Most readers here know that Newt Gingrich has long advocated the uses of prizes for space exploration, seeing them as more efficient than current NASA-led efforts. (Nevermind that Gingrich, when he did have considerable power as Speaker of the House in the 1990s, did little openly to promote such prizes.) Gingrich, who may or may not run for president in 2008, is still in favor of them, and talked about them briefly during a speech Friday, according to the AP:
In a glimpse of what his candidacy might look like, he said he would shut down public schools that aren’t performing and offer a $20 billion reward for the first private company that successfully completes a Mars mission.
“Somebody would be there and back about 40 percent of the way into the NASA process,” he said.
One assumes here that the “Mars mission” mentioned above is a human landing on Mars.
Newt Gingrich is an odd fish. He has about a hundred new ideas every day. Fifty are dangerous, forty-nine are crazy, but the remaining one is brilliant.
The idea of a massive prize is just an unworkable idea for so many reasons. But the biggest one is the most obvious–what guarantee is there that the US government will actually pay the prize? No company could bank on that.
And there are obvious other ancillary problems as well. For instance, any Mars mission is going to cost many many billions of dollars. Let’s assume that it is theoretically feasible to do it for even $10 billion. What company can raise that kind of capital? And what company is willing to risk it on a venture that is a) dangerous, b) unprecedented, and c) has no guarantee of a payoff even if successful?
I agree. There is no guarantee that what one President and Congress might offer won’t be taken by the next. It took Burt Rutan 5 years with adaquate funding to build Spaceshipone. How long would a private Mars mission take even if someone had the $10-20 billion to fund it?
A private Mars mission will only work if there are stable revenue markets to attract investors. Ones that will provide a projected ROI of at least 300% plus to justify the risks involved. And if there were such a market you wouldn’t need a prize to have firms go for it.
A $20 Billion prize for the first Space Solar Power Satellite would be far more practical. At least that has the potential to generate revenue, and societal benefits, beyond the prize.
I have to add my voice to the consensus. Prizes are great for relatively small things (like–say–landing an instrument package on the Moon.) But no one with any sanity would trust the federal government to maintain a twenty billion dollar Mars prize for the space of several Congresses and administrations. Better to break up to Mars thing into smaller, bite sized pieces, each with its own prize.
While I mostly agree that a $20B manned mars bounty would likely not deliver what Gingrich thinks it would (at this point in time), the idea of large prizes aren’t entirely stupid. A $1B or even $500M prize to land four people on the moon and keep them there for six months, with a safe return might be far more doable. As Tom says, the key is picking a prize that allows for reasonable hopes of follow-on business. Another thing that would help, much like in the engineering side of things, is to take an incremental approach with the prizes. Follow up the Lunar Lander Challenge with some intermediate prize–possibly a higher performance LLC prize simulating a fully reusable lunar lander, possibly an actual lunar microlander, or something like that. Stuff that once again is in a useful direction, but close enough to the state of the art in the industry that you’re likely to get competitors.
But eventually, a decent sized prize for a manned lunar outpost like I mentioned above is probably doable. Future revenue streams might include lunar tourism, lunar base resupply, selling/leasing space at a lunar base, flying astronauts from other countries to an international lunar base (privately developed, owned, and operated this time)? There’s some possibilities.
But I need to get this thesis done before I can write up some more of my thoughts. 100 pages of content down…hopefully a lot less than 100 pages to go…
~Jon
>>what guarantee is there that the US government will actually pay the prize?
If I remember correctly, in “A Case For Mars”, Zubrin talked about a human Mars Prize along the lines of this $20B prize from this article, as far as I can tell from the short bit on it. This was supposed to have come from discussions with Gingrich. In the one in “A Case for Mars” there was a really big prize for an actual human Mars mission, but there were a number of incremental steps, made of smaller prizes, that led to the final goal, as some folks here are recommending. As you might expect, the steps followed the “Mars Direct” idea pretty closely.
I agree with the posters that suggest that prizes will tend to work better for projects that have more immediate follow-on economic usefulness. Perhaps that would be things like tugs, solar sails, space access demos, refueling, better instruments or better satellite components. A reasonable substitute for general commercial usefulness would be usefulness to government agencies that could then buy the new service (eg: NASA moon mission components).
Of course this is all fantasy when we’re wondering whether or not Centennial Challenges will get $4M this year.
Here are some Gingrich items on this subject, just FYI (since the referenced article was a bit brief on the subject). Like Richardson, at least he knows what the X PRIZE is.
http://www.youtube.com/watch?v=R1xKo_bXnrk
http://www.newt.org/backpage.asp?art=4373
http://www.newt.org/backpage.asp?art=439
http://lawlegislationandlunacy.blogspot.com/2007/04/gingrich-kerry-debate.html
and one from Jeff himself: http://www.thespacereview.com/article/60/1
Ray (Space Prizes blog)
Actually, as long as the current Congress appropriates the whole $20 billion in the fiscal year of their current appropriations bill, and stipulates that the funding shall remain available for obligation for, say, 20 years, there’s nothing technically wrong with Gingrich’s proposal. The Treasury would then have the $20 billion “in the bank” from which to pay a future “Mars Prize” winner.
