Alex: I think the lunar economy is, is is one of the ones that's going to be a little bit further down the road. I think one of the ones that's coming up sooner is, is what's called the low-Earth orbit economy. And this refers more to commercial space stations. One of the biggest, you know, contractual competitions right now is the competition for who will get the contract, for a private space station from NASA. So NASA already starting in 2010, as I mentioned, privatized commercial human spaceflight with a commercial crew program, that resulted in the SpaceX Dragon capability and the Boeing's Starliner capability. Right now, those vehicles are going to International Space Station. Plan, however, is to retire the International Space Station. The latest date that's been thrown out, being, 2032. After that point, there would be, in theory, one or more fully commercially owned space stations.

Tracy: Hello, and welcome to another episode of the Odd Lots podcast. I'm Tracy Alloway.

Joe: And I'm Joe Weisenthal. Joe, have you ever met anyone at a party and you start, you know, you ask them the standard question, what it is that they actually do.

Tracy: Yeah.

Joe: And you just get a response that kind of blows your mind at something that you've never even thought of before.

Tracy: First of all, can I say my favorite question at parties is what do you do?

Joe: I've heard that. I know some people look down on it. I find it fascinating. Ask me about my hopes and dreams. I don't care. I don't care. I don't care. I want to know what you do. No, I do like, oh. Where do you live? And whatever. I want to know. You do it. I mean, look at some instances. Maybe people don't want to talk about it, but I figure people devote a big chunk of their lives to work. That's a pretty good icebreaker. So we need to renormalize that.

Tracy: Absolutely. And as podcast hosts, we're always looking for interesting people.

Joe: That's right. And sometimes you meet them at parties. This person that we're going to be speaking to, we actually met at our party, our ten year anniversary party. Someone else brought them, and I was introduced to him, and I said, what? What is it? What is it that you actually do?

Tracy: And the answer that came back was I was NASA's first chief economist. Amazing. Sold. Have you ever heard of that before?

Joe: I would have I would have not. I mean, no, I definitely would have never heard of that before. I mean, I guess I'm not surprised in some sense. I'll say the one sense that I'm not surprised that NASA had a chief economist, which is like economists seemed to sort of be in every organization these days. They have a lot of tools in their toolkit that can be applied to a lot of things. They're pretty good with statistical analysis, etc. but then also, you know, but this is stats in space.

Tracy: Well, then the other thing is, you know, I know that there's growing interest in the commercial application space. So satellites are another are one area. Obviously defense. People talk about, asteroid mining. I don't know if I'll ever see that in our lifetimes, but I know that that's the thing people are interested in. So although I would not have necessarily thought it, you know, I can. So I guess I'm not totally surprised that NASA is like, all right, let's bring in an economist.

Joe: Well, I was pretty surprised. I guess I'd never thought about it.

Tracy: Yeah, I never thought it. But it turns out that not only does this role exist, but it sits at the sort of intersection of, I guess, a lot of public and private investment.

Joe: Yeah. Space exploration. And we've talked about this before. This idea that NASA has perhaps been ceding a lot of territory in many ways to private capital SpaceX especially. We've done tons of industrial policy episodes at this point and what the benefits are of government investment versus, again, private capital. And so I'm I'm very excited to talk space economics but do it truly the perfect guest. We're going to be speaking with Alex MacDonald. He served as NASA's first chief economist, as I said, and he is now a senior associate at the Aerospace Security Project at CSIS, the Center for Strategic and International Studies. Alex, thank you so much for coming on Odd Lots.

Alex: Thank you so much. It's a pleasure to be here.

Joe: Thanks for coming to our party.

Alex: Yeah. That too.

Joe: Well good party, I enjoyed it.

Tracy: That's awesome.

Joe: Excellent. So obvious question. First, I suppose. What is a chief economist at NASA actually do?

Alex: The position of chief economist is essentially one of the kind of three independent technical advisers to the administrator. I'll point out that all three of those positions were, basically, canceled at the beginning of this Trump administration. But, they they had been essentially people who would be brought into the agency to advise the administrator on technical issues related to economics. Chief economist, technology chief technologist and science chief scientist. These are not positions that are responsible for implementing programs. They are essentially independent technical advisers, to the head of NASA. NASA is a $25 billion agency. It has ten different centers across the US. It has international partnerships. And of course, it has an extensive amount of contracts for the private sector. And so the role of the chief economist is essentially to advise the administrator of NASA on whatever the administrator of NASA needs advice on. But it tends to be related to, what are the markets that we're seeing? What level of investment can we expect in a given sector? Has this company actually raised money or are they perhaps, maybe, misrepresented? These are all questions that come up in procurement and in strategy.

Alex: I started at NASA in 2008. So that was when the space shuttle was still flying. We were beginning to think about partnering with the private sector. SpaceX had received its first, essentially contract from NASA. But it had not launched anything to space yet. So, as you can imagine, over the last 15 plus years, the role of the private sector has become very significant within NASA's portfolio. And as a result, economic analysis, became one of the types of internal services, that essentially the senior leadership at NASA decided they needed.

Joe: That was fantastic. Just real quickly backing up even further, how did why are you in that role? What were you doing prior to that role such that you got brought in for this?

