On the Race to Mars and the Economics of Colonizing Space

It is at least a little exciting to see that NASA wants to put a human on an asteroid by 2025 and on Mars by 2030.

Why not very exciting? Because NASA — unlike with the Moon — is not on track to be the first one there. Yes, governments — the largest of which are capable of borrowing, spending and taxing trillions — still have the most economic power of any agency at their disposal. Yet if their plans for space exploration are anything to go by, they no longer have anything like the most ambition.

Elon Musk, by contrast, plans to be on Mars by 2020, and establish a colony he wants to grow to a million humans by 2100. Mars One plans to establish a colony by 2024. Overambitious? Nobody really knows. Sending flesh-and-bone humans to Mars is a pioneering act, not just on par with but considerably more ambitious than the pioneering explorations of Magellan and Columbus. Scurvy, foreign diseases, unpredictable weather at sea and geomagnetic anomalies are one thing. But nobody knows how the human body will respond to multi-year space travel trips across the vast void of space that separates Earth and Mars, nor to life in a metal box on the Martian surface.

Of course, if the private colonists fail — as many are expecting them to do — it is nice to know that the U.S. government will try and get the job done instead. After all, as Stephen Hawking has argued, space colonization is absolutely central to humanity’s future. In our current state as a one-planet species, one stray asteroid, one nearby gamma ray burst, one large scale industrial accident, one explosive supervolcano, or one stray genetic mutation — not to mention climate change, and all the cataclysmic risks we don’t know about — could send us to the edge of extinction. As a two-planet or ten-planet or two-solar system species those risks progressively diminish further.

Simply, we face a choice as a species. Turn inward and remain an earthbound species and face inevitable extinction in the next few thousand years, or possibly even the next few hundred years. Or turn upward, colonize other worlds and human beings — like us, and descended from us — have a chance of still being around one million or even one billion years from now.

Of course, the ultimate viability of all this really comes down to economics. If Musk, Bezos, Branson and the other stargazing private space interests can make space technology profitable, they can fund their way (and our way) to the stars. If not, then humanity’s hopes of colonizing space are tied up with the inward-looking, climate change-denying, and stupefied reality of scientifically and economically illiterate politicians who care more about their 19th century ideologies, election campaigns, and parliamentary champagne than the state of humanity 10 or 1,000 generations from now.

In theory, the resources floating up in space may be the economic fuel necessary to take us to the stars. As I noted last year: “An asteroid less than a mile in diameter could hold more than $20 trillion in industrial and precious metals” at 1997 prices. And that’s in addition to the massive potential of tapping into the sun’s rays as a self-perpetuating energy source. And while abundance may bring down the price of such commodities (including energy) early asteroid miners may reap massive enough rewards to turn themselves into the next Google, Apple, or Facebook, capable of pumping billions or trillions of dollars into research into further technologies.

As I argued last year, those who believe that the global economy may be entering an era of so-called “secular stagnation” clearly have either not thought very much about the potential economic growth possible from growing into space, or they think it a very unlikely possibility. Do you know how much one interstellar spacecraft or large-scale space station could add to GDP? Not just in its construction, but in the huge amount of research and development needed to develop and deploy such a thing? This is a whole new economy.

And while robots may mean that this spending does not create many jobs, and while off-planet tax havens are likely to become a thing, at the very least the technologies will trickle down to the wider public. Already, the widespread availability of the internet is creating a widely accessible and levelled playing field in the dissemination of information, news and ideas. Distributed solar energy and 3-D printers have the potential to create similar effects in energy markets, and in manufacturing and lift billions out of poverty.

But none of this is guaranteed. Even with the recent upsurge in interest in private space industry from titans of industry like Musk and Bezos, uncleared technical hurdles may stymie the development of large scale space industry for decades to come. NASA may still beat the privateers to Mars. But NASA is no longer the tip of the spear. Hopefully, NASA’s exploits will begin to look like afterthoughts.

To build the Death Star, we’ll need this space elevator

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Last year, I wrote about why we should make massive-scale space projects like Star Wars’ Death Star a serious long-term goal for humanity. I wasn’t joking.

