All posts by Sam Dinkin

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Depolarize Lunar Exploration

In the latest issue of Moon Miners’ Manifesto and Ad Astra Peter Kokh makes the point in “Perfect Spot Found for Moonbase?” that R&D for living everywhere except the poles would open up a lot more of the Moon to utilization especially the mare/highland “coastline”. Good point! But let’s do both. Let’s colonize the easiest place to colonize too.

He did say that if the government puts a base at the pole that the rest of the Moon might never get developed. This is an error. In 500 years of 2% growth, the average worker will be able to fund their own Elon Musk-style orbital space program 5 times over with one year’s income. See a comical look into the future here.

General

Whining About State Protectionism

When you have an ill like gambling or liquor, it makes sense to have a state monopoly to curb usage. The high monopoly price limits usage and rakes in more money for the state. State monopolies may be better than outright prohibition. But those are the only things good about them.

This logic of externalities works less well with a price discriminating monopolists. A monopolist may charge different markups on different products based on price sensitivity. That is, they may set a different monopoly price for each kind of liquor. If they can further discriminate with affinity clubs, rebates, personal coupons and so on, then each person can be paying their own personal monopoly price. The price discriminating monopolist does not deter usage if it does a perfect job, just extracts all the consumer surplus out of the sale. That suggests that the value to the citizenry of curbing usage through a state monopoly is falling with technology.

Consider the state lottery machine in the Chicago O’Hare airport. It has about 40 different games. What may have deterred entry through a high price and low choice in yesteryear certainly looks to me like a very aggressive price discriminating monopoly. Some entries cost $10, some just $2. Some have high prizes, some low and some groups of prizes. The state is not curbing the ills of gambling in the slightest via this method. It is just expropriating all the rent for the state.

Monopolies also perpetuate high cost. There has not been much in the way of innovation in internet lotteries coming from state lotteries. Some kind of security dongle distributed in state would allow state internal internet distribution of further lotteries at much lower cost than paper. The monopolist might do a calculus that says that such a system might increase overall revenues and decrease costs, but most of that would go to the state and the players and not us. Don’t expect too much innovation from monopolists that do anything except maximize their profits.

How about some conditional federal spending for states that allow liquor sales through the mail to encourage competition? That does not sound like a political winner. Good luck if you like mail order wine. The liquor lobby might well ban all mail order sales in state and out to protect each oligopoly. Cheers.

Technology and Society

Greening of GE

GE started a big ecomagination advertising campaign. I think that proactively spending to be a net cleaner of the environment by buying up carbon emission permits (where they are for sale) would be more effective than their research spending at abating pollution. But of course, the image is more important to them than the results.

If GE wanted to reduce internal pollutants at lowest cost, it would have an internal tax on GE polluters and provide cash to corporate abaters. The pollution permit trading scheme would decentralize the decisions about what abatement projects to fund out to the individual profit and loss units. That is good public policy for the world if it decides to cut carbon emissions. It is also good public policy for countries, states or cities that want to cut the maximum emissions for the least social dislocation.

China and India have probably reached the tipping point in many of their cities where their inhabitants are rich enough to want a cleaner environment even if it has some associated increases in the cost of doing business. US reached that point in about the 1940s and has been getting cleaner ever since.

I think the campaign may be a flop. It sounds to me like Echo Machination and is a little too reminiscent of HP’s Invent! campaign. But they are the masters of their sound and image and they are probably right on the winning emotion if not on the details.

For two takes on “echo think” (fka group think), read this novel-length fictional account, Rigged by Ross Miller, my former boss and czar of risk management at GE R&D. There is another article in today’s FT (trial/subscription required after first two paragraphs).

Humor, Media Criticism

News Bulletin

Listen to this when it gets posted tomorrow.

In the early morning the bodies of 14 men were discovered in a shallow mass grave in a rubbish dump in northeastern Baghdad. Some of the victims were blindfolded and appear to have been executed with a shot to the head. Now this news bulletin…

BBC radio 15:00 GMT, Friday, May 6, 2005

This gives a new meaning to murderous competition for news delivery.

Economics

Losing Reserve

I am reading The Ultimate Resource 2 by Julian L. Simon (Princeton, 1996). He makes the point that commodities prices tend to decline over the course of the last couple of hundred years compared to the cost of human labor. The average US wage in 1999 dollars is growing at about 2.1% per year geometric mean from 1900-1999. The real interest rate has been about 1% (in the UK anyway).

This means that if technology were constant and reserves were constant, the real price of a commodity would rise 1%. Otherwise, it would make sense to mine as much oil as possible and put the money in the bank, or leave the oil in the ground and wait for the price to rise.

In fact from 1860-2000 the price of kerosene (see figure 5) has dropped about a factor of 6. If you look at the service kerosene was providing (lighting), it has dropped a factor of 40 from

Space

Launch Dry

The most interesting talk at Space Access was a fill-in that was not blogged by Rand, but was by Clark Lindsey:

a CEV concept [was presented] that Boeing is investigating that involves commercial delivery of fuel to orbiting depots. This so-called “dry launch” approach would mean that vehicles for in-space and lunar transport could be launched without fuel and so, being lighter, they would not need new heavy lifters. This would open a great opportunity for the new launch companies to provide fuel to the depots.

It involves an alternative concept (see page 32) from Boeing. The idea is to launch the lunar transfer vehicle dry and provide commercial propellant delivery. This could result in thousands of metric tons of fuel needing to be delivered to LEO. This might bootstrap the commercial launch industry. There are also opportunities for “the last mile” because some launcher companies will not want to have to figure out how to dock with a fuel depot.