Alex: So for me, space economics was a real passion. I remember very distinctly, 2005, when I was a master's degree student in economics up at the University of British Columbia in Canada. And I remember, two things that happened that year. One was the flight of spaceship one. This was the first privately funded, privately built spacecraft to take humans above the Von Karman line above 100km, which is the kind of internationally definition international, you know, definition of where space starts. And I remember as an economist kind of saying that's unusual. How long have we been, you know, building our own spacecraft and doing that with private money? That started my PhD into the long run economic history of space exploration.

Alex: That became my first book called The Long Space Age, essentially on the economic history of where the money came from, for astronomical observatories. And when you look at that, one will find some very interesting parallels. For example, the people who built the largest telescopes, in the early 20th century. These are the Mount, Wilson and Mount Palomar observatories. They were funded by Andrew Carnegie and John de Rockefeller, the two richest people in America at the time. Sound familiar? So this was a type of parallel that, that that, you know, a number of us were starting to think about in terms of how are we going to get new money onto the table to advance our objectives in space exploration.

Alex: And then the second thing that happened in 2005 was essentially the announcement of what was then called the vision for space exploration, and this was the George W Bush era plan to return to the moon, build a moon base, and, ultimately use the capabilities to one of ours. And that basically, told me that eventually we're going to need economists in space, because if you're building a permanent habitat somewhere else outside of Earth. Yes. That's a technology problem. Yes. It's an engineering problem. It is also an economic development problem. You're going to think about where the revenue source is going to come from this. Where might you see, you know, cost savings for new types of technologies. And so I had decided to go pursue, space economics as a, as a field did my PhD in that.

Alex: I used to joke that once you do a PhD in the economics of space exploration, there's no nowhere else that can really employ you other than NASA. These days, there is such a growth in venture capital and private equity investment in space that actually it's, a bit of a of a booming field, to be honest. So I started my work at NASA Ames Research Center. So this is one of NASA's ten centers out in Silicon Valley. And I was brought out there to essentially start doing some of the economic analysis related to venture capital. How do we leverage these private companies?

Alex: And, essentially, as I did my work, I started managing some of the programs related to encouraging commercial space development. Made my way to Washington, DC. And, with kind of the experiences that it had in Silicon Valley, working with some of the investors and some of the startup founders. Found my way to, the office, the administrator, and, during the first Trump administration, that was when the, chief economist position was created.

Tracy: I have so many questions already, and I'm kind of I'm already struggling to choose a particular path to go down because there are so many. But one thing that that stood out to me and just said, you know, you talked about the sort of history of space exploration and the idea that you had these very rich industrialists who were funding the early stages of, I guess, astronomy and observatories. At what point did the U.S. flip into more of a government funded model for space exploration, and how did that actually happen?

Alex: Yeah, it's a great question, and I think it's instructive to think about kind of how do we develop the capabilities to go in space in the first place? So, the history of astronomical observatories in the U.S really begins with these, these wealthy funders. And, and there's a mix of motivations. I break it down to these two types of motivations. One are signaling motivations in economics. Signaling theory is the idea that you can credibly transmit information by costly action. Right? This is kind of how, you know, something about someone when they're driving a Lamborghini versus, you know, say, a Ford Pinto, right? You have some information about the individual, even if you do nothing else. Similar with education.

Alex: The classic signaling product, that I can think of, though, is, if, you know, that one country has launched something, around Earth and another country has not, you know, something about the the technical capacities of that country, very similar in terms of astronomical observatory. These were very complex projects. They were about billion dollar projects. If we do the kind of inflation adjusted, metrics today. And so the wealthiest people did these things.

Alex: Fast forward to the 1920s and 30s, when the technology for liquid fuel rocketry is being developed. This year is actually the 100th anniversary of the first flight of a liquid fuel rocket.

Joe: That's why we did this episode. It was all time. It was all time for the 100 year anniversary. That's all right. No. Keep going.

Alex: I always love it. But in January, you know.

Joe: Thanks for doing that.

Alex: So he's working on this technology because he wants to be able to go to space. He received the vision of space exploration by reading science fiction when he's a teenager. He reads A War of the Worlds, in his local newspaper. And then a sequel to it, an unauthorized sequel called Edison's Conquest of Mars. And he actually writes in his diary, about a vision that he had while trimming a cherry tree, on on his aunt's farm, and he decides that he's going to dedicate the rest of his life to space exploration. And every year, after he celebrates what he calls his Cherry Tree Day.

Alex: So he's going out into the world trying to figure out how is he going to get resources for this project. And it turns out that the largest funder for his early phases, is in fact, the Guggenheim family. He manages to actually, convince, the Guggenheim family to fund this work. But when the Second World War starts, which is really when the U.S. government starts to get involved with rocketry at a very significant level, he starts working with a number of the generals, and essentially gets funding to develop, a jet assisted take off rocket, to help, planes take off more quickly. And he starts getting funding that way. So the Second World War is really when, governments across the world really start to get involved with rocketry development. Most famously, of course, in Germany, but also in the Soviet Union.

Alex: And so after that point, the technology for rocketry, is essentially co evolving as a weapon system and as a technology for taking humans, off of the Earth. That's really when the US government gets involved. NASA gets created in 1958 after the flight of, of Sputnik. And then you have the, the, the kind of dual development of essentially the civil program, which is what NASA is as well as, Department of Defense programs. And both of them are roughly kind of equivalently funded for, for quite some time.