OK, I was kind of joking — I chose the Death Star as my example because it was the biggest and most absurd-sounding space technology project that I thought readers would generally be aware of. But I could just as easily have chosen a Dyson sphere, or a ringworld, or a topopolis, or a faster-than-light spacecraft. Whether the project resulted in an energy source in space or a planet-destroying battle station didn’t really matter for the purposes of my argument: The idea was that by reaching for the stars we could employ hundreds of thousands (millions?) of people during economic slumps and we’d accumulate a huge number of helpful technologies for use on Earth.

The good news is that we don’t have to wait for super laser or tractor beam technology before we begin work. The first steps should be comparatively small R&D projects, such as sending a manned mission to Mars or building a permanent base on the Moon, which are well within reach. Or, as a new report from the International Academy of Astronautics (IAA) shows, we could begin by building a space elevator.

Read More At TheWeek.com

Why the post-antibiotic world is the real-life version of the zombie apocalypse


Right now, humanity is engaged in an epic battle against fast-adapting and merciless predators. No, zombies are not beating down doors to tear chunks of flesh out of the living. Rather, humanity is being hunted by deadly pathogenic bacteria that have gained resistance to antibiotics.

And thanks to the peculiar incentives that drive the pharmaceutical industry, it looks like the cavalry may be a long time in coming.

Read More At TheWeek.com

Why We Should Build The Death Star

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In January 2012, Zero Hedge made a sarcastic proposal to boost US GDP by $852 quadrillion — building the Death Star, a fictional moon-sized space station from the Star Wars film series:

Building a massive space weapon is all very well, but you have to find the materials to build it with. It’s easy to say that “sure, the Death Star would be expensive” but is there actually enough iron in the Earth to make the first Death Star? Centives decided to find out.

We began by loo king at how big the Death Star is. The first one is reported to be 140km in diameter and it sure looks like it’s made of steel. But how much steel? We decided to model the Death Star as having a similar density in steel as a modern warship. After all, they’re both essentially floating weapons platforms so that seems reasonable.

Scaling up to the Death Star, this is about 1.08×1015 tonnes of steel. 1 with fifteen zeros.

Which seems like a colossal mass but we’ve calculated that from the iron in the earth, you could make just over 2 billion Death Stars. You see the Earth’s crust may have a limited amount of iron, but the core is mostly our favourite metal and is both very big and very dense, and it’s from here that most of our death-star iron would come.

But, before you go off to start building your apocalyptic weapon, do bear in mind two things. Firstly, the two billion death stars is mostly from the Earth’s core which we would all really rather you didn’t remove. And secondly, at today’s rate of steel production (1.3 billion tonnes annually), it would take 833,315 years to produce enough steel to begin work. So once someone notices what you’re up to, you have to fend them off for 800 millennia before you have a chance to fight back. In context, it takes under an hour to get the steel for HMS Illustrious.

Oh, and the cost of the steel alone? At 2012 prices, about $852,000,000,000,000,000. Or roughly 13,000 times the world’s GDP.

The point was one against fiscal stimulus — while it may be possible to boost GDP by any amount through government spending, there is no guarantee whatever that that government spending will do anything productive. After all the toil and effort of building a Death Star what is an economy left with? On the surface of things, a giant metallic orb in space and very little else. In Misesian terms, this would be seen as a massive misallocation of capital, resources, labour and technology, building something that nobody in the market demanded and which could be ostensibly used to oppress people (“do what we say or we’ll fire our laser cannon at you!”).

Yet, I am going to try to defend it. I think that building the Death Star, or something similar is a very good idea and would have massive beneficial economic effects for employment, output, science, technology and so forth. And furthermore, I think it is possible in the very, very long run for a government to build the Death Star or something similar of a smaller scale without misallocating any capital, labour, technology or resources whatever.

