Asso­ciate Pro­fessor of Eco­nomics Charles Steele spoke on space eco­nomics on Feb. 11. Adam Wade | Courtesy

What is space eco­nomics? Is it important? Asso­ciate Pro­fessor of Eco­nomics Charles Steele asked stu­dents on Monday, Feb. 11, at an event hosted by Praxis to discuss the future of space eco­nomics.

Praxis’ first official event of the semester addressed the topics of space devel­opment, the question of private property in space, and the kinds of eco­nomic struc­tures that may be developed to govern space.

There are two ways to predict the progress of tech­nology, Steele said. The first is through eco­nomic fore­casting, which pre­dicts the future based on the past, but he says this becomes mean­ingless for pre­dic­tions beyond 10 years. The other alter­native — science fiction — is more useful for pre­dicting beyond 10 years, but deals in pos­si­bil­ities, not prob­a­bil­ities. Steele said he hopes for “a middle ground between fore­casting and science fiction.”

“That middle ground is eco­nomic theory,” he said, and used pos­itive eco­nomics to explain what he believes will happen, ruling out the unlikely pos­si­bil­ities where eco­nomics is less certain.

Steele pointed out that with a pro­jected minimum GDP growth rate of 2 percent over the next century and the sig­nif­icant advan­tages of space for man­u­fac­turing pur­poses, the potential for the increase of space activity is huge.

“The world will be six to eight times wealthier by 2100, tech­nology is going to be more advanced, devel­opment is going to be greater than my grand­mother wit­nessed, and we’re going to have a multi-trillion dollar space economy,” Steele said. “Now that’s the space economy, but what about space eco­nomics?”

Steele addressed three major com­po­nents of the potential space economy: the devel­opment of models for a space economy and the role of private sector in that process, the devel­opment of private property rights in space, and the role of gov­ernment in space. He jux­ta­posed the current American model of cen­tralized space devel­opment, as exhibited by NASA, with a more decen­tralized space devel­opment process in which NASA would just be another cus­tomer.

“The space shuttle was actually the last big, cen­tralized project for the United States. It was sup­posed to provide easy access to space, and it was a failure,” he said. “It was sup­posed to be cost-effective. It was not cost-effective.”

Steele said the world is already in the process of moving from the cen­tralized to decen­tralized model.

“The Chinese under­stand this,” he said. “Anybody who’s going into space at this point under­stands that this decen­tralized model is the cost-effective way to do it. Decen­tral­ization is inevitable. Anybody who doesn’t do this is going to be left behind. The Rus­sians even seem to be catching on.”

Steele quoted Ludwig von Mises, who said that civ­i­lization is based on private property rights, to assert that any expansion in space would nec­es­sarily involved some method of securing those rights.

The existing insti­tution to protect private property rights in space is the Outer Space Treaty of 1967, he said, which was signed by the U.S. and all the major space-trav­elling nations, and extends to the moon and other celestial bodies. No group exists to enforce the treaty, however, and there are ques­tions about its effec­tiveness. The law is also unclear about what kind of mining or pro­duction is actually allowed in space.

Senior Andrew Berryhill said he felt it pro­vided a better framework for him to think about news stories or political ques­tions that relate to space.

“I per­sonally did not know a whole lot coming into this talk, and I think it was not only com­pre­hensive, but as an eco­nomics major, it was pre­sented in a lan­guage that I could very easily under­stand,” Berryhill said. “I think I got a lot more out of it because of that.”

He added that he appre­ciated that Steele covered a variety of topics related to space devel­opment and how those ele­ments may play out in the future.

“His goal of finding that middle ground between fore­casting and science fiction I found really inno­v­ative and really inter­esting,” Berryhill said.

Praxis Sec­retary sophomore Joy Brower explained that the club’s goal for the event was to bring together both science and eco­nomics stu­dents with a common interest. She said Steele was a natural choice for speaker.

“Dr. Steele has been studying space eco­nomics for probably going on a year now, he’s really inter­ested in it,” Brower said. “Every day after class when I have him, he’ll show me dif­ferent things that he’s reading about space econ; he’s a great, knowl­edgeable speaker.”

Praxis Public Rela­tions Officer sophomore Melody McDonald said Steele’s talk made her want to invest in space.

“It made every­thing seem a lot more real. I like that,” she said. “It’s a whole field of things I never thought about before.”