1000 metric tons of fuel would be a cool $3 billion unless someone can undercut Elon Musk. 9000 metric tons through 2030 would be $27 billion at current prices, but would likely spur a tech drive and a bidding war to compete prices down to $1000/kg or less.

Political Commentary

High Water Mark of Federalism?

For years the Republicans have been champions of Federalism and the Democrats have been trying to have the Federal Government bring the States into national conformity. Now that Republicans control Congress and judicial nominees, we are likely to see those who favor and oppose Federalism switch sides.

The Republicans seem to be more aggressive at consolidating their new found power than Democrats are in holding onto theirs. For example, ramming through redistricting off cycle in Texas. Another example is the threat of the “Nuclear Option” underscores that collegiality and continuity are not more important to the current Republican leadership than partisan interests.

The Supreme Court is also moving in that direction and will do so decisively once there are a few more Republican appointees on the Court. Conditional federal spending like the No Child Left Behind Act largely invalidate any state independence of the sort granted in Lopez which lined out criminal, education and family law as provinces of the States. (I am surprised that no state has made it a felony to be a three-term Senator. That would test whether criminal law really is something a state can do and potentially allow term limits for federal officials to move forward.)

As red state policy becomes federal law, it will be more and more difficult for blue states to maintain their independent policies. There is a narrow window while Republican legislators and the Republican judiciary has not fully internalized the polarity switch. During this time, Democrats can try to cement Federalism before Republicans realize they no longer need this issue.

My guess is that the time for Federalism has passed and that Democrats will convert to Federalism more slowly than Republicans convert away from it. I look forward to reading how the Supreme Court Justices and some of the more self-important partisan publications will justify their newly-found interests in the opposite sides of the Federalism debate.

Economics, Political Commentary

Thermonuclear Option

The Senate leadership is pondering repealing the cloture requirement of 60 votes to close debate and stop a filibuster for judicial nominees. Cloture would be repealed not through a formal rule change, but through a clever finesse of the rules. The parliamentarian responsible for interpreting how the rules apply would simply invalidate the cloture rule. This would be challenged and the rule would need 51 votes to keep it at that point assuming Dick Cheney is against.

The Senate Democrats have warned that they will bring all business to a halt in the Senate were this to occur. This is credible, but in turn may be finessed with something even more drastic.

Here is a new option–call it a thermonuclear option–that would allow the Senate to switch to a new majoritarian mode and continue to function. A member would call a point of order saying that none of the rules are in order because they had not been approved by a majority of the current members. The parliamentarian would rule that yes, after over 200 years of precedent, the original Senators clearly made a mistake in assuming that Senate rules bound future Senates. The majority could then go on to adopt any rules they want. This could allow it to continue to function without the participation of any Democrats.

Cloture should be an issue that cuts across party lines. If the Senate repealed cloture on all legislation, the House would have equal say in all matters for a change. This would be a big boon to states like California, New York and Texas that are highly underrepresented in the Senate. Democrat Senators from all States that have nine or more Representatives in the House should be in favor.

The flip side of course is that small state Senators should be opposed. There are many more small state Senators than large state Senators. For this reason, cloture is unlikely to ever be repealed without a massive buyout transferring money from large states to small to compensate them for the lost pork in future years. Even cloture removal just for judicial nominations would be a critical weakening of small state power.

While I like supermajoritarianism in general, I have not been a fan of supermajority requirement in the Senate and a simple majority requirement in the House. This systematically bleeds money from big states to small states. While perhaps a sensible policy during colonization, now it is just a pork fest. Arnold Schwarzenegger made that point after getting elected. My question is, “Why has the House not imposed its own 60% cloture requirement to balance the power in the Senate?”

More on legislative power can be found in “The Senate: An Institution Whose Time Has Gone?” in The Journal of Law and Politics, 1997.

Humor, Media Criticism

Poor Word Choice

On NPR this morning I heard the following gem:

A member of Iraq’s new parliament has been shot and killed outside her home in Baghdad. It was the first assassination of a member of the National Assembly since the body was elected in January.

I would want to be elected and remembered for my mind.

Space History

Changed Tone at Space Access

Space access last year was an excellent conference. I met Jeff Foust and have been writing for the Space Review ever since. I met David Livingston and was since on his show twice, signed his corporate space ethics pledge and have co-authored a paper with him. I met Thomas Olson and now I am on the Colony Fund’s board of advisors.

But comparing last year’s program to this year’s there are several differences.

There are more political and regulatory discussions this year. Last year we praised Tim Hughes, who was pivotal in getting 5382 passed. This year, he is presenting. Last year political priorities was part of “open mike” time. This year there is a panel. Last year there was one presentation from AST. This year there are two. Last year there was an informal workshop on the FAA AST license process. This year there is a panel discussion on policy.

I am part of the change. On Friday night, I am co-presenting a paper first posted here. (Look for an update as soon as I can get it uploaded.) There is also a new panel discussion about what venture capitalists are looking for. These two additions really focus on calibrated business-goal setting, and filtering and tempering the pro-space rhetoric to enhance credibility.

The community will be taken more seriously if it graduates from being a victim to being proactive about removing alleged barriers, upholding standards of ethics and the professionalism on the business side of space access. This change was already underway last year, but perhaps in the next few years Space Access may yet become the kind of tacky commercial conference that Esther Dyson prefers.