Date posted: 15/11/2018 13 min read

Musk, Bezos and the economics of space

As private firms expand their operations, human colonisation of space remains a dream. The reason? There’s no apparent pay-off.

In Brief

  • Elon Musk and Jeff Bezos are investing huge private wealth to help restart human space exploration.
  • But beyond earth orbit, space is an inhospitable and expensive environment.
  • Space exploration will be restricted by the lack of any clear sustainable economic motive.

By David Walker

There’s a band of space stretching for 36,000 kilometres above your head that contains almost all of Earth’s commercial space activity. For the most part it’s surprisingly mundane, delivering navigation to phones and cars, telecommunications links, and a lot of pay TV. It’s mostly satellites, and mostly automated: only Russia, its once-great space program now shrunken, has the capacity right now to take humans to space on short notice.

No human has travelled beyond this satellite zone in 46 years. When we want to make scientific discoveries beyond it, we have taken to sending robots – whether it’s the Curiosity rover on Mars or our missions to Jupiter, Saturn and various asteroids and comets.

What about human space travel beyond the satellite zone, away from Earth, beyond the business of delivering college basketball to US sports fans?

What about real space travel? What about flying to the moon and beyond? What about people boldly going where no-one has gone before?

The private boom

To date, the most memorable human moments in space have come about from governments’ quest for national prestige. That was true of Yuri Gagarin’s first flight to space, and it’s why the United States sent the Apollo astronauts to the moon – the last of them, the late Eugene Cernan, in 1972.

Over recent years the US government, devoting a falling share of its own budget to space, has encouraged the efforts of the private space firms. The biggest of them are led by magnates: SpaceX’s Elon Musk, who has made fortunes out of PayPal and Tesla; Blue Origin’s Jeff Bezos, founder of Amazon; and Virgin Galactic’s Richard Branson, whose media brand branched into air travel and might finish with space travel. Their efforts are documented in an entertaining new book by the Washington Post’s Christian Davenport, The Space Barons: Elon Musk, Jeff Bezos, and the Quest to Colonize the Cosmos.

As Space Barons demonstrates, the colonising hasn’t yet begun. Instead, each of these space entrepreneurs is aiming right now to earn their dollars just a few thousand kilometres above the Earth. Virgin Galactic and Blue Origin both hope to commercialise “space tourism”, with travellers paying around US$250,000 to visit for a few minutes the edge of space, about 100 kilometres up. SpaceX and Blue Origin are working on commercial satellite launches; SpaceX has US government contracts to resupply the International Space Station. And all three hope to carry people to space by 2020.

Can they boldly go?

There’s a reason that Davenport’s book title declares a “quest to colonize the cosmos”. Davenport makes clear that Musk and Bezos want more than suborbital joyrides and satellite launches.

Musk’s essential story is well-known. He has fixed his gaze on Mars. Indeed, his entire post-Paypal career can be seen as an effort to build a Mars colony – electric vehicles and solar power stored in batteries (Tesla), underground tunnels (The Boring Company and the Hyperloop proposal), and of course getting to Mars (SpaceX). Musk claims to see space colonies as an insurance policy against some catastrophic Earth event, such as an asteroid strike. When he recently launched a spaceship towards Mars with a Tesla Roadster electric car on board, it also carried a digitised copy of Isaac Asimov’s epic Foundation science-fiction trilogy.

Bezos’s fascination with space is less famous, yet remarkably similar. Davenport quotes Bezos’s high school girlfriend as saying he founded Amazon to make enough money to start a space company. A lifetime Star Trek fan, Bezos says the starship Enterprise’s speech-operated computer inspired Amazon’s Alexa device. He wants to make real the 1970s’ ideas of physicist and space colony pioneer Gerard K. O’Neill, who designed giant solar-powered colonies for 10,000 people floating in space. In the Bezos vision, heavy industry would migrate to space and reduce the pollution of planet Earth.

“I’ll believe in people settling Mars at about the same time I see people settling the Gobi Desert”
Science-fiction author Bruce Sterling

Space’s horrible economics

But here’s the problem that even the Musk and Bezos millions cannot yet solve. There’s as yet no payoff for journeying beyond the satellite zone.

For a start, space travel is expensive and dangerous. NASA lost 14 people in a US$209 billion Space Shuttle program that mostly ran costly deliveries to the International Space Station, orbiting just 400 kilometres above the Earth. (As even NASA hands admit, the Shuttle was built to fly to the ISS, and the ISS was built to give the Shuttle somewhere to go.)

The task of getting to orbit and beyond is governed by unforgiving economics.

They start with what’s called “the rocket equation”. This equation specifies all your constraints: gravity is this much, fuel weighs a minimum of that much, and you need to take quite a lot of it almost up to low Earth orbit, and that leaves you able to carry only a tiny sliver of cargo. Plus you have to slow down from orbital speeds to land by using atmospheric compression (often described as “friction”) – just as scary.

In a sense Musk, Bezos, NASA and the Russians are all lucky that they can get to space at all. The rocket equation tells you that if the Earth’s radius were just a little bit bigger – say, 10,000 kilometres – then no rocket that could be built would get us to space. Instead, the Earth’s radius is 6700 kilometres and people can get to space – but only just. It’s frustrating, but it’s inescapable with our current technologies or anything like them. The astronaut Don Pettit has described it, accurately, as “The Tyranny of the Rocket Equation“.

