Human beings have been wanting to know where they came from for centuries, how everything
around them was created, how to expand their borders into the unknown.
Despite this, space continues to be a hostile and unknown environment for humans.
It’s perhaps the last unconquered territory we need to delve into.
But, dear friends of VisualPolitik, in the last century, or more specifically, in the
last five or six decades, space has gradually become an increasingly familiar, and it has
to be said, a more accessible place.
And the fundamental question is... why?
Human beings took the great leap into space in the late 1950s, when the United States
and the Soviet Union began a long and rough space race in a bid to get one up on their
adversary.
This is a story we all know quite well.
What we probably don't know so well is the extent to which this competition between the
two great superpowers contributed to scientific and technological development in general.
Basically, these two great powers had to invest so much money and so many resources in the
space race that in addition to the, let’s say "moral" superiority of being the first
to conquer space, it brought great scientific, technological and military advances.
Yes, military.
Don’t think for a second that the space race was merely an exercise in scientific
enlightenment..
Not at all.
The fact is that with the end of the Cold War and the fall of the communist bloc, things
began to change.
The former Soviet countries ran out of money and the United States gradually began to devote
less and less of their budget to space.
In fact, the percentage of federal spending dedicated to the space race has dropped by
more than 50% since 1991.
Check this out.
(CHART)
So, as there was no real competition, governments, especially the US, as we’ve just seen, began
to lose interest in space.
The race for dominance came crashing back to earth.
And that paved the way for private companies to become more and more involved.
Yes, private companies.
Right now, more than a dozen private companies are developing rockets to launch objects into
space: satellites, supplies for the international space station and even passengers.
You’ve probably heard of Space X, Virgin Galactic, Blue Origin and others.
And that brings up some questions:
Is a huge new market in space exploration in the process of being created?
Could the future of humans in space really develop through the private sector?
If so, what will happen to the government agencies?
Will they be able to coexist with private companies?
Listen up.
(CHANGE OF PLAYERS?)
As you all know, during the twentieth century, space conquests basically involved two main
players.
The United States and the Soviet Union tackled the challenge by investing vast amounts of
money.
To give you an idea, on just the Apollo Program alone, the United States spent more than $110
billion dollars in today’s money.
That’s $110 billion on a program that employed more than 400,000 people and that became the
standard for the American space race.
At that time, the aerospace sector was so important that the US government soon took
over almost absolute control and leadership over all space projects.
In 1967, the United States, the Soviet Union and the United Kingdom agreed on the Outer
Space Treaty, a treaty that, among other things, established the responsibility of governments
over every activity undertaken by non-governmental aerospace entities.
That is, that every company or any other private aerospace entity was subordinated to their
country’s government.
In practice this meant that any private business project had to be explicitly approved by the
company’s nation of origin.
And not only that.
As the State was ultimately responsible for the company’s actions, in the end the direction
of every project was in the hands of politicians and officials.
Ultimately, it was the governments who approved the day-to-day operations of the aerospace
companies.
What’s more, this treaty is still in force today.
However, due to the fact that the space race has lost steam in international affairs, the
application of the treaty is less strict.
Thanks to this, the private aerospace sector has gained more and more freedom.
And this is hugely significant.
You see, for some years the space race has been warming up again – and is enjoying
a golden era.
And this is happening due to one fundamental reason:
The reduction of entry barriers.
Okay, allow me to explain.
This is something we’ve all experienced on a smaller scale.
In recent decades technology has become cheaper, and the capabilities of our devices have taken
an exponential leap, all this has led us to think about the aerospace area as much, much
more accessible.
Think about it for a moment...
A supercomputer from the 90s, which could only be accessed by governments and huge multinationals
after paying millions for the privilege, only had the computing power of an iPhone 6.
And this explains why more and more countries now have their own space programs and agencies.
And we’re not just talking about superpowers, like China – who are joining the new space
race by storming through the front door – but also much less powerful countries like Ghana.
Yes, that’s right.
Even Ghana has a space agency.
But... the real shake up in this new race is that it’s not governments pulling the
strings anymore… but companies.
And this is a paradigm shift.
Now that we have more governments and, more especially, new companies involved... the
question is, are on the verge of seeing an even more exciting space race?
(AUDIO: Israeli company sends world's first privately funded mission to moon - The Guardian)
(AUDIO: Chandrayaan-2: Success in India's second attempt at launching moon mission - CNN)
To give you an idea, new aerospace companies such as SpaceX can offer launches to Earth's
lower orbit for around $60 million dollars.
And that may sound like a lot, but if you compare it with the almost $500 million that
it cost to launch the Space Shuttle, it sounds like a bargain.
And it’s precisely this improved efficiency in the costs and resources of the private
aerospace industry, which has led governments to give up on doing the work themselves and
become customers instead.
Governments are now customers of private aerospace companies that work autonomously.
Obviously, public agencies such as NASA have had private suppliers since day one.
Just as the army or the Air Force do.
That's clear.
But, let’s not skip over this detail: it’s one thing to manufacture something under a
government space agency’s commission, and a completely different thing to develop an
entire independent launch program.
Put another way, it’d be like the difference between a company that builds a road or a
hospital for a government, and another company that builds its own road or its own private
hospital.
