lunar tourism on the Apollo model. You’d rendezvous with a lander in Earth orbit, you’d take two cosmonauts instead of two passengers. The passenger and one of the cosmonauts would land on the Moon. Roughly four $200 million launches. That includes the cost of doing it robotically once, then the price will drop in half. There are about 691 billionaires. If 1% of them want to go, we could be doing Lunar tourism as soon as a few years after someone puts down their $100 million deposit to get it going.

With global income doubling every thirty years, a larger percent of the economy becoming private sector and with concentration of wealth increasing, we could see thousands of billionaires in 60 years. There are 70,000 with $30 million in 2005. There will be more than 70,000 with $120 million in 2065. With thousands of new centimillionaires every year, utilization might allow a cycler that only centimillionaires would use. E.g., $20 million in 60 years garnering a flight a month. That would be 0.02% of them per year, a rate sustainable indefinitely with no repeats. The numbers to orbit would have to be about $2 million, but the big step from $12-20 million to $2-4 million will occur in the next 10 years with Bigelow stations and America’s-Space-Prize caliber launchers and vehicles.

With an L-1 station refitting the return portion of the lander for reuse, cyclers, Lunar oxygen, etc., the mature industry price could drop roughly to three times the fuel cost which is only about 5 times the cost to orbit. So $100,000 trips to orbit means maybe million dollar trips to the surface of the Moon. I’d go at that price even if I have to sell my house, take up a major weightloss program and go through years of therapy to overcome spacesuit claustrophobia. I’ll be ready to go at that price no later than 15 years when I pay off my 15-year mortgage and my daughter is graduating college. I won’t be unusual–with tens of millions of million dollar mortgages with payments of $5000/month tax deductible at 6% mortgage rates, there will be tens of millions of millionaires in 15-30 years. People on both coasts are paying 50% of their income for houses. There’s an average of $120,000/year GDP (not counting those pesky local taxes and insurance). That’s only three times per capita GDP or the average GDP for a household of three. Median per-capita income is less than half of average GDP ($45,000) so we are not talking about 50% of the US population being able to afford this in 15 years, but that would not be impossible. In any event, there are still likely to be tens of millions of millionaires by then in the demographic for full-price orbital flight and SpaceShot for everyone else.

Like the Economist wrote last week, it will be hard to do conspicuous consumption of space travel any more.

Philosophy

If Current Trends Continue

In researching The Tragedy of the Commons, reading Freeman Dyson’s autobiography Disturbing the Universe, and checking out today’s NY Times (subscription required–at least intermittently), I reached the following epiphany. If current trends continue, the world will either be empty or full. We will each live forever or die out because our life expectancy will go to zero. The Tragedy of the Commons was coined back in 1833 by Malthusians. Dyson quipped, “we all thought that energy was going to run out in 1937” and today’s Friedman column worries that social security and medicare will eat up all the budget.

I think that it is good to have social security eat up the budget. As people start to live forever, the only way to get them to cede the good jobs is to offer them a life of leisure. Inflation will take care of any pesky budget infinities. With the right subsidies, the federal budget can be hundreds of percent of GDP. You have to recycle the subsidy dollar and tax it back multiple times per year. That brings up another thing. Taxes will either go to infinity or zero (or maybe negative infinity).

In Joe Haldeman’s Late Twentieth, society has to deal with immortality. I think that there won’t be a radical shift like he extrapolates. If you think of age as a percent of life expectancy, long lives are the same as short ones. Even with clinical immortality, there are always accidents and violence (as he proves in Forever Peace). But suppose we achieve RAID integrity and deaths could hit zero for a good length of time. If trends continued, to update Keynes, in the long run, we will all be dead–or alive.

Space

7500 Launches

is the midpoint between the high and low scenario numbers that FAA chose for the Proposed Rule for Human Spaceflight Requirements for Crew and Spaceflight Participants to calculate how much of a burden the regulation would be. 7500 flights over ten years with one paying customer paying $200,000 would be $1.5 billion. Rocketplane is building a 4-seater expected to enter testing in 2006. Masten has a 5-seater on their product roadmap for some time after 2008. XCOR Xerus is a two-seater. The Spaceship Company has an operator who says they have $10 million in deposits for flying in a 7-9 seater. 7500 times 4 passengers would be $6 billion over ten years or $600 million/year.