First, I think that right now humanity is sitting in dangerous territory. There are over seven billion of us, yet we are all concentrated on one ecosystem — the Earth, with one tiny totally-dependent off-planet colony (the International Space Station) that houses less than ten people at a time. Simply, in our current predicament we are incredibly exposed. A single mass viral pandemic, asteroid strike or other cataclysm could completely wipe our species out. With humanity spread throughout the solar system (and preferably, the galaxy and the universe) our species is far less fragile to random extinction events. The Death Star itself — a giant space weapon — would be a safeguard against a particular kind of cataclysmic risk, that of hostile alien attack. If there are other advanced lifeforms populating our universe, they may see life on Earth and especially humans as an existential threat. Having a large, powerful weapon like a Death Star could be a strong safeguard against our own destruction by other species.

Zero Hedge’s mock proposal is actually quite thin, only taking into account the resource cost of the steel, and not the cost of getting the steel into space, building a moon-sized steel satellite in space, presumably including the development of laser cannon technology, some kind of propulsion system, the feeding and housing of a large permanent crew including oxygen and water recycling facilities, hydroponics and artificial food technologies, a transport system to get people and things between the Earth and the Death Star, etc. Nor does it take into account the cost of the labour in employing scientists and technologists to develop and prototype the technologies, employing engineers to deploy the technology, and employing labourers or automated robots to produce components and parts and to assemble the finished article. Simply, the cost would far exceed even what Zero Hedge projects, possibly by many times over.

So why the hell would I think that committing to spend vastly more than global GDP on a single project that nobody in the market is demanding is a good idea? Have I completely lost my mind, and any concept of sound economics that I once had? Well, on a potentially infinite timeline, such a huge figure (let’s say the necessary figure is ten times what Zero Hedge estimated, which could still be rather low in my honest opinion) pales into insignificance as we go further along the timeline. Building the Death Star is not currently a short term project that could be done to boost GDP in a single year to make up an output gap, deploy idle capital or reduce unemployment. In fact even if we committed to building the Death Star today, it is highly unlikely that we would actually even begin work on it in the next 100 or even 200 years. There would be vast technological, social and organisational challenges ahead before we could even begin to think seriously about commencing production. What we would begin work on are challenges far more modest and far closer to our present capabilities — sending a human to Mars, setting up a permanent base on the moon, setting up a permanent base on Mars, and developing technologies for those purposes — specifically multi-use lifters, a space elevator, improved solar energy collection and storage, improved nuclear batteries, improved 3-D printing technologies, higher energy particle accelerators, space mining technologies, robots, machine learning, computing, life support systems and things as mundane as increased science and science education spending.

Those kinds of tasks are much, much, much lower cost than actually committing to building the Death Star in one go, and can relatively easily be funded from presently idle resources (thus not misallocating any resources) as measured by the output gap which currently sits at around $856 billion (5.8% of potential GDP). The United States (alongside like-minded countries with similarly large output gaps) could fund a manned mission to Mars ($6 billion), build a new high energy particle accelerator ($12 billion), give ten-thousand million-dollar basic research grants ($10 billion), build a base on the Moon ($35 billion) and invest $20 billion more in science education for less than 10% of the current output gap. Better still, NASA and space-related spending historically has a relatively high multiplier of at least $2 (and possibly as much as $14 for certain projects, as well as a multiplier of 2.8 jobs for every job directly created) of extra economic activity generated per dollar spent. Given that space-spending yields new technologies like global positioning systems, satellite broadcasting, 3-D printers and memory foam that lead to new products, this is unsurprising. It also means that such spending is likely to get the economy back to full employment more quickly. Once this round of projects is completed, we will have a better idea of where we need to go technologically to be able to build a Death Star. The next time the economy has a negative output gap and unemployment, a new series of large-scale projects can commence. Eventually, with the growth of technology, automation and knowledge, a project on the scale of the Death Star may become not only economically viable but a valuable contribution to human capacity.

