Daily Times

If you want to go to space, call the Russians, Chinese or the Indians. Anyone but the US government as it is out of that business. Or, instead, call one of the three Rocket Men who can actually deliver. And Little Rocket Man, North Korea’s Kim Jung Un, is not one of them.

Three multi-multi-billionaires, two Americans and one Brit, are the current space pioneers. Jeff Bezos, founder of Amazon and worth well over $100 billion started his Blue Origin space company in 2000. Richard Branson, knighted by the Queen in 2000 for entrepreneurship, started his space company, Virgin Galactica, an extension of his Virgin Records, Airlines and Rail four years later. And Elon Musk, founder and owner of Tesla cars, started Space-X also in 2004.

Of the three, Branson was the first in space with Unity 22, a rocket launched from a mother ship reaching some 50 miles above earth last week. Bezos lifts off shortly and may have already travelled 60 miles above the earth in his craft, named New Shepard for astronaut Alan Shepard when this column is published. Presumably, Musk will follow suit.

All three have invested at least $100 million as a start-up. Each company has received private equity investment and substantial support from NASA. Bezos has seeded some $500 million and has pledged to put up a billion dollars a year from his Amazon stock. Each of the Rocket Men is betting that commercial space travel, even for a few minutes, will attract sufficient passengers to be successful.

Musk has developed four designs: Falcon; Falcon 9 (the world’s heaviest rocket with the power equal to 18 747’s with payloads of sufficient capacity both for building in space and transporting back whatever raw materials space exploration may find); Dragon; and Starship. Likewise, Bezos and Branson are developing follow-on space vehicles. While no comparisons exist and clearly these three companies were totally dependent on the prior work done by NASA in their race to the moon, it would appear that private capital has been more efficient and less costly than the money spent by the US government on space.

With the success of these space companies so far, perhaps privatising research and development might prove fruitful

To date, the success of these Rocket Men raises several questions. Can these endeavours replace the government in space? Will these companies be financially viable or as with other fads–from the tulip frenzy in the early 17th century to the dot com bust four hundred years later–will this turn out to be billionaires’ whimsies? Perhaps more importantly, if at least one of these companies succeeds, does this suggest that government might turn over more responsibilities to the private sector? If yes, who might be future candidates?

Privatising many aspects of government has been tried including “hybrid” organisations such as the Federal National Mortgage Association (FannieMae) and the Federal Home Loan Mortgage Corporation (FreddieMac). According to the law, Fannie was created in 1938 and Freddie in 1970 by the US government “to help ensure a reliable and affordable supply of mortgage funds throughout the country.” Both are shareholder-owned companies operating under a federal charter. But each has often been criticised for shortcomings.

Similarly, a number of penitentiaries have been privatised with very mixed success. Each of the departments of the government has attempted to privatise certain functions in an effort to reduce costs and improve efficiency. The record here has not always been good.

But with the success of these space companies so far, perhaps privatising research and development might prove fruitful. Operation Warp Speed produced three vaccines for Covid-19 in an extraordinarily short time of less than a year because of the private sector. Given the revolution in military technologies, perhaps privatising the Defense Advanced Research Agency (DARPA) might be one such idea.

Government would “sell” or assign the rights to this new company and provide the R and D funding as well as priority lists for research. Here, the entity could acquire shares in the companies being funded, acting as a de facto private equity firm but with the US government being an equal partner. If the technologies were successful, in essence, the government would be rewarded if the companies went public and were, in turn, acquired by a larger entity or were profitable, meaning costs to the taxpayer would be reduced. And the entity “owning” DARPA would pay an annual fee for the rights.

Indeed, the only likely way to close the huge gap between defence needs and budgets would be to emulate the success of these Rocket Men in privatising space.

The writer is a senior advisor at Washington, DC’s Atlantic Council and a published author