The Free Market Goes to Outer Space- Much Better than NASA

With the Space Shuttle recently retiring from its thirty year career, it’s as good of a time as ever to explore the enticing opportunity that a free market can provide us in space travel and exploration.

The space industry has been a government industry for most of our lives, in America and around the world. However, it would be a mistake to assume this proves either that space socialism1 was or is necessary or desirable.

What would be different if the government hadn’t established NASA? Why is all that science fiction still fiction? Why isn’t space tourism affordable and routine? Should more or less money be spent on space? What would happen if we embraced market based space travel today?


Rockets can be traced back to at least medieval China. Progress was minimal until Robert Goddard and others began making important strides about 100 years ago. However, it wasn’t till governments provided major funding several decades later that we saw rapid advancement.

We all know about the space race, where American and Russian governments competed to get their hands on German rocket scientists, orbit a satellite, orbit humans, and eventually land on the moon itself. Russia stagnated just as NASA, which had been established in 1958, reached its pinnacle in the mid to late 1960’s, taking in up to 4.41% of the annual federal budget. Just 66 years after the first powered airplane flight, man was standing on another world. Quite an accomplishment.

Back on the ground, with Americans winning the race and now facing a deteriorating economy, enthusiasm and funding faded. NASA moved on to the Space Shuttle- with a tighter budget , and later a space station, which ended up being an international project, mainly funded by American, European, and Asian governments.

The International Space Station had been in orbit six years by the time the first commercial, private manned space flight was made in 2004. That flight, aboard the Space Ship One, merely reached the suborbital altitudes Mercury astronauts achieved in 1961. However, it was a reusable ship, able to swiftly repeat the same feat a mere two weeks later, thus winning the $10 million X-prize.

In 2010, a Falcon 9 rocket, developed by SpaceX , became the first commercial rocket to reach orbit. Meanwhile, Space Ship Two was already making test flights and is expected to start ferrying space tourists soon. No less than four other companies were developing space vehicles, all to be flown- hopefully- within the next 10 years. Jay Barbree sums them up:

  • Blue Origin, a secretive company founded by Amazon billionaire Jeff Bezos. It’s working on a gumdrop-shaped capsule to carry astronauts.
  • Sierra Nevada Corp., which is building a reusable Dream Chaser space plane that looks and feels like a mini-space shuttle. The craft is to ride a rocket into orbit, and at the end of its journey it would glide to a runway landing like the space shuttle did.
  • The Boeing Co., the foursome’s most experienced aerospace company. Boeing is building an Apollo-style CST-100 capsule, but so far it’s behind the newest kid on the block.
  • SpaceX, which was founded nine years ago by dot-com millionaire Elon Musk. The new boys at SpaceX have two successful Cape Canaveral launches under their belt.

Space Shuttle: A Magnificent Failure

A number of people are now candidly and succinctly describing the Space Shuttle Program, NASA’s focus for nearly 40 years, as a magnificent failure. The complexity of the vehicle, it’s abilities and accomplishments- are indeed magnificent. However, the set goals of routine, affordable, and reliable space travel were entirely missed, i.e., failure.

While Shuttle first launched in 1981, development began at least 9 years earlier. Prototype orbiter Enterprise did landing tests aboard a modified Boeing 747 in 1977. The first orbiter, Columbia, was due to fly in 1979 but delays from the troublesome thermal protection system pushed it back two years.

The most active year ever was 9 flights spread among four orbiter vehicles in 1985. Each new orbiter was improving, but the program was already missing it’s goals by a significant margin- the promised 50 flights a year were still a dream. Then came the ill-fated day of January 28th, 1986. Seven astronauts and a fourth of the fleet perished in a tragic accident shortly after liftoff.

The shuttles were grounded for over two years, leaving Americans without a way to get into space. The second phase of space shuttle flight came to life in 1988, at a more cautious and slow pace, with sometimes up to 7 flights a year, and no more DoD missions. Work began on space stations, first with the Russian Mir and later with ISS assembly.

Once again NASA seemed to forget the lessons of Challenger. Safety was compromised for the sake of the schedule. On February 1, 2003, another tragic accident took another 7 astronaut lives and the flagship, Columbia. The fleet was grounded for another two and a half years. The President announced Shuttle would be retired after completing the ISS. The third and final phase began, with half the flight rate prior to the Columbia accident. No one pretended that routine and affordable space flight was the goal now.

As we shall see, the magnificent failure wasn’t a mere flaw with the Shuttle program: it was the system of government space travel itself. Ultimately, it’s because socialism and economic interventionism cannot work.

NASA is Seen; What is Unseen?

What if NASA had not been established? Would we be better off, or worse? What might space travel look like today without government running the show? We must answer these questions if we want to make any comparative assessment.

The classic essay, That Which is Seen and That Which is Unseen, penned by Frédéric Bastiat over 150 years ago, explained the oft-forgotten opportunity cost associated with government spending.

We see a lot with NASA, particularly the beautiful rocket launches, the images from space, and other important achievements- including the pinnacle of them, landing a man on the moon.

We also see the many spinoffs- which NASA loves to promote.

Unfortunately, most don’t consider the opportunity cost. The projects, inventions, products which we give up to pursue NASA are just as real. The resources used to fund NASA would have been used for something else- left in the pockets of taxpayers- and possibly funding commercial space companies.