Many free market purists will wonder what the point of all of this is. Didn’t the Soviet economy collapse under the weight of huge misallocation of capital to large-scale grandiose projects that nobody wanted? What about all the projects that could have been undertaken by the free market in the absence of such a grandiose project?  My answer to this is twofold — first of all, I am only proposing deploying idle resources that the market has chosen to allow to sit idle and unproductive for a long time. Second, there are some projects that are actually important but which are not currently viable in the market. Space technology is probably the most obvious example. While I greatly admire the new generation of space entrepreneurs, and while I concede that long-term space colonisation will be undertaken be private individuals and groups (in the manner of the Pilgrim Fathers who colonised America — people seeking the ability to live by their own rules, instead of those of established Earth-based jurisdictions) the private space industry is still a long way behind where states were forty or fifty years ago. The Apollo program that put human beings on the Moon has still not been matched by private enterprise.

Ultimately, the Death Star itself is far beyond current human capacities, and far beyond the capacity of the idle capital, labour and resources that we have the option of using up through public initiatives. This I must concede. But, as a super-long-term goal, the capacity to build such things is what our civilisation ought to aspire to. And getting to such super-long-term objectives requires investment and investigation today.

Will Gold Be a Medium of Exchange Again?

While gold is widely held as a store of purchasing power, and while it is possible to use gold as a unit of account (by converting its floating value to denominate anything in gold terms), gold is no longer widely used as a medium of exchange.

Noah Smith says that gold will never be a widespread medium of exchange again:

In the days when people carried around gold doubloons and whatnot as money, you had a global political system characterized by pockets of stability (the Spanish Empire, or the Chinese Empire, or whatever) scattered among large areas of anarchy. Those stable centers minted and gave out the gold coins. But in the event of a massive modern global catastrophe that brought widespread anarchy, the gold bars buried in your backyard would not be swappable for eggs or butter at the corner store. You’d need some big organization to turn the gold bars into coins of standard weights and purity. And that big organization is not going to do that for you as a free service. More likely, that big organization will simply kill you and take your gold bars, Dungeons and Dragons style.

In other words, I think gold is never coming back as a medium of exchange, under any circumstances. It is no more likely than a return of the Holy Roman Empire. Say goodbye forever to gold money.

Well, forever is a very long time. Human history stretches back just six million years. Recorded history suggests that gold has only been used as a medium of exchange for five or six thousand years. But for that tiny sliver of human history, gold became for many cultures entirely synonymous with money, and largely synonymous with wealth. So I think Noah is over egging his case by using the word forever. Societies have drastically changed in the last six thousand years, let alone the last one hundred. We don’t know how human culture and technology and societies will progress in the future. As humans colonise space, we may see a great deal of cultural and social fragmentation; deeper into the future, believers in gold as money may set up their own planetary colonies or space stations.

But what about the near future? Well, central banks are still using gold as a reserve. In the medium term, it is a hedge against the counter-party risks of a global fiat reserve system in flux. But central banks buying and acquiring gold is not the same thing as gold being used as a medium of exchange. Gold as a reserve never went away, and even in the most Keynesian of futures may not fully die for a long time yet.

And what about this great hypothetical scenario that many are obsessed with where the fragile interconnective structure of modern society — including electronics — briefly or not-so-briefly collapses? Such an event could result from a natural disaster like a megatsunami, or extreme climate change, or a solar flare, or from a global war. Well, again, we can’t really say what will or won’t be useful as a medium of exchange under such circumstances. My intuition is that we would experience massive decentralisation, and trade would be conducted predominantly either in terms of barter and theft. If you have gold coins or bars, and want to engage in trade using them — and have a means to protect yourself from theft, like guns and ammunition — then it is foreseeable that these could be bartered. But so too could whiskey, cigarettes, beer, canned food, fuel, water, IOUs and indeed state fiat currencies. If any dominant media of exchange emerges, it is likely to be localised and ad hoc. In the longer run, if modern civilisation does not return swiftly but instead has to be rebuilt from the ground up over generations then it is foreseeable that physical gold (and other precious metals, including silver) could emerge as the de facto medium of exchange, simply because such things are nonperishable, fungible, and relatively difficult to fake. On the other hand, if modern civilisation is swiftly rebuilt, then it is much more foreseeable that precious metal-based media of exchange will not have the time to get off the ground on anything more than the most localised and ad hoc of bases.

