Profit in space and boostrapping adifferent (was: economics of b

>
> On Thursday, September 11, 2003, at 12:25 AM, victoriatangoman
> > I'm looking for space nexus - and satellites don't really have
it.
> > They're built on Earth, the launch is from Earth, the seller of
the
> > service is on Earth, so to the buyer, the information either
> > originates or is processed on Earth, in some case almost the
entire
> > value chain occurs on earth.
>
> Initial development has to be earth-centered. That's where the
money
> is. Even if you have a transaction between two separate companies
> taking place in LEO, eventually the money comes from earth and
goes
> back to earth.

Come on. I was describing some of the characteristics of nexus not
advocating that development must take place off of Earth or that
there is an orbital economy. I'm not really sure what your point is
or how it relates to what I wrote.

I'm sure in your advanced physics work you seek root causes and
fundamental principles. I'll ask you to do the same here. For some
people economics is a black pit of mystery. You seem to enjoy the
subject (heck, you even asked for more discussion :-) so I'll ask
you to consider where Earth money comes from? Do you have any econ
texts that are handy?

>
> The simple presence of *something* off planet creates
opportunities.

Too vague of a statement. There is an ore body of iron at the center
of Antarctica. What opportunity does that present?

> The fact that none have been developed yet is unimportant.

Why not? How do you validate the importance without someone doing
something about it. Doesn't the fact that an opportunity that's
passed over undermine its very definition of being an opportunity?

They are
> there, and people are trying to make money exploiting them.

So what about the nutcase who pulls fresh garbage out of the dump
and tries to get restaurants to use them as table setpieces? He's
found a resource and is trying to exploit that opportunity. Is
garbage as art really an opportunity? (other than in trendy N.Y and
L.A.) NOTE: I'm not saying the space entrepreneurs are nutcases. I'm
just trying to point out that you're rebuttals in this paragraph are
platitudes. You wouldn't accept this from one of your physics
colleagues, would you?

One
> promising idea is satellite rescue and life extension.

Yes, it is promising.

This is a pretty
> small step from orbital refueling, which creates a market for
fuel,
> which can be supplied from NEO mining, which creates a market for
> various mining support industries, etc, etc.

I find a beach of sand, I can make Pentium chips, powerful computer
processsing can change the world, etc etc. So easy.

> > The satellites presence in orbit doesn't really advance towards
the
> > goal I think is important - economic activity in orbit. I'm not
> > oblivious that not many are sharing my concern about the
> > distinction, :)
>
> Because it's an artificial distinction.

Everything is an artificial distinction. To distinguish something is
to identify some characteristic and to identify by that
characteristic. That's like me saying that electrons are identified
by artificial distinctions. They're just an atomic particle. The
specific criteria that distinguish them from other particles are
accepted by you to help identify one from another.

You seem to be claiming that
> somehow the critical step is independent companies carrying out a
> transaction in space, and that this is somehow fundamentally and
> qualitatively different from other types of space activity in
terms of
> enabling further development. I disagree.

The argument is very straigtforward. I've made it repeatedly in past
posts in this thread, so for brevity's sake I won't repeat it here.
You're missing the point. It's not further development or
transactions in orbit that are critical. It's nexus and
interdependence that ease the burden for those ventures that follow
that is critical. You could have a thousand different ventures in
orbit, and if they are all independent of each other, all supplied
from Earth, then despite the billions in revenue being generated
from orbital activities you still don't have an orbital economy.
Think Grand Bank's fishery in the 16th Century.

I think that simply doing
> stuff creates opportunities. I can't necessarily point to all of
them,
> but I don't have to. The market will figure out how to make a
buck.

If it's possible to make a buck, then through trial and error from
various actors, a possible outcome is that someone will figure out
how to make a buck. If it's impossible to make a buck, then the
market will NOT figure out a way to make a buck. You're taking to
many things for granted in your statements. Further, I'm not arguing
that you can't make a buck in space and it's getting tiring to have
to concede this point over and over when I never disputed it.

The
> more stuff being done, the more possible ways to leverage the next
> step.

The mathematics of this works only if each opportunity has an
interdependence value greater than zero, with zero being completely
independent. A thousand opportunities, each of which is isolated to
function on its own, creates NO new oportunities.

Eventually there will be purely space-based businesses. We cannot
> predict what they will be because we don't know what the
opportunities
> are that they can exploit. We do know that if nobody is doing
anything
> in space, there will be no opportunities.

You set yourself up to give the answer you wanted. I sure never said
that we shouldn't do anything in space. I'm not arguing against
space commerce.

>
> To me is seems obvious that simply encouraging any kind of space
based
> activity improves the chances of someone finding a way to come up
with
> the kind of purely space-based business you want to see.

It seems obvious to me too.

The difference
> between our outlooks appears to me to be that you want to know
what
> that business will be before creating the preconditions for its
> existence, while I think that trying to do predict the future that
far
> in advance is a waste of time.

I'm not quite sure why my argument appears to you the way you claim
it appears. I'm writing more and more, and in greater and greater
detail to explain my position, so it's frustrating that it's being
misconstrued.

I have a lot of faith in the forces embodied within the concept
of "market." I'm saying that one should look beyond a blind faith, a
blind appeal to historical precedent, and look at the conditions
that will face orbital commerce, and what conditions must be met to
ease the path for subsequent ventures. It is clear to me that once
there are ventures in orbit that specialize in tasks or materials
that are of use to other orbital ventures, then the burdens facing
orbital commerce will have been eased. I never said you need
a "refractory shield manufacturer" or a "oxygen gas supplier" in
order to make things happen.

History shows that when people move into
> new areas the kinds of businesses that succeed are very hard to
predict
> in advance.

Your appeal to history is only relevent if the same conditions can
be expected in the future. You haven't sufficiently made the case to
be able to appeal to history in support of your proposition. You're
also pulling me into defending positions that I don't support. I've
not ever tried to predict which businesses will be successful.

Not only are they able to purchase services and goods from
> those businesses, but the simple fact that they are using launch
> services helps drive down the price of access to LEO.

Excellent point you make here. I challenge you to find anywhere in
my posts where I've taken a position to counter the importance of
volume to the price elasticity of launch services and the consequent
lowering of thresholds for prospective orbital ventures.

> I've done a few outline business plans, and every one of them
founders
> on LEO launch costs. Getting those costs down is the single most
> important thing for space development,

I feel that it doesn't matter what I write, my points are ignored
and your mantra of lowering launch costs becomes the issue. Let's
start a new thread "Lowering launch costs is important to space
development" and you and I can be on the same side and reinforce
each other and have a mutual admiration society for the good points
we're making about why low costs are important. It'll be a boring
thread because we'll both be in complete agreement :)

and anything that creates demand
> for launch will help drive down costs.

It'll have a bigger impact on the fixed costs rather than the
variable costs. The prices won't fall in a linear fashion.

Even if nothing else I've said
> makes sense to you, this single overwhelmingly important issue is
> enough to actively support any space based business.
>
> ......Andrew

You nailed this. It makes overwhelming sense to me, but that was
never the issue that I wanted to raise, and I never contended that
launch costs were irrelevant.

TangoMan