MAR 98-033

Thinking About Martian Economics
Ed Hudgins
The Cato Institute, Washington DC

Why, four decades after men first ventured into space are there no regularly scheduled commercial flights into orbit? Some 35 years after the Wright brothers 1903 flight the commercially viable DC-3 was flying. But today the cost of placing payloads into orbit on the Shuttle is perhaps a magnitude more than on Apollo. By contrast, in the past twenty years the cost of airline tickets per mile dropped by 30 percent, with twice as many people now flying, and the cost of shipping oil dropped 80 percent. For too long space enthusiasts have ignored economics at the peril of their passion.

The most economically and politically viable approach to a Mars mission, based on market principles, is the Mars Prize approach, supported by House Speaker Gingrich. A $20 billion prize, with an actual mission cost of only $5 billion, indeed creates an incentive for the private sector to find the best way to the Red Planet. But these funds still have proven difficult to secure. Mars enthusiasts might support a radical approach: as part of a strategy to return civilian space efforts to the private sector, the planned space station could be scrapped. Some of the savings would go the Mars Prize and would help promote that civilian sector.

But at $5 billion, a consortium of enterprises and educational institutions could fund a Mars mission. Yet without taxpayers funds, what would be the incentive to go? The prospect of property rights and owning Martian assets would be a strong incentive. Also a consortium might earn money and develop technology for a Mars mission by taking on other tasks for profit. For example, a Disney Company might put up several hundred million dollars to put camera-equipped rovers on the Moon to provide holodeck-type virtual reality entertainment on Earth. The road to Mars does not have to go through government territory.