Joe: Well, why don't we talk then about the flip side or the, the other direction. You mentioned that when you were at NASA we still had the shuttle program. I've never understood. I mean why do we get rid of it. Like why are we still launching shuttles and so forth. What was the sort of economic logic or national security logic or whatever such that from the perspective of the government, we don't need to keep launching shuttles, and maybe we can begin the handoff for some of this more directly to the private sector.

Alex: Yeah, it's a great question. I mean, the shuttle really was an incredible vehicle. But of course, as I'm sure you're familiar, there were a couple of fatal accidents with the space shuttle. First the challenger disaster and then the. And then the Columbia accident. So essentially, the decision was made after the Columbia accident that there was no way to make the vehicle sufficiently safe at a regular rate of flight. That would be economical. And that it was time to move on to a safer, more economical form of of human spaceflight.

Alex: What's interesting in many ways with the development of vehicles like Starship is that the the idea originally behind the space shuttle is very much the same idea that is now motivating the development of of Starship in space. Low cost, re fully reusable aircraft like operations. You know, that was not ultimately achieved. In the space shuttle. You can look back at the original Economic Estimates for what NASA thought they would be able to fly the space shuttle at. And they turned out to be rather optimistic relative to what was delivered. We'll see where we get to on Starship. But I think it's just important to recognize that that it's really, part of the same engineering and, kind of economic capability, thrust shuttle to Starship. It's the same idea. We want low cost, reusable aircraft like operations so that we can do more in space.

Alex: Ultimately, the shuttle was deemed to be no longer safe after, after the Columbia accident. Blue ribbon Commission was, was was was kind of fielded and they decided that it was time to move on to what then became, the Commercial Crew program. And that came around at the beginning of the first, Obama administration. At the time, it was it was very controversial. You can you can certainly, you know, go back and watch some of the hearings where you've got people like Neil Armstrong who are arguing that this this is not a this is not a good idea for the nation.

Alex: At the same time, there was essentially a need with a NASA to figure out how to offload some of the operational responsibilities for human spaceflight, because NASA was seeking to go back to the moon and ultimately on to Mars. One of the things that's defining for NASA's strategic landscape is its budget history. Budget history is very easy to describe. It starts in 1958 at a relatively low level. It peaks massively in, 1965 66 at the peak of the Apollo program. And then it declines very significantly until 1972. And it has basically been inflation flat ever since. Our ambitions, however, have not been inflation flat. Our ambitions continue to increase. And so as the agency's been figuring out, how do we achieve our ambitions? We figured that we would we would basically, partner and figure out how to leverage commercial capabilities, and private investment.

Joe: One thing that's really insane. I don't know if. Have you ever seen the chart of the NASA budget as a share of the federal budget? It's unbelievable. So in the mid 60s, over 5% of the entire federal government budget, at least according to this chart that I pulled up on Reddit just now.

Alex: No. But I'm pretty sure I've seen this chart before I figured it. I think I know the one.

Joe: It's like a staggering level of the federal government spending was at one point through NASA. And then, of course, it sort of declined into relative oblivion, but it's kind of extraordinary. Well, on this note, Alex, you're talking about NASA's ambitions. How would you broadly define those? Because it seems if you say that NASA exists for security and as a as a signal to other countries that we have superior technology to them, you could justify basically any element of spending as we, you know, seem to have done in the 1960s. But if you say that we actually want some sort of return on investment in terms of jobs or, I don't know, some sort of multiplier effect on the economy, then you're kind of thinking about different things.

Alex: Sure. Of course, one of the challenges that I always ran into is that there's this perennial request for calculation on the return on investment, which I've always had to patiently explain that this is not an investment, it's an expenditure, right? You can't actually calculate a direct return on investment in the way that you can for an actual private sector investment. You can't, however, calculate the economic impact. And so every two years I would be responsible for the release of our economic impact report. And for those curious, that is the highest level resolution data that NASA releases publicly about where it spends its money and it spends its money across all of the 50 states.

Joe: Oh, yeah, this is famous, right?

Alex: It has to. It has to. Exactly. Because it is a public program. It is there to meet, you know, the needs of the American people as determined by their representatives in Congress. And so that is is a kind of part of the agency's, responsibilities and mission. And its missions are essentially defined by that combination of congressional mandates and presidential direction.

Joe: Right. Just like any agency. And so what are the what have been the consistent requests by Congress and presidents to NASA?

Alex: Well, over the last 40 years, let's say the post Apollo era and even the post shuttle era. We are now, on the third attempt to return to the moon and build a permanent habitation there. The first was called the Space Exploration Initiative under George H.W. Bush. Then it was, as I mentioned, the vision for space exploration, under George W Bush. And today we are working on the Artemis program, which I was in will involved with. And essentially it is very much we're using a different strategy now than we've used in the past. But it was, it was essentially the same interest.

Alex: There's only one world relatively nearby, only three days away. That is the moon. There is also, only one planet nearby that you can plausibly land on. That is Mars. I happen to personally be a big fan of flybys of Venus. But that's actually kind of counterintuitively, because it is.

Joe: So when you say personally, you don't mean that you're, you know, flying past Venus yourself, right?

Alex: Just in theory. I'd be happy to, but I don't think I've got the answer for that. But the the benefit of Venus is that it is literally so hot and high pressure that it is impossible to land on. So it stops both engineers and politicians from trying to, that's actually a benefit from a program management perspective sometimes.

