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Monday, August 22, 2011

Worth the Price? Should We Even Need to Ask?

The Space Race in the 1960s was an epic battle for supremacy in space exploration between the United States and the Soviet Union. National pride and prestige seemed to be a driving force as the Cold War waged on. The Soviets were the first to send the world’s first artificial satellite, Sputnik 1, into orbit and the US were the first to successfully land a man on the moon. The real question, though, boils down to whether or not this was all worth it? Certainly there were gains, many of them we are still seeing come to fruition but its hard to imagine the counterfactuals of what we missed by spending the money the way the Soviet and US governments did.

In today’s document, Henry Hazlitt’s 1962 Business Tide Column article for Newsweek entitled “Worth the Price?”, the question of whether the Space Race was worth the price is addressed. It is particularly interesting to see Hazlitt’s perspective given it was written before we had reached the moon. Hazlitt ultimately sounds as if the price is far too high and the reason deals with the inability of the government to properly assess the costs and benefits of engaging in the space exploration.

For many, if space exploration was to occur at all, it needed to be conducted by the state. The costs are simply too great and the ability to transform the possible benefits, such as scientific and technological discoveries, were too difficult to transform into “profits” for private businesses to undertake. But with a new space race starting to develop this claim is becoming less true. The new race seems to be between NASA and private companies attempting to reach Mars. Back in 2007 NASA stated the goal of putting a man on Mars by 2037 and recently the private company SpaceX, which is already attempting commercial space travel, stated their goal of establishing a means of getting to and from Mars.

As technology is improving the discovery process of the market is in full swing with entrepreneurs finding new ways of improving and satisfying the desires of his fellow man. And space exploration seems to be in the cards.

The difference between NASA and the private companies is in the price. With NASA we need to ask, like Hazlitt did some 50 years ago, is it worth the price? But with the private company, no such question exists because the market, through the profit and loss mechanism, provides the answer. Going to Mars is a risk; it may or may not be worth the price. With NASA the government takes our money whether we like it or not and there are no signals to say whether it was truly what people want or not. With private companies, however, if the venture is not worth it, they would know because they would have lost money. Money, which was voluntarily provided at the investor’s own risk. If it pays off then the rewards will be in the form of profits and others will follow suit, further reducing the costs and increasing the availability for others.

Asking whether something, particularly expensive as space exploration, is worth the price is an important question. And it is a question we should have a real answer for. So, maybe this, as with so many things, is another example of the state overstepping its bounds.

Download Hazlitt’s “Is it Worth the Price?” here.

  • Nicholas Snow is a Visiting Assistant Professor at Kenyon College in the Department of Economics, and previously a Senior Lecturer at The Ohio State University Economics Department. His research focuses on the political economy of prohibition.