Noah concludes:

So when does gold actually pay off? Well, remember that stories do not have to be true for people to believe them. Lots and lots of people believe that gold or gold-backed money in the event of a global social disruption. And so when this story becomes more popular (possibly with the launching of websites like Zero Hedge?), or when large-scale social disruption seems more likely while holding the popularity of the story constant, gold pays off. Gold is like a credit default swap backed by an insolvent counterparty – it has no hope of actually being redeemed, but you can keep it around forever, and it goes up in price whenever people get scared.

In other words, gold pays off when there is an outbreak of goldbug-ism. Gold is a bet that there will be more goldbugs in the future than there are now. And since the “gold will be money again” story is very deep and powerful, based as it is on thousands of years of (no longer applicable) historical experience, it is highly likely that goldbug-ism will break out again someday. So if you’re the gambling type, or if you plan to start the next Zero Hedge, or if your income for some reason goes down when goldbug-ism breaks out, well, go ahead and place a one-way bet on gold.

Noah, of course, is right that gold is valuable when other people are willing to pay for it. The reason why gold became money in the first place was because people chose to use it as a medium of exchange. They liked it, and they used it, and that created demand for it. If that happens again, then gold will be an in-demand medium of exchange again. But for many reasons — including that governments want monetary flexibility — most of the world today has rejected gold as a medium of exchange.

But there is another pathway for gold to pay off. Noah is overlooking the small possibility that gold may at some point become more than a speculative investment based on the future possibility that gold may at some point return as a monetary media. In 2010, scientists from the Brookhaven National Laboratory on Long Island, using their Relativistic Heavy Ion Collider (RHIC) collided some gold nuclei, traveling at 99.999% of the speed of light. The plasma that resulted was so energetic that a tiny cube of it with sides measuring about a quarter of the width of a human hair would contain enough energy to power the entire United States for a year. So there exists a possibility that gold could be used at some date in the future as an energy source — completely obliterating any possibility of gold becoming a medium of exchange again. Of course, capturing and storing that energy is another matter entirely, and may prove impossible. In that case — if gold does not become a valuable energy source — it is almost inevitable that some society somewhere at some stage will experiment again with gold as a medium of exchange.

On My Enthusiasm For Solar Energy

I am a solar energy enthusiast. The energetic parts of the universe are clustered around stars. We sit here on this dusty ball of rock and water, heated continually by the Sun. The difference between when we face toward our local star and when we face away from it is — in the most literal sense — day and night. Our lives on Earth are already solar-powered; the plants (and plant-eating animals) we eat get their energy from photosynthesis. The trees and other biomass we have used for energy for much of our history, as well as the fossil fuel reserves we use today are forms of stored solar energy from earlier organisms that died and were trapped under the Earth. Wind energy and tidal energy are perturbations of dynamical systems heated by solar energy. Even the nuclear energy we use extracted from fissionable uranium and plutonium is stored from supernovae in early stars that exploded and pushed the complex elements — including the carbon, nitrogen and oxygen in our bodies — out across the universe.

It is not so much a question of whether we use solar energy, but whether we use direct solar energy, or some derivative form. As our civilisation has advanced and grown, we have had to tap into larger sources to meet the demand for cheap and easily-accessible energy. Our technological sophistication and understanding of basic physics and chemistry has had to grow with our energy hunger to take advantage of different forms of energy; windmills, steam engines, oil refineries, cold water reactors and photovoltaic panels, and so on. In the long run, it is a mathematical certainty that to sustain our civilisation at present levels, or to grow and increase energy consumption we must transition to renewable energy both because quantities of fossil fuels and star fuels like uranium and plutonium on Earth are finite.

The availability of direct solar energy on Earth dwarfs other energy sources, including renewable energy:

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All that is necessary in the long run for renewable energy sustainability is that the level of output exceeds the level of input enough to provide a reliable energy source. Even at current solar efficiencies — and thus assuming that the technology won’t improve — photovoltaic solar generates seven times more energy than it takes to generate:

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While this is not currently as good as oil or natural gas or coal, it already beats shale oil and biofuels. The beautiful thing about solar energy is that there is so much of it that the technology does not have to be greatly efficient. And prices are falling and efficiencies are improving. While some renewables like wind and hydroelectric are more efficient, they are not abundant enough to even cover the bulk of our energy needs today. In the short run, combined with hydroelectric and wind and nuclear there is a real basis for long-term renewable energy sustainability. To smooth the transition, renewable technology needs investment and development.