There’s nothing there

The next, and perhaps biggest, problem is that space is empty. Huge and empty.

It’s hard to overstate the problems of distance in space, even within our Solar System. We describe space exploration the way we talk about the exploration of the world by sailing ships between 1450 and 1850. Star Trek’s James Kirk is really James Cook with warp drive; the similarity in the names is no coincidence. But that metaphor is deluded. Even allowing for huge advances in technology, space remains orders of magnitude more challenging than any terrestrial ocean. After the Moon, there are no major bodies until Mars, tens of millions of kilometres away at its closest. If space is an ocean, then it covers everything but this small island Earth and a few tiny rocks barely large enough to stand on.

And then when you get to the rocks, they’ll try to kill you.

Both the moon and Mars are terrible places for people to live: oxygen-free deserts with nothing like Earth’s Van Allen belt to protect against radiation of all sorts. Their mass creates deep gravity wells that make it hard to get to anywhere else. Night brings a cold unknown on Earth. Mars, Musk’s favoured target, at least has an “atmosphere”, but it’s unbreathable and a mere hundredth of our planet’s, with corrosive dust as fine as cigarette smoke.

“I’ll believe in people settling Mars at about the same time I see people settling the Gobi Desert,” the science-fiction author Bruce Sterling has brutally observed. In fact the Gobi, with its breathable air, normal sand and lack of fatal radiation, is vastly more hospitable.

Floating space colonies face the same sustainability challenge. O’Neill had beautiful visions, but with no understanding of their cost. In a 1975 interview, he suggested the cost of a trip from the Earth’s surface to a space colony could be “about $3,000 per person for a round trip”. More than four decades later, the true cost of a trip just to Earth orbit remains in the millions of dollars; it’s hard even to find a good estimate.

Right from the moment early humans first left Africa’s Rift Valley, exploration has needed to at least provide the food and other resources to sustain the explorers. The fate of space privateers seems more likely to resemble that of the Vikings who colonised Greenland – to hold on for a short time and then be defeated by their environment.

Asteroid miners?

The greatest commercial hope of current would-be space explorers is the mining of asteroids, comets and other space objects, either to manufacture items in space or to return the materials to Earth. The likely metals to return to Earth include platinum, gold and a few others like ruthenium. Water and oxygen from such space objects could sustain space-goers, and hydrogen, ammonia and oxygen could be used for rocket fuel.

A few start-ups hope to pioneer such activity. The best-known among them, Planetary Resources Inc., takes its lead from a 2013 NASA paper, Affordable, Rapid Bootstrapping of the Space Industry and Solar System Civilization, which mapped out a way for future space companies to use 3D printing and other technologies to “bootstrap” their way into harvesting space resources in a self-sustaining, space-based resources industry. Planetary Resources has its own magnates: Google’s Larry Page and Eric Schmidt are investors.

But the NASA paper was written by physicists, a chemist and an engineer. In the absence of serious economic modelling, rough calculations suggest resources would probably be far more expensive to create in space than to fly up from Earth. Although we can imagine scenarios where this might change, they all seem unlikely – and a very long way off.

Even space exploration enthusiasts such as physicist Vidvuds Beldavs and political economist Jeffrey Sommers, writing in late 2017 about the embryonic field of space economics, described the situation in gloomy terms:

“There are no plausible scenarios for widespread sale of space resources to existing markets on Earth. The very high cost of acquisition and transport to Earth and the time required for transportation would make sale of all but extremely valuable materials to Earth markets unviable. However, even in the case of highly valuable materials, such as platinum group metals and diamonds, the sale of large quantities of highly valuable materials would drive down their price.”

Unsustainable dreams

It seems likely, then, that the space effort we have now is what we will have over the next few decades. Virgin Galactic and its ilk will send sub-orbital tourists up to the edge of space. Businesses will send satellites up into orbit. Governments will fund one-way robot science missions to the planets, moons and other debris of the solar system; as the astrophysicist Neil deGrasse Tyson puts it, “if you only care about science, then there’s no rational reason to send humans”. A few magnates, together with NASA and perhaps the Chinese state, will keep their heads turned towards the Moon and Mars, while wondering how to get it funded.

Yet the magnates press on. Their vision of space travel beyond the satellite zone seems dangerous, expensive and economically unsustainable. But these people read of space voyages as kids, dreamed of them, and can’t get those dreams out of their heads. Whatever their stated motives, they want to colonise space because living in space would be a magnificent achievement. It’s sad that economics, which fulfilled their earthly dreams, is making their bigger dreams so hard.

David Walker is the former editor of Acuity, read Isaac Asimov, Star Trek and Gerard O’Neill as a kid, and has written about economics for three decades.

Further reading

• The Space Barons: Elon Musk, Jeff Bezos, and the Quest to Colonize the Cosmos

by Christian Davenport. This book is available at the CA ANZ Library. To reserve a copy visit

Astronaut and engineer Don Pettit on The Tyranny of the Rocket Equation

NASA’s paper Affordable, Rapid Bootstrapping of the Space Industry and Solar System Civilization

Harvard economist’s Matthew Weinzierl’s paper in the Journal of Economic Perspectives, “Space, the Final Economic Frontier”

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