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7.4.3 How the Government Can Help the Private Sector

There are several ways the government can help start large scale development of space by the private sector along the lines of PERMANENT. These may include some, or possibly all, of the following:

  • Funding basic R&D
  • Funding deployment of some of the initial infrastructure
  • Legislation protecting private property rights in space
  • Government-sponsored insurance
  • Providing a guaranteed initial customer
  • Promotion via the pulpit

It is clear that the private sector will take over once the initial startup costs and basic infrastructure are overcome.

Government will not be the entity making products and services in space, except possibly a few products in the initial years.

It is beyond the scope of this discussion to cite other examples of government initiated research and development (and joint ventures with government contractors) which became purely private sector realms of high profitability, e.g., communications satellites, internet, various energy technologies, but business readers and government program leaders may want to study some of those case histories.

Funding basic R&D

In those areas where private industry is not funding research and development (R&D), due to high cost for all enabling technologies combined, long payback times, and/or high perceived risk, government can step in and fund the R&D. However, the results of the R&D paid for by taxpayer dollars should be available to the taxpayer. This will provide a basis for fair competition between many companies in space development.

Funding deployment of some of the initial infrastructure

It may be reasonable for the government to fund some of the initial infrastructure. For example, a space station (of an appropriate design) and interorbital vehicles. The services can be sold to the highest bidders, and of course the door is open for the private sector to provide additional services, e.g., by buying additional copies of the interorbital vehicles and other items initially created by government contracts. We must gets things moving. The revenues from the highest bidders are likely to exceed the costs, and so we should be prepared to deal with the issue of where the revenues should go - to other basic R&D in this field, or back to the government for other uses. Once the private sector starts providing identical services, the government should stop competing with the private sector (though the infrastructure could be used for purely scientific government-funded projects).

Legislation developing and protecting private property rights in space

As discussed elsewhere in the PERMANENT website, there is practically no international law protecting private property rights in space. It's probably not a big problem because legal precedence in the USA and other major economies generally give pedis possessio rights to discoverers who intend to exploit a find, including establishing presence by teleoperated robots (as discussed elsewhere). Nonetheless, it would be good to clarify private property rights, and to defend against any other "have-not" nations trying to cause international law problems regarding private property rights in outer space. The rejected 1979 Moon Treaty is an example. What multinational company will spend money developing asteroidal or lunar resources if they perceive that their expensive claim could possibly be revoked, or they run into serious complications later?

It would make investments more secure if the USA and other nations which are economic powerhouses proactively and clearly recognized private property claims in outer space, for example "requiring robotic occupation, progressive resource development, and eventual manned presence, as the necessary steps toward ownership" (Neil et al., paper reference). A sample Claims Registry with different classes of claims is given at http://www.permanent.com/archimedes/PropertyRegistry.html .

Government-sponsored insurance

Insurance costs are extremely high for space based ventures. Unlike insurance for cars, ships and aircraft, insurance for satellites and rocket launches is extremely high, sometimes accounting for a third of the total cost. Indeed, getting insurance is one of the serious barriers for startup private launch companies getting into the business.

The government could provide partial insurance for vehicles involved in asteroid and lunar mining ventures, which would significantly reduce the startup cost and the risk, as long as the vehicle is manufactured, assembled and launched domestically. It would be nice to see governments of different countries compete in this regard!

Providing a guaranteed initial customer

A guaranteed initial customer reduces the perceived risk of a project. Private sector entities think that if they can produce fuel propellants, radiation shielding and steel beams from asteroidal materials, they can probably be marketable. But they're not guaranteed an immediate customer for these products, and this is a risk given the costs involved for delivering the product, especially given that there is no commercial space station in existence right now. In some part, it's a chicken and egg situation.

If the government put up no money, but simply guaranteed that it would buy a certain quantity of such products at a certain price on a certain date in case nobody else did, the risk would be substantially reduced. However, if the products can be sold at a higher price to a private consumer, the government does not need to buy and use them at all, and is relieved of any such obligation. However, government applications would include the space station, defense, and science applications, so the government may want guaranteed delivery and price for the products, with the contractor free to sell additional supplies to other entities.

Promotion via the pulpit

Presidents and leading politicians can promote projects without spending any money. The PERMANENT concepts are hardly known by the general public or government leaders, but if one or more great leaders were simply to raise the topic seriously for purposes of leading their nation, they can be effective without spending any money.

"The "fat" [total] NASA budget ($14 billion in 1995) has long been tagged a financial burden to the skeptical electorate, but it pales in comparison to the $800 billion annual U.S. coal industry cash flow. The problem is not a lack of financial resources. The roadblocks to space development lie somewhere in the region between public policy and private investor confidence. It is there that we must look for solutions." (Neil et al., paper reference).






PERMANENT.com > Law, Governments, and Private Sector > Government > How Governments Can Help




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