Alex: But anyways, the real goal continues to be Mars. Because Mars you can land on and there is, increasing signs of the potential, of potential. A previous life having been on Mars, we continue to learn a lot by our robotic missions. There. There's going to be some very interesting indications, that there may have been a life there in the past. It's a very interesting world. And of course, NASA also does robotic missions out to the outer planets. You know, the the moons of Saturn, of Saturn and Jupiter are truly some of the most incredible objects, you know, in, in, in the night sky in our solar system, right.

Alex: You have, you have moons like io that have volcanoes that spew lava hundreds, thousands of kilometers above the surface of these planets. You have worlds that are actually ocean worlds underneath these massive, ice caps like Europa, and Enceladus. And so this has water geysers. So it's actually possible to imagine building, a probe that could just kind of land under one of these water geysers, open up an aperture and then assess, you know, what might be in that water. And then one of my favorites, of course, is the moon of Saturn. Titan.

Alex: Titan is the only moon that we have that has an atmosphere. It's actually, can't really see through it, but it does have lakes. Except the lakes are not water. They're made of methane. And we now have a mission on the books. Dragonfly, which is, for me, one of the most exciting missions that NASA is doing to send a robotic helicopter to this moon of Saturn and explore it to learn about this, different type of, of liquid cycle based on methane rather than water.

Alex: You know, it's a fascinating solar system. And one of NASA's core mandate is to explore that. And I could keep go on. You've also got the largest number of Earth scientists employed by one agency in the world. Huge amount of the climate data that the world relies on comes from NASA are also responsible for aeronautics basic research. A lot of the basic research for, fundamental, you know, green aviation, electric aviation, is, is funded through NASA. So it has a huge mandate, which is why at the end of the day, NASA is always looking for ways to to make that tax dollars go further. Leverage partnerships, leverage private sector investment.

Joe: That was great. And I just want to say, like, I'm very pro going to space. I'm very pro landing, on the moon again. I think it'd be really cool if in my lifetime, someone landed on Mars. I think it's very cool. But why?

Joe: So if there's going to be private money invested in this, other than the fact that, okay, maybe there can be a return from the private dollars because they're getting public dollars because they could do more from the economy? Is that is there a rationale for some of these projects that you see beyond just this? Is very interesting and cool?

Alex: Yeah. There's a never turn into a return on investment in the classic sense. So so the most classic example that I have of where the economic return, you know, came from some of these types of investments, really does come from, from, you know, the Apollo program and the early rocketry development, in the 1960s. So during that time, for about three years, 75% of all global semiconductor demand came from these rockets.

Joe: Oh, yeah. What does that mean?

Alex: It means that this was a technology that was pushing the boundaries of capability, of technical capability, and it needed this new thing, the semiconductor, in order to be effective. That meant that semiconductor manufacturing got to scale up at a level that it would not otherwise have probably been able to do based on consumer demand.

Tracy: If I recall, from Chip war, it was also the fact that space was scarce on the shuttle, and therefore it helped create the impetus to miniaturize a lot of this technology, which then unlocked various consumer electronic goods.

Alex: Exactly. The Apollo guidance computer being the other example of that. So that's exactly right. So when you're pushing the technology frontiers for this kind of you know, challenging objective, like going to the moon or going to Mars, you do push the capabilities. And that results in, you know, the kind of famous case for spin off effects and if there's one thing that I would just love to correct is this idea that spin off effects are things like Tang, right?

Joe: Or these types of more. I forgot about that. Worth it. We got Tang worth it, right?

Alex: And that's always used as a kind of, you know, you say, oh, well, yeah, okay, we got some out of this. Great. But the reality is spin off effects are semiconductors, right? It is really fundamental technologies of the modern world. Another example of that is, you know, the ways in which we now have, very advanced space based internet, right? In part, this stuff came from a government demand for, rocketry. Right?

Alex: SpaceX, its first major service was providing the government with cargo to their national space station. Well, that's a pretty high mass demand. It's not a small payload. To get cargo to the space station. You've actually got to be able to launch a fair bit into orbit. Well, once you've already established a demand for something, that is high mass. Well, what other high mass things can you launch up into space using your existing infrastructure? Turns out, the principal demand for space rockets are its own products right now, Starlink. And that's also part of the plan for, you know, orbital data center. So these are things that emerge from having, from pushing the technology from setting really difficult goals.

Alex: So there's a real kind of economic truth to that whole, you know, Kennedy statement. And we do these things not because they're easy, because they're hard. And when you do hard things, you create new technology and new capabilities.

Joe: Can you extrapolate something like the semiconductor experience to, I guess, creating some sort of lunar base because I, you know, I get it for semiconductors. We have computers on Earth. That makes sense. But if you're building a base on the moon, it would seem to me that for at least a very long time, your principal customers are going to be NASA and maybe the Department of Defense. Right.

Alex: And also potentially other international partners.

Joe: Okay.

Alex: So right now the Artemis base camp as it is being developed is imagining participation from, for example, Japanese astronauts and European Space Agency astronauts and Canadian Space Agency astronauts. Actually, the U.S. is committed to landing two Japanese astronauts on the lunar surface, the first time the U.S. has ever committed to, an international partner, landing on the lunar surface with it. And we're now about, less than a month away, depending on when the launch actually happens from Artemis two, the first time that we've returned to the moon since 1972, and the very first time ever that a non-American will be, on board for a mission that is leaving Earth orbit. Canadian astronaut Jeremy Hansen. And so, the international element is a key part of it as well.