Likely there will be higher prices early and more flights at lower prices later as operations become more routine, more suborbital vehicles get built and competition takes hold. If flight rates grow linearly from zero, we would get 1425 flights in year ten and even if the price drops to Futron’s predicted 2015 price of $80,000 per passenger, we would substantially exceed the demand forecast by Futron if this prediction holds up. $500 million per year was a number they did not think would get hit until 2018.

If we double the Futron price estimates (they anticipated $100k prices at the start), we might double revenues, but that requires that all those launches have willing purchasers. (As I’ve said when Futron first released the study in 10/2004) since Futron doesn’t include demand from games, this may be reasonable.

Put another way, reconciling Futron’s passenger numbers with the FAA flight numbers, we get an average passengers per flight over ten years of only 2 passengers per flight.

The high estimate for suborbital flight rates by FAA was 10142 and the low 5081 with a 50% probability attached to each. These include test flights and non-passenger flights.

–Update 2006-01-04 04:56:00 CST–
And non-government orbital passenger flights.

Political Commentary

Check the Wire

Robert Reich in today’s Marketplace Morning Report (“Spies Like Us”) talks about how unchecked executive power is a concern for business. We can argue about whether Congress authorized any means necessary with its vaguely worded declaration of war. We can argue about whether the ends justify the means. But if the President can designate anyone an enemy combatant with no judicial check, that suspends habeus corpus. Holding people without charge is not supposed to happen in America especially not to American citizens on American soil.

If the President can tap anyone’s US-overseas calls without judicial review and use the evidence against them, that suspends the 4th amendment protections on unreasonable searches.

If the President can search my library book record, that nullifies the first amendment right to freedom of the press as surely as staking out people’s bedrooms nullifies their right to privacy.

Innocent until proven guilty is being whittled away as people like Walt Anderson are being held without bail based on their reading list.

Reading unclassified information is not illegal. A free press requires that anything that is legally published should be read without legal consequence.

I believe that authorities have overstepped here. There are antibodies society should create to check an executive or Congressional majority tinkering with the Constitution.

I propose that libraries be reorganized to hide reading lists from authorities. In particular, books should be checked out anonymously. The main business problem this causes is that the library doesn’t know who to send an overdue notice to. To solve this problem, readers should be allowed to pay a substantial deposit in cash to check out a book anonymously which would then be returned when the book is returned.

Let the Executive Branch go to Congress for money and get a warrant for staking out the library if it is so all-fired important to find out what we are reading.

So check the Executive. Check the wire. Check out the books without Big Brother looking over your shoulder.

Economics

Intergenerational Wealth Transfer

At 2.3% per capita real income growth, real income doubles every thirty years. That is, we can expect our kids to be roughly twice as rich as we are. In particular, we should stop worrying about them supporting twice as many retirees per capita. We should also stop worrying about their environmental legacy. They will have twice as many billions to devote to environmental cleanup and upgrade even if population remains constant.

One thing that would cause the social security crisis to come back in spades would be if, as is proposed in the UK, that social security is indexed to wages instead of prices. If wages are used, social security payments will double when wages double and longevity and early retirement will bear down on workers.

How much do we owe retirees? Is it the same absolute standard of living as they had when they were working? Their same relative position in the economy? These are expensive moral questions. But recognize a promise of a wage indexed gain for what it is: it is a heavy tax on the working to give more real dollars to the retirees than they gave to the retirees while they were working.

I am still in favor of privatizing government pensions, but that would in effect be a huge cut in subsidization of government borrowing. That is, without the whole social security trust fund invested in government bonds, it will be more expensive to finance government borrowing. That will either require higher taxes, increased borrowing or reduced spending to offset.

One thing I can say about that is that my daughter’s generation will be twice as able to deal with it as mine per capita.

Technology and Society

Video Conferencing Soon Ready for Prime Time

Economist reports that video conferencing kinks are being worked out of both the experience and the business model. Corporations are getting on board. $1.75/minute on peak, $0.25 off peak? If it is being used “around the clock” as they say, average price would be only $0.50/minute or if only during business hours 40 hours/wk at $2/minute. Paying $3000 hard costs for four hours ($12.5/minute) of on site business meetings the past two days myself, I sure would like it if I could cut travel by 75%. The calculation is more extreme if you assign labor cost to travel. If you throw in my 16 hours of travel at $2/minute you get up to over $20/minute for these face-to-face meetings.