But what about the spinoffs? There would have been spinoffs from using the resources in other ways.

Now we’ve established that government space travel is merely one way to use resources in attempt to satisfy our needs or wants. By choosing to fund NASA all these years, government has given up other ways to use your resources.

The key question: How can we determine which use was better? Fortunately, no guessing is required. Again, basic economic laws provides the answer.

Making the Calculation

Timothy D. Terrel explains:

An individual or a business operating in a market system has to consider the potential alternative uses of resources employed in any particular action. Prices of labor, capital, and raw materials provide a way to compare the costs of the different methods of producing any given good, and consideration of profits or losses give the entrepreneur critical information about whether or not the product is as desirable as other things that could be produced with the same resources.

While a government agency such as NASA typically does have to purchase resources such as a technician’s labor or a shuttle part from the private sector, it is operating without the information provided with profit and loss. Is a shuttle mission a better use of the resources than any alternative? We can’t know, because a shuttle mission is not sold at a market-determined price to a willing buyer. NASA did not have to consider whether $200 billion dollars forcibly extracted from taxpayers would produce something salable at a price of more than $200 billion…

… [E]ven with competition from other governments, and even with NASA subcontracting to the private sector, the calculation problem remains. What was and is still being given up in order to build and maintain the ISS? What has been the opportunity cost of the various exploratory and research missions funded by the government? Without profit and loss, government space flight is unable to provide a credible economic justification for its own existence.

In other words, free markets always deliver vastly superior products and services because of the price system gives constant feedback to businesses on the success and failure of their actions. Scarce resources are allocated where and how consumers want them since that is where the maximum profits are.

Government cannot replicate this because they are not subjected to the profit-loss regulation, resulting in the calculation problem. It continues to receive money regardless of whether it’s actions best serve the needs of the customer. The problem is unique to government because the “customers” have no choice whether to pay up: taxation is not a voluntary exchange.

As a result, the resources consumed by NASA are either completely wasted or used inefficiently. It leaves us all poorer and holds back our potential in the space industry- or any other sector of the economy.

“But what if that means less funding for the space industry? What if that means delayed progress?”

It’s true that without the government diverting resources away from the uses chosen by individuals and towards space, less- or more2 progress might have occurred. If development would have come at a later point, that simply means the people had more urgent needs to satisfy. We have no justifiable reason to override their decision with the force of government.

Two More Considerations

We can raise further objections to government space programs, moral and constitutional:

  • You have a right to do whatever you want with your property as long as it is peaceful . It is immoral for anyone to violate these rights, but that is exactly what happens when government expropriates money from the public on behalf of a space program (or anything else).
  • Via the Constitution, the states created a limited federal government, granting it certain powers and retaining the rest for themselves. Creation of a civilian space program such as NASA was not one of those powers ceded to the federal government. Rather, it was just assumed by Washington over the years. Those who think the original meaning of the Constitution should be enforced, rather than a modern re-interpretation, must consider a federal space program unconstitutional.

The Market Goes to Space

Spaceflight- manned or not- is the most expensive and demanding form of transportation; compare it to a bicycle, car, boat, or an airplane, which are all much simpler in every aspect. Consequently, the savings and capital required to reach the final frontier is immense, and only possible in advanced, wealthy economies- after other, more fundamental human needs and wants are taken care of.

Once an economy reaches this point, space travel becomes feasible, and develops like any other good or service on the market. A business earns profits only by serving the needs of customers. Once there is real demand for space travel, it becomes profitable to develop.

While the commercial space industry is concrete proof that private space travel is possible, it’s still occurring in market dominated by government interventionism. As a result, progress is hampered in countless ways. There is every reason to think that without government crowding out and restricting the freedom of private enterprise, it would have flown rockets many decades ago. Indeed, the first telecommunications satellite was funded by private industry, not government- all the way back in 1962.

Inefficient vehicles like the space shuttle would have never been sustained in a free market, especially not for 40 years (including development). Rather, cheaper, safer, and more reliable vehicles would have been required for companies to reduce costs enough to make a profit.

Despite the past mistakes, what really matters is the path we take moving forward. The free market offers the best environment for prosperity- not just on earth, but in outer space as well. The Congress and President should begin taking steps to remove government barriers to the market as well as free up resources under government control so they can be used more efficiently by the people. Ultimately, everyone benefits from this transition, including the prospects for a robust space industry.


It will be difficult to persuade some dedicated space fans- and probably most Americans- that NASA was a mistake. It took me awhile. The emotional attachments are hard to overcome. Ideas we have clung to for years are difficult to abandon. The harsh light of facts and reason to the contrary usually do not suffice.

However, admitting failure and finding a better way is all that we need to do. That process is partially underway now. The success that is now showing up in the form of commercial spaceflight is a step in the right direction; however, we are still quite far from a free market, which is the goal.

That goal is desirable from both utilitarian and moral perspectives. Economic laws and human nature say so. The Final Frontier is waiting for us.


  1. Yes, it is socialism: the means of production, distribution, and exchange are owned by the government- either directly or through its claimed right to regulate in any manner it chooses.
  2. It could be argued that government’s inability to efficiently control the space market has held us back so much that we would be much further ahead even if the private economy started many years later.
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