Alex: I think the lunar economy is, is is one of the ones that's going to be a little bit further down the road. I think one of the ones that's coming up sooner is, is what's called the low Earth orbit economy. And this refers more to, commercial space stations. One of the biggest, you know, contractual competitions right now is the competition for who will get the contract, for a private space station from NASA. So NASA already starting in 2010, as I mentioned, privatized commercial human spaceflight with a commercial crew program, that resulted in the SpaceX Dragon capability and the Boeing Starliner capability. Right now, those vehicles are going to International Space Station. Plan, however, is to retire the International Space Station. The latest date that's been thrown out, being, 2032 after that point, there would be, in theory, one or more fully commercially owned space stations.

Alex: There are companies that are, you know, raising money. A couple of them have actually announced a $100 million investment in the last couple of weeks. What are they going to be doing while they're hosting NASA astronauts? They're going to be hosting international astronauts. That's going to be training. But they're also going to be conducting fundamental research in microgravity. Microgravity is a very interesting phenomenon because not only do you have no gravity, but because you have no gravity. In in a pressurized environment, you also have no convection. And that allows for, different phenomena than you see on Earth.

Alex: So, for example, you're able to grow crystals larger, you're able to, develop things like fiber optic cables more a more pure that may increase the transparency of them. We are still searching one product that we can actually make in space, especially profitably, and make it again and again and again. We're still in the R&D phase, and we've been working on for a long time. So it may be it may be a while before we see one of these things, but there is a huge research effort going on across the world to figure out how do we leverage, the removal of gravity in the production of many things. And semiconductors is one of the other areas that we're starting to see a lot of investment. And so I think that one, I think is easier to understand, if we are to maintain, a zero gravity environment on Earth, pretty close to the source of, source of mass. But when you're flying around the Earth, you you inherently have that that property, and people are really exploring how we can make, make new side of it and make new products.

Joe: It's going to be an interesting race, Tracy, to think, like, who is going to make something economical first, sort of that zero gravity space or anyone in crypto where industry will deliver something of economic value first.

Tracy: No. What? For real?

Joe: So speaking of actual economic value, and you briefly alluded to it in one of your answers, one of the things you hear is, data centers and outer and outer space. And, you know, like Elon is very bullish on it. But of course, he is a rocket company. So he, you know, of course he would say so I can't tell. Is this like just saying that like people on podcasts and Twitter like to talk about or from your perspective, from what you can tell? Is there a real plausibility that given intense compute demands? And I have to imagine it's like maybe the cooling bill is a little lower up there, that maybe this could be like a real thing.

Alex: Yeah. Obviously one of the currently, you know, hot debates within, you know, engineering, economic analysis and space, you know, how much sense does this make? There's actually been a few folks who put on really, really good calculators online so you can kind of look up, you know, orbital data center, online calculator and the, the kind of profitability of it depends on a number of factors. What do you assume the launch cost is? How often do you assume, these GPUs are going to fail?

Joe: Yeah.

Alex: How effective do you assume the radiators are going to be for getting rid of the excess heat? There's a lot of different variables. And given the fact that we don't have any orbital data centers of scale, it's hard to know exactly what the profitability is going to be. I'll say one of the big obvious benefits is not a technological one. It is simply that you you probably don't need to go for extensive permits for.

Joe: No. Yeah. For but it it's a real advantage. There's no space NIMBYs who are again. Not. Yeah. About that. Yeah.

Alex: I mean, you may end up, depending on how large these things are and how many of them are and what kind of, what essentially what reflectivity they have. So one of the things that we're now starting to see is with, constellations the size of, of of Starlink, these are about 10,000 satellites in space, right? The vast majority of satellites that are in space right now that are operational are owned and operated by space X 10,000 or so, constellations have now been approved and submitted to the ITU and various ones submitted to the FCC. At the million satellite scale, already a large amount of the night sky people are very familiar with fly over these. A orbital data center would be significantly larger and potentially more reflective, than a Starlink. So if you've got hundreds of thousands of these, there, you might start really seeing them a lot. How much do we care about that? Right. These are these are kind of social, you know, social public choice issues that, you know, we're just starting to think about.

Joe: actually speaking of stuff that we might be able to see, our space elevator is plausible at all. This idea that we could have space elevators instead of rockets to bring stuff, up,

Alex: I love it, you know, I haven't had a good space elevator question for a long time, so thank you.

Joe: Maybe that says something about their plausibility, but go on.

Alex: Well, you know, they're funny idea, right? I mean, Arthur C Clarke I mean it's a beautiful it's a beautiful kind of vision. And the as a first, I understand they're very reliant on, you know, high performance carbon nanotubes and equivalent like, analogies. And the joke I've always kind of maintained is, you know, I will I will wait until we have a bridge or a swing set made out of carbon nanotubes before I get too excited for, the, the space observatory. In order for them to work, they would need to be about 36,000km in length. Right?

Alex: Because your goal is to get them into a place where they are in G0, somewhere stable. If it's not in Geo, then it's going to be continually moving around. And you know, that doesn't really work. So it's got to be in an orbit that it's basically staying above the same place on Earth. That's geosynchronous orbit 36,000km away. So these are these are going to be very long carbon nanotubes. So I'm, I'm, I'm, I'm not I'm not planning on that anytime soon.