In the long run, while obviously renewables still cost a lot more than non-renewables in the marketplace, but we have already established that that cannot last forever. Even the supply of uranium is limited. While we may discover superior technologies like cold fusion, we should be completely prepared for the eventuality that we don’t discover a better technology. While photovoltaic solar remains the largest and most long-term source of available energy — and thus the best hope for the continuation and expansion of sustainable human civilisation — it should receive a bulk of funding and development, and we should assume that in the very long run it should meet the bulk of our energy needs. There are still challenges like solar energy storage, but these challenges are being surmounted with improved battery technologies, and improved distribution technologies such as microgrids. 

Of course, if the photovoltaic solar price trend known as the Swanson Effect that has seen solar fall over 99% in cost since the 1970s continues, then solar will reach and exceed parity with other energy sources and be crowned the winner by the market based simply on  low cost. After all, solar energy is superabundant compared to the alternatives, so it would not be at all surprising for it to become the cheapest. But even if the Swanson Effect does not play out and solar does not become super-cheap, direct photovoltaic solar is extremely likely to play a major role in continued human civilisation on this planet and elsewhere.

Ben Bernanke Is Right About Interconnective Innovation

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I’d just like to double down on Ben Bernanke’s comments on why he is optimistic about the future of human economic progress in the long run:

Pessimists may be paying too little attention to the strength of the underlying economic and social forces that generate innovation in the modern world. Invention was once the province of the isolated scientist or tinkerer. The transmission of new ideas and the adaptation of the best new insights to commercial uses were slow and erratic. But all of that is changing radically. We live on a planet that is becoming richer and more populous, and in which not only the most advanced economies but also large emerging market nations like China and India increasingly see their economic futures as tied to technological innovation. In that context, the number of trained scientists and engineers is increasing rapidly, as are the resources for research being provided by universities, governments, and the private sector. Moreover, because of the Internet and other advances in communications, collaboration and the exchange of ideas take place at high speed and with little regard for geographic distance. For example, research papers are now disseminated and critiqued almost instantaneously rather than after publication in a journal several years after they are written. And, importantly, as trade and globalization increase the size of the potential market for new products, the possible economic rewards for being first with an innovative product or process are growing rapidly. In short, both humanity’s capacity to innovate and the incentives to innovate are greater today than at any other time in history.

My reasons for optimism for the long run are predominantly technological rather than social. I tend to see the potential for a huge organic growth in the long run resulting from falling energy and manufacturing costs from superabundant alternative energy sources like solar, synthetic petroleum, wind, and nuclear, as well as decentralised manufacturing through 3-D printing and ultimately molecular manufacturing.

But Bernanke’s reasons are pretty good too. I see it every day. Using Twitter, the blogosphere and various other online interfaces, I discuss and refine my views in the company a huge selection of people of various backgrounds. And we all have access to masses of data to backup or challenge our ideas. Intellectual discussions and disputes that might have taken years now take days or weeks — look at the collapse of Reinhart & Rogoff. Ideas, hypotheses, inventions and concepts can spread freely. One innovation shared can feed into ten or twenty new innovations. The internet has built a decentralised open-source platform for collaborative innovation and intellectual development like nothing the world has ever seen.

Of course, as the 2008 financial collapse as well as the more general Too Big To Fail problem shows greater interconnectivity isn’t always good news. Sometimes, greater interconnectivity allows for the transmission of the negative as well as the positive; in the case of 2008 the interconnective global financial system transmitted illiquidity in a default cascade.

But in this case, sharing ideas and information seems entirely beneficial both to the systemic state of human knowledge and innovation, and to individuals like myself who wish to hook into the human network.

So this is another great reason to be optimistic about the long run.