Marginal Utility

by Tom Bozzo

Or, the "Is John Tierney smarter than a computer-simulated crustacean?" watch

Sure, Donald Luskin may be the stupidest man alive, but surely John Tierney deserves some award for testing the limits of what an 'elite' op-ed page can tolerate on a regular basis before it loses its status.

One of his early Times columns made an, er, brilliant case for U.S. Social Security privatization on the grounds that Chilean privatization worked out great for a friend of his in Chile. Following in that tradition, today he argues (Times Selecters read at your own risk) that since the Ansari X Prize worked out so great in getting Burt Rutan's SpaceShipOne rocket-plane to an altitude of 100km, it would be great to have NASA compete with private industry over prizes for the implementation of far more extravagant space projects.

As is often the case, the mere concept of using awards to spur innovation is not totally stupid in itself. It's ancient, if much less extensively used than the main alternative systems: Monopolies granted to innovators through the patent system, and direct funding of research through contractual mechanisms. Tirole's Theory of Industrial Organization (MIT Press, 1988 [*]) notes that awards have the potential advantage over patents in that they don't create monopolies, though there are substantial disadvantages, notably:

The award system is difficult to implement. First, the government must be highly knowledgeable about the feasibility of various inventions and the demand for them. Information about demand is crucial for determining the size of the award, which, in turn, influences the research incentives. Generally, firms are better informed than the government on these matters, so a less centralized solution (such as the patent system) is preferable. Indeed, one advantage of the patent system is that monopoly profits are correlated with (although different from) the social value of an invention. (p. 401)

So that's the serious case. Then there's the Tierney version:

[Sir Richard Branson's Virgin Galactic] has ordered five spaceships and plans to send more than 700 people into space in the first 18 months, which is more than all the government-sponsored space programs have sent in history.

That's nearing whopper territory just out of the gates. A Russian site lists 442 people who have flown in space, though the top 30 frequent fliers alone have 157 trips among them. The endurance record holder, cosmonaut Sergei Krikalev, has individually spent over 800 days in space, which is a solid order of magnitude more time than Virgin Galactic's first 700 passengers will spend in Galactic's brief suborbital flights.

The new Virgin Galactic spaceship will be a larger eight-person version of the ship that last year won the $10 million Ansari X Prize for a reusable spacecraft. Its designer, Burt Rutan, backed by the billionaire Paul Allen, spent over $25 million to beat two dozen competitors.

While there is clearly a small space adventure travel market at six- to eight-figure price tags, $10 million in revenue (not counting the X Prize) against more than $25 million in cost just for the proof-of-concept vehicle doesn't suggest that this market is more than a very expensive plaything of the very rich for the foreseeable future.

That's the beauty of offering prizes: a little money buys a lot more R.&D. than you would ever get by giving the funds to NASA. Prizes spurred Charles Lindbergh and others to quickly turn aviation from a stunt into an industry. Competition inspires innovations that would never be approved by bureaucrats - like modeling a spaceship on a badminton shuttlecock.

Now, Tierney is starting to getting silly. Remember, market demand plus the award size determines the research incentives. The potential success of the prize approach depends on a certain configuration of knowledge between the awarding entity and the competitors; there is nothing magical about the prize mechanism. Moreover, the "bureaucrat" slur makes it look like Tierney hasn't followed aeronautical history very closely at all. X-planes flown by NASA (and predecessor agencies) pioneered flight decades ago in regimes where private industry is just now headed; in the real world, acknowledging Burt Rutan's cleverness need not be at the expense of that legacy.

Rutan's spaceship, unlike NASA's space shuttle, doesn't need elaborate tiles as a heat shield because it re-enters the atmosphere much more slowly. Before returning to Earth, it changes its streamlined shape by folding its wings, enabling it to descend relatively gently, like a shuttlecock.

This is beyond silly and well into sheer stupidity. SpaceShipOne doesn't "need" an elaborate thermal protection system because it doesn't get anywhere near velocities at which it would need them. It reaches maximum speeds just north of 2,000 MPH, against orbital velocity of roughly 17,500 MPH. SpaceShipOne's Wikipedia entry usefully notes:

The achievements of SpaceShipOne are more comparable to the X-15 than orbiting spacecraft like the Space Shuttle. Accelerating a spacecraft to orbital speed requires more than 30 times as much energy as lifting it to 100 km.

Or, as I said a year ago:

But the SpaceShipOne design, in being cleverly geared towards the suborbital flight profile required by the X Prize, effectively punts on the major challenges that currently make spacecraft capable of reaching orbit expensive and/or dangerous: obtaining sufficient performance from rocket engines to reach orbital speeds, and then dissipating the energy on re-entry. Spending the price of the median Dane County house on a few minutes' high altitude weightlessness sounds like a little less than a space tourism revolution.

-------------------------

Tierney does take a quick detour into the realm of agreement among reasonable people:

Now that Rutan and Branson and other entrepreneurs are entering space, there's no need for NASA to poke around in Earth orbit with the space shuttle and the space station. Nor does it need to return to the Moon. Rutan figures that private spaceships will be going there before long, so he'd rather see NASA concentrate on ways to reach Mars.

Sending people into low-earth orbit (LEO) is, indeed, an increasingly futile effort, particularly with funding for such research as can be done on the International Space Station on the chopping block. Since that money has much more scientifically productive uses elsewhere (even staying in space), there seems to be little harm in leaving civil flight to LEO to SpaceShipThree — Virgin Galactic's currently-hypothetical first orbiter — such time as Sir Richard can spare a few billion euro for the RDT&E.

But then, of course, there is Tierney's Cunning Plan:

So would I, but not all by itself. Instead of just financing NASA's plans for Mars, Congress and the White House should make it compete against engineers like Rutan. It could offer a prize, to be awarded by the National Academy of Engineering or the National Research Council, for the best plan on paper for a manned mission to Mars.

Branson told me he'd be willing to enter that competition for a prize of $10 million - a pittance next to NASA's $16 billion annual budget. Robert Zubrin, the president of the Mars Society, said he'd enter it, too.

I'll bet they would. Is it necessary to offer Zubrin $10 million to re-write The Case For Mars?

An even better idea would be to offer prizes for making actual progress on a Mars mission, not just drawing up plans. Zubrin suggests that the federal government get entrepreneurs started by offering a $5 billion prize for the first flight of a vehicle that can lift 120 tons into orbit.

This looks like an even bigger waste than $10 million for a paper plan, as NASA could fly (almost) 120 tons to low-earth orbit with an actual rocket 38 years ago.

There could also be a grand $30 billion Mars Prize for getting a human to Mars and planting the American flag. That would be a bargain compared with the current plans of NASA, which wants to get to Mars by first spending $100 billion just to reach the Moon.

I've suggested that the price tag for the Bush human exploration "vision" is part of an effort to gain political cover for excising a chunk of NASA's current funding. Given penny-pinching on other programs, in addition to the likelihood that a Mars landing would be the best use of $30 billion in space science money, it's not obvious that there's even $30 billion for the endeavor in the first place.

A Mars Prize would have one wonderful political advantage over doling out money to NASA. Today's politicians could announce the prize without scrimping to pay for it in any budget anytime soon. They would get the immediate glory of inaugurating an interplanetary quest, and someone else would get the bill.

That, at least, is just like the Bush administration.


(*) A text which is now dated by the selection of computers as an example of an industry in which patents "play a minor role."