advisor@utcsstat.UUCP (Taras Pryjma) (12/27/83)
In recent discussions that I have had with various people, and also with
reading some of the recent stuff on the net, I have noticed a total lack by
some of the economic consequence of various space developments.
For example the statments like 'what do you think what kind of
space development will there be?' and 'I hope weapons will not be intro-
duced in space?' particularly irk me. The simple point of the matter is
that space development will follow the track of whatever provides the best
rate of return for the investors. What will naturally follow, of course,
will be the fact that those investors will put weapons into space that will
protect their investments. Eg. where-ever people go, so do their arms!
Consideration should be also given to who will finance space
development in the future. In many cases, corporations will be formed that
will be special joint developments of various utilities and investment cap-
ital groups to run these projects. They will in turn have to raise vast
amounts of capital to make these projects go, which in turn means that they
will have to turn to the major banking corporations of the world, who will
in turn have to form bank syndicates to finance these projects. They will
probably finance these projects through mortgages, similar to those pro-
vided on houses, or leases, which are very similar to those that are used
to finance heavy equipment or computers. You will not find that corpora-
tions such as Boeing or Rockwell or others will get into the financing end
of space development, they may have subsiduaries that will, but in large
part they will reamain simply as space contractors and make a good buck at
it too.
In the most part, bank presidents are people who do not under-
stand high technology issues all that well, all they do understand is that
untried technology is very risky. To reinforce this feeling, one need only
look at those people who tried to start new car companies and failed. What
they also understand is that they have to protect the assests of their
respective banks, and that untried technology usually means delays, as wit-
nessed in the initial contruction of the shuttle. Like the rest of us they
also like to dream and write glossy bank brochures, so they will jump in
when they think its safe, which also means that they will probably insist
on management that already has a good track record for the management of
large projects.
So that to make along story short, I think that you will find
that the bankers of the world will jump into space technology when somebody
contructs a pilot project that proves that construction of space projects,
such as the solar power satellites, are both technically feasable and
economically viable. This criteria, by the way, is the same for any capi-
tal intensive project that you might require money for!
Other interesting questions that will be raised will be those of
what will be the consequences of the balance of trade problems when space
development really does become prevelant. Or can a solar power satellite
really be classified as real property or as a capital asset, the ramifica-
tion of this question alone are immense.
The real intention of this article is to start a discussion of
space economics, and the problems that inherintly go along with it. If you
have thoughts on what I have just said, or any related subject please
respond to me via this news group or by sending me stuff via mail.
Taras S. Pryjma, The UTCS Advising Office uucp: utcsstat!advisorstevel@haddock.UUCP (12/31/83)
#R:utcsstat:-158900:haddock:16000005:000:1114
haddock!stevel Dec 30 10:25:00 1983
Boeing has consistantly shown it's desire and willingness to put billions
of dollars into major development projects in order to be at the leading
edge of the air transport industry. The 747 is suppose to have cost 3 to
5 billion dollars. Both the L-1011 and the DC-10 cost over 5 billion each
to develop and produce the first prototypes. In contrast the shuttle cost
10 billion, which while a hell of a lot of money is comparativly not such
a staggering figure.
It seems plausably that in 20 years or less, when space factories start
to become a standard part of buisness, that Boeing will undertake the
production of a space vehicle. The shuttle will be getting old and while
NASA may get funding for a new vehicle it seems likely that there will be
a hole in the market for some size of space vehicle. It is also plausible
that another major space contractor, like Rockwell or Grumman, will try
to step into the lead when the market opens up. This is less likly as
these companies prefer to stick to the straight low risk contracting.
Steve Ludlum, decvax!yale-co!ima!stevel, {ucbvax|ihnp4}!cbosgd!ima!stevel