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Orbital Economics: Engineering GrowthTerry Bain.Twentieth Space CongressCocoa Beach, FloridaPrivate Enterprise in SpaceApril 26, 1983.Copyright 1983, Terry Bain
 
Orbital Economics: Engineering GrowthTerry Bain.Twentieth Space CongressCocoa Beach, FloridaPrivate Enterprise in SpaceApril 26, 1983.Copyright 1983, Terry BainAbstractGovernment funding is usually too irregular and inefficient to sustain OrbitalIndustrial Operations. Economic history indicates that America's Moon landingwas probably engineered by the Kennedy Tax Rate Reductions of 1964-66.Taxation, directly and indirectly, has always affected the aerospace industry: ratecuts engineer growth.Economic "Bad Medicine" is the primary causation of most problems delayingPrivate Enterprises’ expansion into space. Rate cuts increase governmentrevenues: tax hikes seem to precipitate budget cuts that can kill projects, or people. Unnecessarily high tax rates almost always force private sources of capital "underground". Mankind needs access to its "second worlds". One-world, "fractional economics" is obsolete.Introduction: the Malthus MistakeAviation people understand the crashes are usually the result of an uncorrectedchain of small mistakes. Each isolated error often seems far too minor to besingled out as an accident’s cause. A long train of minor errors, however, canhave results that are fatal.America's economy "stalls out "occasionally.” Any good pilot knows how torecover from a stall; they simply nose their ship down, and trade off a littlealtitude for airspeed to regain lift. If the machine isn't damaged, a stall shouldonly be a relatively minor problem - unless, of course, it happens a little too closeto the ground.Good economic "navigation" is essential, if the captains and crews of Americancommerce choose to avoid "pilot error". Today's economists, for the most part,are not navigating effectively: their tools still work, but their charts are out of date.All forms of Malthusian, or controlled growth economics (Mercantilism) are
 
dangerously obsolete - since July 20, 1969, Earth's expanding population hashad potential access to a "second world.” Mercantilism is too slow; economic"bad medicine" is the only barrier, in 1983, to unrestrained frontier growth.Mercantilism became obsolete in 1776, when Adam Smith published Wealth of Nations. (Figure 1). Smith advocated minimum governmental intervention, freeenterprise, and free trade, based on the assumption that the labor of individuals(rather than the national hoard of gold) was, and is, the only real source of allwealth. Smith felt that the interests of society, as a whole, are best served byallowing every individual to pursue his own self–interests.Classical economics began veering off course in 1798, when Thomas Malthuspublished An Essay on the Principle of Population. He observed, correctly, thatunrestrained populations tend to grow geometrically, while resources seem onlyto rise at an arithmetical rate. Malthus feared that more and more people,competing more each year, for ever-smaller per-capita shares of the planet,would someday leave Earth hip-deep in hungry people.Later European economists, including Jeremy Bentham and David Ricardo,attempted to deal with the projected Malthusian "evils" of unrestrained growth.Classical economics became the "gloomy science," and mainstream economicphilosophy gradually began reverting back towards controlled growth.Income redistribution and social reform were advocated, in the 19th century, toration out the alleged "dwindling resources" of the planet. John Stuart Milladvocated "progressive taxation,” socialization of land rent, and compulsoryeducation, while paradoxically insisting on limited governmental power, topreserve individual freedom. Karl Marx pondered Ricardo's "gloomy science"and came to the conclusion that only political revolution could save society.John Maynard Keynes wrote The End of Laissez-Faire, in 1926. Later, hebecame the first economist to argue that increased government spending(Monetarism) would solve the Great Depression of the 1930s. Monetarists were"... all Keynesians"; but by the 1970s, severe inflation had forced a feweconomists to begin having second thoughts. Milton Friedman, in Free toChoose, re-examines Smith's classical economics to find solutions thatgovernment spending, alone, couldn't seem to cure.While working as an editorial writer for the Wall Street Journal, Jude Wanniskinoticed two economists, who seemed to be "navigating" correctly. Wanniskiobserved, in The Way the World Works that Robert Mundell and Arthur Laffer foretold the rapid inflation of 1973, and correctly predicted the recession of 1974-75.In the summer of 1974, Wanniski writes, President Ford proposed a 5% surtax onpersonal income. (1) The nation's economy. "stalled and crashed". At first
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