Joe: Actually, that reminds me. This is something else we wanted to ask you, but, you know, you're obviously focused on the economics of particular projects, but I imagine the technology matters as well. How do you actually evaluate the technology? Because as outsiders to the space, space, space pun? No, I won't do it. I resisted, you know, as outsiders to this particular topic, it it's very difficult for us to get a handle on what seems feasible, just in terms of basic physics versus what seems feasible, both in terms of reality and also the money that it might actually cost.

Alex: Yeah, it's a great question. One of the things that I loved about working at NASA was that, you know, you're working with some of the smartest people in the world, and you're all working for, you know, the public good. And you're just trying to figure out, you know, what's the right thing to do for the country. And the way that the agency evaluates these types of technologies and projects is through teams, and you have a team with a number of different capabilities and skill sets. So you'll have people who are very familiar with systems engineering, combined with people with, experience in, you know, expertise in material sciences.

Alex: Throw in an economist, you know, throw in a lawyer. And you all as a team evaluate, you know, what is this? What would it take to make this thing real? You know, what benefits would it have? And, you know, you do these types of grassroots engineering economics assessments of these projects, and part of the kind of, you know, the joy is that you tend to do these things, you know, kind of, you know, dedicated for, for, for days, weeks, depending on how long, you know, or how serious of a procurement it might be. But a lot of that kind of stays, you know, stays kind of behind the, behind the door, so to speak. So we don't put as much of that out. And when we do, it'll be in these kind of procurement announcements where you kind of will talk about the strengths and weaknesses, of a project,

Alex: you know, if you really want to kind of get a sense of how the agency does these types of evaluations, you know, next time there's a very big procurement, that is coming out of the agency, like we did for the human landing systems to return humans to lunar surface. Go look at, the the procurement, assessment that the agency does on the projects.

Joe: How long are those assessments?

Alex: Typically, you know, they can be dozens of pages, right. And and they'll get into some of the technical issues. You know, obviously there's proprietary technology involved. So, you know, it's not like it's giving you the kind of, you know, blueprint diagnostics necessarily, but there's a lot of information in them. And so that's the benefit of having a public agency like NASA is that it does have to actually put out, these types of, these types of assessments, publicly.

Joe: When are we really sending people back to the moon next month.

Alex: We're sending people back to the moon, in a flyby. So the Artemis is to let you know, we'll take four crew, in the Orion around the moon, and then return on a roughly, you know, kind of weeklong mission, give or take.

Joe: And then what's the timeline for when we want to land on the moon again?

Alex: That is the $25 billion question. You know, there is been a change in the way that the agency has approached, its lunar landing efforts. So in the Apollo program, NASA did rely on contractors, relied on, Grumman, you know, the Grumman lander system, that they built, but that was ultimately owned and operated and kind of managed by NASA. Right. With the shift to commercial services and operations, that is not the case right now. For NASA's landing plants, the landers are owned and operated and managed, as services by SpaceX and Blue Origin.

Alex: And so there isn't quite the same level of, of, of insight and, and kind of certainty, you know, and you might say that, you know, there's some arbitrary certainty in kind of government timelines, which is absolutely true. But we don't quite know at the same level. For example, NASA has not clarified publicly how many refueling flights they expect to be needed for a first lander of Starship, in part because that depends on the performance of Starship, and we don't quite yet know we're still waiting on the version three. Flight coming up here. In the next month or two. So there's a lot of uncertainty around when that landing would be. The NASA administrator, Jared Isaacman just announced a change to the Artemis, campaign. Inserting a flight in between this next flight of Artemis two and the projected landing. And that would be, equivalent to the old Apollo nine mission where you're going to test docking the lander with the crew module in low-Earth orbit.

Alex: The agency suggested, actually, that, if both landers are ready, the Blue Origin's space-x lander, maybe, you know, a low-Earth orbit Orion might dock with both of them. So long way of saying there's still a number of technical, steps that need to go. I think the agency has targeted 2028 for a landing. But we will we will see the architecture for lunar landing this time is not as simple as it was in the Apollo program involves a lot more launches, to the point where we don't yet quite even know how many.

Joe: talked to us a little bit about Elon Musk has a mars obsession, and he's not just interested in exploring whatever lakes or potentially, you know, he's actually talks about colonizing Mars. But I don't totally get that. I'm sure he could read a book on it. In fact, I think there is a famous book that inspired everyone. I got to read that. But like, there's no oxygen up there must be pretty miserable. Like, what's the idea behind actually living on Mars?

Joe: And does that seem and, you know, I have to say, just to back up for a second, like, I don't think we'll ever see a space elevator in our life, but I absolutely think there will be one eventually. And if it happens in a thousand years, that's a very short time in the grand scheme of things for human history. So like, but like, okay, so maybe we don't we never see Mars in my lifetime. But what is the idea generally behind the idea that Mars is a theoretically habitable location that maybe could be economically productive or useful to decamp to in some, in some way?

Alex: Yeah, I think you're asking kind of one of the most fundamental existential questions about our, you know, journey into space, right? In theory, we have a long time to go. Right? We've got approximately, you know, 1 billion years, give or take, until this planet becomes uninhabitable. Right. And so ultimately, as HG Wells would have it, it's all the universe or nothingness, right? Either we managed to escape, the planet of our origin, and we have further experiences and expansion and adventures out amongst the stars. Or we don't. So part of the long run vision is that eventually humans will figure out how to leave not just our planet, but our solar system. However, we do not have, a real good understanding of how we would at all make that possible today.

