Businessweek Archives

The Economic Value of the Space Program (corrected version)


Sigh. I had to retract and redo the original post, in light of some absolutely correct comments. The original version of the post is at the bottom, so you can see the problems. I clearly overstated my case there. Sorry about that—MM

Yes, let us celebrate the 40th anniversary of the Apollo moon landing, an amazing human achievement.

But even as it lifts our spirits, let us ask a different, more mundane question: What was the long-term economic value of the spending on the Apollo program? The amounts spent were enormous. Consider this: From 1962 to 1972, when the last Apollo mission landed on the moon, space-related activities got 59% of nondefense government R&D spending. That was $176 billion (inflation-adjusted in 2009 dollars).

What did we get in return? The space program was one of the original big customers for integrated circuits in their infancy, helping give them a big boost. And here’s a long list of other spinoffs from the space program.

However, there are two points to remember. First, one key spinoff that we did not get was a viable private manned space industry, at least so far. One is developing, but it’s not there yet. And the government manned space program has limped along since the Apollo program.

The other problem is that while we were spending at a rapid pace on space travel, we didn’t put money into R&D in other key areas like energy and natural resources. (This omission had real consequences during the energy crisis of the 1970s).

President Kennedy acknowledged as much in his 1961 speech where he committed the U.S. to the goal of “landing a man on the moon.” Kennedy said:

This decision demands a major national commitment of scientific and technical manpower, material and facilities, and the possibility of their diversion from other important activities where they are already thinly spread.

Let me be clear here—I don’t think the moon landing was a bad idea. To the contrary—I’m glad we did it. And yes, the money spent on the moon program helped stimulate innovation.

But as an economist, I have to wonder whether the same R&D money, spent in other ways, could have had a bigger impact. That’s a hypothetical question that we’ll never know the answer to. But it would sure have been nice if the investment in the Apollo program had led to a viable private manned space industry in fewer than 40 years.

Here is the original post

The Economic Failure of the Space ProgramYes, let us celebrate the 40th anniversary of the Apollo moon landing, an amazing human achievement.

But remember something else as well: The U.S. space program turned out to be one of the great economic and innovative failures of our time. For a decade it absorbed a big chunk of the country's scientific and technical resources, while producing very few economically useful spinoffs.

Consider this: From 1962 to 1972, when the last Apollo mission landed on the moon, space-related activities got 59% of nondefense government R&D spending. To put it another way, while we were spending at a rapid pace on space travel, we didn't put money into R&D in other key areas like energy and natural resources. (This omission had real consequences during the energy crisis of the 1970s).

President Kennedy acknowledged as much in his 1961 speech where he committed the U.S. to the goal of "landing a man on the moon." Kennedy said:

This decision demands a major national commitment of scientific and technical manpower, material and facilities, and the possibility of their diversion from other important activities where they are already thinly spread.

Let's put the spending into other terms. Between 1962 and 1972, the U.S. space program spent $176 billion (inflation-adjusted in 2009 dollars). In magnitude, that comes close to the mammoth federal expenditures on building the interstate highway system over the same period (outlays from the Federal Highway Trust Fund totalled $220 billion in 2009 dollars from 1962-72).

We know what we got from the interstate highway system--fast, easy transportation, the creation of the suburbs, an entire transformation of our way of life. What did we get economically from the space program, especially the manned portion? Much, much less. Government investment in space, rather than opening up new opportunities, turned out to be a one-off. Lots of communication satellites, yes, but what else? There's no manufacturing in space, and unless I'm wrong, there's been little research done in space which has had great practical applications (please let me know if I'm wrong about this).

I'm sorry to be a grump about this. I don't think the expenditures on space were a bad idea. I don't think the moon landing was a bad idea. To the contrary--I'm glad we did it.

I'm just making the economic point that we used large amounts of scarce scientific and technical labor and money for one activity which at least up to now, has not produced big economic payoffs.

Finally, how much of this problem was due to the heavy hand of government? I've got another post coming up where I'll look at the recent history of private-sector space activity.


Video Game Avenger
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus