Paging Robert Murphy – Donald Trump wants to go to the Moon, Mars

On Monday, President Donald Trump announced that the United States will declare a space race, sending American astronauts to the Moon and Mars.

Signing a new NASA directive, the president will order the space agency to focus its efforts on space exploration. This is yet another campaign promise that Trump has kept – he made it in Florida last year.

He appeared to take the advice of former Speaker of the House Newt Gingrich’s idea of constructing a permanent presence on the planet’s moon.

Trump said in a statement:

“The directive I am signing today will refocus America’s space program on human exploration and discovery. It marks an important step in returning American astronauts to the moon for the first time since 1972 for long-term exploration and use. This time we will not only plan on flag and leave our footprint.”

But why does the U.S. government need to focus on space exploration and not the private sector?

Economist Robert Murphy wrote in 2005:

In a free market, the maverick pioneer just needs to convince one or a few capitalists (out of thousands) to finance his revolutionary project, and then the results will speak for themselves. In contrast, an innovative civil servant at NASA needs to convince his direct superiors before trying anything new. If his bosses happen to dislike the idea, that’s the end of it.

Prior to the exploits of SpaceShipOne, the standard justification for government involvement in space was that such undertakings were “too expensive” for the private sector. But what does this really mean? The Apollo moon program certainly didn’t create labor and other resources out of thin air. On the contrary, the scientists, unskilled workers, steel, fuel, computers, etc. that went into NASA in the 1960s were all diverted from other industries and potential uses. The government spent billions of dollars putting Neil Armstrong on the moon, and consequently the American taxpayers had billions fewer dollars to spend on other goods and services.

This is just another example of what Frédéric Bastiat described in his famous essay, “That Which Is Seen, and That Which Is Not Seen.” Whenever the government creates some public work, everyone can see the obvious benefits. For example, everyone can appreciate the fact that we put a US flag on the moon, and listened as Neil Armstrong apparently flubbed his memorized line. Or to use a more mundane example, everyone can see a beautiful new sports stadium financed (in part) by tax dollars.

What people can’t see are the thousands of other goods and services that now won’t be enjoyed, because the scarce resources necessary for their production were devoted to the government project. Politicians may break moral laws, but they can’t evade economic ones: If they send a man to the moon (or build a new stadium), consumers necessarily must curtail their enjoyments of other goods.

Thus the question becomes: Was the Apollo program (or new stadium) sufficiently valued by consumers to outweigh its opportunity cost (i.e., the value consumers place on the goods that now cannot be produced)? At first glance, this seems to be a difficult question to answer. After all, how can we possibly compare the benefits of the Apollo program with, say, the benefits of the additional shoes, diapers, automobiles, research on cancer, etc. that could have been alternatively produced?

The short answer is, we can’t. This is just a specific example of the more general principle elaborated by Ludwig von Mises: the impossibility of economic calculation under socialism. Even if a central planning board were truly benevolent, and even if it had access to all of the technical conditions (such as resource supplies and technological recipes) of the economy, the planners would be at a loss to deploy the scarce resources in an efficient way. There would be no way to determine whether the chosen output goals were good ones, or whether an alternative plan could have provided the subjects with a better outcome.

The above analysis might puzzle the reader. Yes, it is certainly difficult in practice to tell whether the Apollo program (or any other government project) is worth its cost, but isn’t that true of any undertaking? Why should this be a unique drawback for government endeavors?

The crucial difference is that private projects are subject to the profit and loss test. The owner of a private firm must pay market prices for all of his or her scarce resources. If the consumers do not then voluntarily spend enough money on the final product or service to recoup these expenditures, this is the market’s signal that the resources are more urgently needed in other lines (according to the consumers). It can never be the case that all entrepreneurs find a particular resource “too expensive” to use; if no entrepreneurs were buying it, then the price of this resource would fall until some did.

Let the Elon Musks and Richard Branson handle the space race.

The U.S. is facing a $20 trillion national debt.

 

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