Tuesday, April 5, 2016

The Economics of Discovery

Frontiers have to be discovered, and the process of discovery is vastly aided by an appeal to the profit motive. The incentive for the Portuguese was spice. For the Spanish, it was treasure. These may be petty objectives, though merchants made fortunes and kings built armies on them. If you're motivating territorial expansion, it seems, greed is good.

The currency of the twenty-first century is energy. Costs are governed by its price. It takes energy to produce goods, and energy to transport them to market. It takes energy to stay cool, energy to stay warm, energy to prepare food, and energy to pump fresh water. Much of that energy comes in the form of electricity, which is pricey stuff. The bill will be higher shortly, because global warming forces us to recognize the cost of altering the balance of atmospheric gases. You may believe that the greenhouse effect is so much trashy pulp fiction. In that case, I refer you to the evidence and move on.

At one kilowatt per citizen, the United States leads the world in the production and consumption of energy. Hence it has the living standard the world wants. It will come as no surprise to most Americans that the U.S. standard of living trends downward with time. The political world will be satisfied when Calcutta looks like LA. So here's the choice: We share, reducing our expectations accordingly, or we make cheap energy and sell it to the world. The world gets food, shelter, clothing and, most importantly, MTV. The U.S. gets what it used to love: Glory and wealth. There are just a few barriers to success:

    * We have a power generation mix that may kill us in the end, if we continue to rely on combustion. Fission is a waste-handling nightmare. Fusion has been imminent for so long it's due for syndication with the older versions of Star Trek. Pulling energy out of the atmosphere or the ocean is looking for trouble - suppose the Atlantic Conveyor current that warms Europe just stopped. Suppose rain quit falling in the American Midwest.

    * The developing world does not have, and cannot afford, transmission infrastructure to distribute the energy we would propose to send them.

    * There is so much pessimistic talk about limits to growth in the U.S., and so much self-abasement about past glories, that the American eagle may not have the will to do anything but croak quietly.

Now suppose someone could tap a non-polluting, practically inexhaustible power source with dirt as a raw material. Imagine that someone could transmit electricity over vast distances, without wires, "beaming" it from the source to the point of consumption via microwaves.

Then we would be talking about a Solar Power Satellite (SPS) system, space-borne arrays of silicon (dirt) solar cells, riding a stationary orbit 23,000 miles above the equator, built and serviced by residents of the high frontier using lunar materials. Perhaps some folks out there will suggest we could do it all with robots, but that would be missing the point.

The essence of economics is not profit. It is choice, the freedom to leave. That is what competition does in the business world. It keeps prices low for buyers and gives the small seller a real shot at the market. Business competition is about the freedom to leave. Discovery nourishes that freedom by providing alternatives. Frontiers are the surface of an expanding known world in three dimensions now, instead of two. That’s why we can say that space is the future of business. That’s why we say that to be on the cutting edge of business, you need to understand the economics of discovery.

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