Alex: And so part of the thought is we're going to need to learn how to live out in space for extended periods of time. The longest that we live in space these days is about one year. There have been Russian missions in the past that have lasted longer in low-Earth orbit. But our our our medical docs these days at NASA pretty much don't clear anyone beyond one year. So the idea of, of going to Mars has kind of developed, over, over the centuries. For a long time, we thought that there would be it would be much more habitable. We we thought there might be oxygen there. There isn't.

Alex: There's a really good book that's come out in the last couple years called City on Mars, which really kind of goes through some of these things that you're talking about, which is, you know, that really might not be that nice of a place to live. You know, when you ever get the question of where do you want to go? I often say Venus, because it's kind of a one year and back mission, because ultimately I want to say on Earth, it's literally where all of the restaurants are right here, or restaurants anywhere else in the solar system.

Alex: And so there's a kind of sense of, of that frontier mentality that I think appeals to some people's narratives, even if they don't necessarily spend a lot of time on any frontiers themselves. And I think that idea of going out to a new world and learning from that world is also a different related motivator. Right? There is a scientific interest of exploration. What can we learn from this genuinely different alien world? And what can we learn about ourselves by learning to live on it for decades? Centuries?

Alex: There's a cultural argument that some of my friends kind of really like, which is this argument that goes back to the C Clarke, which is that fundamentally it's about getting variation in humanity, variation in the cultures of humanity. What will we learn? What kind of different humanity will emerge from life on other worlds? We don't know.

Tracy: So I know you spoke previously about how private capital has always had a role in space exploration, to various degrees. But when you look at 2026, I think some people would argue that a lot of territory has been ceded to private companies like space X. When you think about your framework of looking at this, are there certain places or things or missions that you think are better for federal funding to take on versus private capital?

Alex: Yeah, for me, the big determinant is whether or not this is something that is going to require, public dollars for essentially the foreseeable future, right, that there really aren't options, as far as we can, you know, kind of reasonably assess for their being private markets. So, for example, on launch vehicles, there were private markets, right? The U.S went from having essentially zero, market share of global launches in 2000 and seven to now basically having 75% or above because of the successful space that there are, there is a global market to launch. It's also a global market in satellite internet. Right.

Alex: So these are ones where it makes sense to have private companies in the lead. There may be, you know, kind of natural monopoly challenges. So you may think about how do you how are you going to manage that in the future. But you know, we do that in other industries too. So for me, the reason we're experimenting in space stations is because, you know, we think that might be an area where there really might be some commercial market. We've actually seen multiple different private missions that have been paid for. They're not yet at kind of, you know, a very significant share of the market for human spaceflight. But it's certainly a lot more than it was ten years ago when it was zero. And now it's, you know, a few percentage.

Alex: For me, some of the things that we need to make sure kind of stay within the, the public domain, within kind of NASA management operation includes things like operating the moon base. It is going to be a very expensive proposition. There may be some elements to that that it may make sense to have, private sector experimentation and potentially even infrastructure ownership. For example, you can imagine a world where you might have a baseline power system on the lunar surface that is kind of owned by the government. But if there's kind of interest in expanding that, well, maybe you have some private sector kind of, you know, take on some of the risks to see whether or not they have some other infrastructure options there.

Alex: If we don't have that privately owned, then I think there might be some challenges of of kind of pushback. Right. To what extent do you want your tax dollars going to fund Jeff Bezos moon base versus, you know, the National Lunar Research Station? I think people's answers on that are potentially different. And given the fact that it's essentially public tax dollars, they're paying for all these things, I think that's something we need to consider.

Alex: So, you know, the standard answer is that we we have the government take on these higher risk activities where there really is no market demand. But I also think that we need to think about this as an infrastructure play for a long period of time. We're going to be reliant on, on publicly funded, resources for these things. And I think therefore there needs to be some, some public management of that through an agency like NASA. We can in private companies do some of the lunar services, like catering, the, the space station. We could get like Sodexo or one of the companies to handle that. I I'd be comfortable outsourcing some of that.

Joe: What is the deal with, lunar territory? Have governments tried to claim slices of the moon? Let's say we land. We? It was a U.S. base station on the moon. Would we then say that that is American property, that area? What is international law established with regard to claims on the moon or elsewhere?

Alex: Great question. So this was actually resolved in the 60s, with the Outer Space Treaty, 1967. So prior to any human landing on the moon, essentially the powers of the world, including the Soviet Union and the US, in China, all decided we don't want the same type of kind of territorial acquisition scramble that we've seen, in human history to take place on the moon. So there was an agreement that essentially there will not be, any assertion of of national territory. And under international law, there are no private sector actors. So essentially there won't be any, ownership of territory.

Alex: However, there is ownership of the assets that you put there. So any any moon base that you put there, any, any physical infrastructure would be American infrastructure. But just like in Antarctica, there are, provisions within the Outer Space Treaty to allow other countries to come and visit these facilities. They can notify and say, we'd like to come visit your facility to make sure that, you know, there isn't any untoward military activity happening there. So so there's this principle of reciprocity of visitation that's established, and, the idea that we can also mine has already been established.

