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NASA vs. Private Enterprise

THIS has been a plague year for NASA: The flawed Hubble Space Telescope, a grounded shuttle fleet, the Magellan orbiter around Venus behaving erratically, and more mirror troubles with the new generation of weather satellites. The National Space Council has ordered an independent review of NASA's operations. People both inside government and out are wondering aloud if the agency can survive. Enthusiasts within the space community are even suggesting that NASA be abandoned altogether, that the government should allow private enterprise a free hand in developing the space frontier.

Private entrepreneurs, say these enthusiasts, can explore the solar system, build space stations and habitats on the moon, and begin to tap the resources of energy and raw materials that exist out there - without government help or hindrance. There are untold riches to be found in space; just unleash the profit motive and get government out of the way.

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Yet private enterprise has been slow to move into space. Thirty-two years elapsed between the flight of the first Sputnik, in 1957, and the first launching of a satellite into orbit by a private company, in 1989.

Some say that the government fought to maintain a monopoly on space activities, relegating private enterprise to the role of contractors. However, the scale of capital investment required and the extreme risks involved are at least as important in explaining the private sector's lack of enthusiasm for space ventures.

The Challenger tragedy broke the government stranglehold on space operations. The Reagan White House decreed that NASA will no longer launch commercial payloads.

Now companies as large as Martin Marietta and McDonnell Douglas are in the business of space-launch services, together with newer companies such as Orbital Sciences Corporation and Space Services Inc.

The future will see a mix of private and government operations in space. What should this mix be? Where should the lines be drawn between free enterprise and government?

The United States government and private entrepreneurs have clashed and cooperated on other vast projects. What can be learned from our own history?

The transcontinental railroad: A transcontinental railroad was first seriously proposed in the 1840s, when railroads were little more than dangerous toys. The federal government had already established a form of subsidy for such projects, via land grants for ``internal improvements'' such as canals and turnpikes. By 1850, Congress had granted about 7 million acres from the public domain to such projects.

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But individual states were unwilling to support a railroad route that did not directly benefit them, so the project languished for lack of congressional support.

It was not until 1862 that the Pacific Railroad Act was passed. A major motivation was to keep California in the Union.

The federal government provided the land, low-interest loans to contractors, and military protection. Land grants are the most painless kind of government subsidy: Simply liquidate existing assets without spending the taxpayers' money. It was much easier for the government to hide subsidies when it had so much capital in the form of land to give away.

Dams, irrigation, and hydropower: In the West, most land is too arid for dry-land farming. Large, capital-intensive irrigation projects were called for. Private entrepreneurs rose to the challenge, but such projects failed with dismal regularity through the early decades of the 20th century. The free market could not supply sufficient revenue to fund these large construction jobs to their completion.

It was not until the 1930s that massive irrigation/hydropower dams such as the Grand Coulee and the Hoover were built - by the federal government. Neither private enterprise nor individual states could manage such huge construction projects and their tangle of legal questions about navigable waters, electricity generation, and water-usage rights.

Air transportion: Civil aviation in the US virtually began with the government's support of mail flights. In the 1930s, as war loomed in Europe, government funding of aviation technology became the base from which most new civil air transports eventually developed. NASA, the Department of Defense, and their predecessors have played crucial roles in the development of aviation technology.

Thus, history does not encourage the idea of private enterprise alone as the spur to major, capital-intensive pioneering development. Government sponsorship is how such projects have gotten started in the US.

It is indeed true, however, that government sponsorship can be carried out in counterproductive ways, and history also reveals mistakes to be avoided.

1.Any monopolistic charter must be limited and contain specific, testable milestones to be achieved within a certain time frame. Britain gave the Hudson's Bay Company a ``perpetual charter'' in 1670; the company grew fat and lazy on the fur trade, and failed to explore and develop the interior of North America.

2.``Land grants'' of one sort or another may be useful. The 1967 Outer Space Treaty specifically prohibits claims of sovereignty on ``celestial bodies.'' But it provides that all activities on those bodies be carried out under government supervision. This could provide the framework in which the US could delegate, for example, lunar mining rights to a corporate consortium.

3.Do not set up perpetual bureaucracies. The US Bureau of Reclamation appears to have fallen into this mode. Many of its recent and proposed irrigation/hydropower projects have marginal economic justification. Because one big dam on the Colorado River is good does not mean that 50 of them will be 50 times as good.

Government's role is to provide initial, not perpetual, investment. Only when that initial investment is so high-risk or large-scale that no private entity could undertake it, is a federal role justified.

4.Guarantee a market by government. The railroads were at one time vital to national security and merited subsidy for that reason alone. Air power has been vital for national security from the 1930s onward. That has served as a spur to the development of civil aviation. Surely transportation to space merits similar concern on the basis of national security, at least. For that reason space ventures should be offered some form of government guarantee.

5.Rather than build infrastructure for free, later to be turned over to some private entity as an outright grant, pay the structure off. The public sector can afford much longer payback scales than the private sector; 50 years is a typical time. Yet there is a vast difference between a long amortization period and a complete giveaway.

Hoover Dam was too big for private enterprise, so it was built by the government. But it was paid for by the electrical power it generated.

Space stations, lunar bases, and other space infrastructure could be financed in the same way. With federal deficits running so high, this may be the only way they can be financed.

Despite the fears and rhetoric flying through the space community today, history shows that it is possible for government and private enterprise to cooperate - to the long-term benefit of both taxpayers and investors.

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