In the first case, the government makes all the decisions, while in the second, it’s
the company itself that takes the initiative, makes the decisions, decides what to spend
on, how the budget will be allocated, how much and when to spend it.
Well that's exactly what’s happening now with the space race.
Are we moving towards a kind of space privatization?
Listen up.
(A WELL DIVIDED PIE)
For the US, it’s no longer useful to monopolize each and every one of the fields of the aerospace
sector.
Not only does it not make sense, it’s also counterproductive.
Under the new paradigm, government agencies will focus their resources on basic scientific
research, such as the investigation of the lunar surface, asteroids, stars or the most
distant planets;
Meanwhile, private companies will deal with applied research, or in other words, in offering
concrete products, such as launching services with reusable rockets, satellite manufacturing
and, to a lesser extent, the much-hyped space tourism.
This coexistence, and not only coexistence but rather collaboration between public agencies
and companies, could bring us the best years of space exploration yet.
But now a key question, why have private companies managed to perform so much better than typical
government space agencies in terms of cost efficiency and innovation?
Well, surely many of you already know the answer: market incentives.
In other words, making things that work, at a reasonable price, to make money.
Money that, by the way, usually comes (surprise, surprise!) from government agencies themselves.
Between 2000 and 2018, various public agencies in the United States such as NASA and the
Air Force have invested $7.2 billion in 67 aerospace companies.
Of all this money, 93% went to companies dedicated to rocket launches.
Companies like SpaceX.
Therefore, every dollar invested by public agencies achieves greater results.
So even though the NASA budget, for example, has decreased, their spending efficiency has
increased significantly.
(AUDIO: Elon Musk says the new SpaceX Falcon Heavy rocket crushes its competition on cost
- CNBC)
That’s why NASA has been investing money in companies like SpaceX practically since
they were founded.
Check this out, during its first decade of operations, SpaceX spent one billion dollars.
Approximately half of that money came from government contracts with NASA.
In other words, NASA financed a large part of SpaceX's growth...
And the truth is that this strategy has worked for both sides.
The development of SpaceX has led to unprecedented and substantial cost savings for NASA.
Just since 1981, the cost per kilo sent into Earth’s lower orbit has plummeted from more
than $85,000 with the Space Shuttle, to less than $2,000 with SpaceX’s Falcon 9.
This is an almost 98, 98% cost reduction.
And that’s just the beginning.
Because soon other rockets such as the Falcon Heavy promise to plunge the cost per kilogram
launched into space to figures below the $1,000 mark.
Now, surely many of you may be wondering...
But Simon!
What about Europe?
You're only talking about the United States, what about Europe?
Has this continent been doing anything all this time?
Yes, of course they have.
Europe has ArianeSpace, the European aerospace company that handles most of ESA's launches,
the European Space Agency.
However, there are some differences.
(AND EUROPE?
FROM PIONEER…
TO LOST IN SPACE)
If I told you that not too long ago, ArianeSpace Europe was the leader, the world leader in
commercial rocket launches, what would you say?
And I use the past tense, because, as you can see in this graph, as of 2013 and because
of the success of SpaceX, Europe has lost its dominant position for the number of commercial
space launches in favor of the United States.
(CHART)
Now, what makes a company like ArianeSpace, which takes almost 20% of ESA’s more than
6-billion-dollar annual budget, unable to compete against newly created companies such
as SpaceX?
Why did the United States leave Europe behind in this industry?
As you can see, ArianeSpace was created in 1980 to compete with the US’s outdated and
expensive Space Shuttle.
In the ‘90s, its Ariane 5 rocket managed to reduce launch costs to $175 million dollars,
in comparison with the more than $450 million that the Space Shuttle’s launch cost.
But in addition to its impressive cost for the time, the Ariane 5 also became the most
reliable rocket.
It only had two absolute failures in more than 100 launches.
So, everything seemed to indicate that Europe was set to be in a leading position over the
following decades and, in fact, it was for several years,that is, until 2013.
The tide quickly turned when suddenly that $175 million price tag, which was the cost
of launching the Ariane 5, became way too much in comparison with the scant $60 million
of SpaceX’s Falcon 9.
And that’s precisely where the European aerospace industry’s problem lies.
They haven’t been able to – or haven’t wanted to – reinvent themselves.
(AUDIO: “Do you buy a Mercedes because it's cheap?”
Stefano Bianchi, Director of ESA’s Launcher Development Department.)
It doesn’t sound like the best strategy for competing in a market where new American
start-ups are sweeping in with low prices, does it?
In any case, they are now trying to follow in the footsteps of the new North American
competition with the development of the Ariane 6, which promises a launch cost of about $95
million dollars, and which could be put into operation as early as 2021.
That’s the result of competition.
More and more agencies, companies and professionals are competing to gain a foothold in the aerospace
sector.
And if experience has taught us anything, it’s that competition drives new achievements.
In short, that's how things are in a sector that is increasingly becoming dominated by
private companies, to the detriment of governments.
Now the question is...
Will these companies like SpaceX, Virgin Galactic or Blue Origin be able to take the space race
to a new level?
Leave your answer in the comments.
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