Alex: So what I always like to say is that no matter what business idea that you have a lunar surface, you can probably engage on it right now if you can make the case with the exception of property speculation, if you want to go build a hotel on the moon, you can afford to do it, and you can just put it down. You get the you get the license to do it. You don't own the territory. But you can you can put it there if you want to mine something. The Space Act of 2015 that was approved by Congress and signed into law established that if you mine it, essentially you own it. Right?

Alex: So if you take something from the lunar surface that's been established, the Artemis Accords signatories have all basically signed up to that. So that's now a very popular proposition around the world. And if you think about it, we've already established that when we brought back rocks from the Apollo program, no one debated that the United States could essentially, do what it wanted with that, and us gave it out to countries around the world, used it for scientific purposes. So we've already established a lot of those principles, but the idea that there's going to be territory is one that currently the Outer Space Treaty, I would argue, thankfully kind of establishes is not one that we're gonna be competing over.

Joe: How often do you think about the economic impacts of an alien invasion?

Alex: You know, only on Fridays.

Joe: You know, it's this not like a thought experiment that they assign to all NASA economists.

Alex: You know, it's a great point. You know, when the agency reestablishes the position, we should absolutely make that a requirement of, you know, reporting out on that, obviously, an alien invasion would probably be, probably be pretty catastrophic. I would certainly recommend, to any listeners, you know, The Three Body Problem, series by Cixin Liu if they have read it, it's absolutely fantastic. And, you know, makes a pretty clear case that, it'd be a rough time.

Joe: All right. Alex, thank you so much for coming on Odd Lots.

Tracy: Thank you for coming to our party. I'm so glad we actually met. And, I did get to ask you the question of what it is that you do, so really appreciate it.

Alex: Thanks. Is a real pleasure.

Joe: Joe, that was fascinating. I mean, part of me just likes hearing what we're up to now when it comes to space exploration. And the answer, it turns out, is, you know, a decent amount. There are so many questions that we didn't even get to. I kind of wanted to ask for an economist take on the procurement process of.

Tracy: Yes, as well, but we're going to have to have Alex back on procurement.

Joe: Actually, I want to do more on that specifically because I imagine that there's a lot of sort of small startups in both the sort of space and defense area. I mean, we know there's a lot of defense tech startups. I assume there's a lot of space tech startups. How do you actually evaluate those ones? I mean, it's actually really impressive thinking about funding, backing space in 2008.

Tracy: Yeah. When it was long before they had sort of proven that they could do reusable rockets and scale. And now we've all seen the videos and they still blow my mind every single time. That was a really good bet. And it was like, you know, I'm sure a lot of people thought that that was completely implausible.

Joe: Yeah. Or whatever very recently in history. So that's pretty extraordinary.

Tracy: I am also I'm still and I think that's right. I looked up this chart again, and Wikipedia page 4.5% of one point, the entire federal budget was NASA, which is just seems like so hard to believe right now that this was like a really big part of what the government was spending money.

Joe: Well, this is a thing. If you couch it in existential terms, then you know, the upward limit of your budget becomes, I guess not infinity, but, you know, 4% pretty good. I do wonder, like it does not seem implausible to me that we have another Sputnik moment with China. Yeah. What if, like tomorrow, they're like, oh, we're landing.

Joe: The other thing I want to ask about how NASA differs from China's space agency. But like, what if like, you know, they're like, oh yeah, we have we have someone landing on the moon next week or something like that. Like it seems plausible. At some point they they've China suddenly builds a space elevator. They've figured out about it. They've figured out, reusable rockets. You know what? The name of their, reusable rocket is?

Tracy: What, the Long March 10th.

Joe: Really? Yeah.

Tracy: That's good.

Joe: Yeah, it's a good name. Anyway, yeah, I thought that was a great conversation, and I just, I say, like, I don't, you know, I'm pretty skeptical of the fact that anytime soon we're going to get, like, actual economic productivity out of space, whether it's from mining or, I don't know, maybe the data center thing will happen, but I'm still pro spending money on going to space just for the sake of it.

Joe: I think it's I think it's inspiring. If we saw some some people land on the moon and hang out there for a while, well, I mean, it'll be in better video condition, you know what I'm saying? Like those. It wouldn't be those. You know, we could see it in high def and they could do stuff and say those grainy things that maybe some people were thought shot on, like a set show.

Tracy: Why don't you just use AI to pretend to be on the moon? I want to see it. Would you go to the moon?

Joe: Yeah, it depends on how, far developed that particular technology is. I would definitely go. I mean, as long as they thought it was like, plausible and other people were going, I'd go. I would need a certain amount of successful missions before I agree to.

Tracy: You'd be on the first one.

Joe: Yeah, I'd be on the first one. Let's do it. Yeah. All right, all right. Well, in the name of Odd Lots, maybe I would consider.

Tracy: Yeah. For, for for do it for content. That's right. Okay.

Joe: Shall we leave it there?

Tracy: Let's leave it there. This has been another episode of the Odd Lots podcast. I'm Tracy Alloway. You can follow me @tracyalloway

Joe: And I’m Joe Weisenthal You can follow me @thestalwart Follow our producers Carmen Rodriguez @carmenarmen, Dashiel Bennett @dashbot and Cale Brooks @calebrooks And if you want more Odd Lots content, you should definitely check out our daily newsletter. You can find that@bloomberg.com/oddlots And you can chat about all of these topics 24-7 in our discord, discord.gg/oddlots And if you enjoyed this conversation then please like the video or leave a comment. Or better yet, subscribe! Thanks for watching.