It is true that the Anti-Deficiency Act prevents one Congress from making obligations on behalf of future, unelected Congresses. The FY 2008 appropriations bills currently before Congress couldn’t say, for example, that the FY 2028 budget shall include $20 billion to be awarded to the winner of the Mars Prize. A sitting Congress cannot usurp the decisionmaking authority of a future Congress.
But a sitting Congress can appropriate any amount of funds under its own authority for any purpose and make those funds available for payout as long as they want. This is how NASA’s current prizes work. Theoretically, just add some zeros and directive language in the next appropriations bill, and Gingrich’s prize would work.
Of course, from a practical perspective, such a huge amount, greater than the entire NASA budget, would never fly politically and would subject its backers to public ridicule.
Instead of floating useless balloons about multi-ten billion prizes and duplicative and unworkable prize advertising legislation (the latest fetish in NASA’s House authorization subcommittee), it would be nice if our nation’s political leaders just properly funded NASA’s existing and working prize program to the tune of just a few tens of millions of dollars.
Thanks for the piece. Yes, prizes do have a useful role — but, as several posters point out, there needs to be a rational discussion of “how big?”, “what for?” and “who funds?”.
Thankfully, X-Prize and now Centennial have now provided practical contemporary examples that can be taken back to Washington as ammunition in budget debates.
That said, I do have a small bone to pick with your parenthetical: “(Nevermind that Gingrich, when he did have considerable power as Speaker of the House in the 1990s, did little openly to promote such prizes.)”
I don’t want to start a semantics debate over the meaning of “little” or “openly” (and in the interests of full disclosure, I worked for Newt in the 90s), but here’s a mid-90s quote from the Speaker:
“We want to explore the use of prizes, which have been used in the West since the late Seventeenth Century and have had a big impact… We want to explore the use of prizes where, if we have a goal we want to achieve, let’s set up a prize and whichever entrepreneur gets there first gets the money.”
Newt Gingrich, 1995
[http://seds.org/xprize/X.html]
Newt was also one of the key figures in saving DC-X in the early 90s [http://www.hq.nasa.gov/pao/History/x-33/facts_5.htm]
This was in an era when NASA and the Administration actively stymied entrepreneurial space and spiked internal discussion of human spaceflight beyond LEO.
Newt has consistently supported entrepreneurial solutions to the challenge of space exploration — but even as the Speaker of the House could only fight the Administration on so many fronts (see welfare reform, tax relief and the line-item veto [which, ironically, Clinton promptly used to veto DC-X*]) .
*As another of my mentors used to say, “there’s only so much stupidity that one man can prevent.”
Bill,
Thank you for piping up. Newt also championed space in other ways, including championing investments in RLV technologies (which was expressed in the form of the X-33 program) and for privatizing the Shuttle (which was good policy … but only led to U.S.A.)
For more coverage on Gingrich’s views on space, read:
http://www.thespacereview.com/article/623/1
http://www.spacepolitics.com/2006/05/15/gingrich-space-development-yes-nasa-not-so-much/
http://www.spacepolitics.com/2005/02/23/more-from-newt/
BILL: the line-item veto [which, ironically, Clinton promptly used to veto DC-X*])
A slight correction. Clinton used his line item veto to kill a “military spaceplane” technology research program, as well as Clementine II, which would have intercepted an asteroid but was also a technology demonstration for ballistic missile defense.
http://www.sciencemag.org/cgi/content/summary/278/5338/563a
http://www.tgv-rockets.com/press/cooper_testimony.htm
– Al
FANSOME: A slight correction. Clinton used his line item veto to kill a “military spaceplane†technology research program
A couple interesting facts.
The person who led the sales effort for Clementine II was USAF officer by the name of Simon “Pete” Worden.
The WH staffer who recommended this “veto” was a Col. Mike Hamel who worked for then Vice President Al Gore. Hamel is now a 3-star general, and head of the USAF Space & Missiles Command.
– Anon
I do think that prizes could play a much bigger role in space policy. Obviously, we should not be “stupid” about it. I think that Zubrin’s approach of incremental steps makes a lot of sense. IMO, we should start with smaller prizes. I would create three (3) prizes, in the following order: 1) orbital RLVs, 2) LEO propellant depots, and then 3) Processing oxygen on the Moon, and 4) Delivering the oxygen from the lunar surface to a LEO prop depot.
I also think that Gingrich is going to do prizes, that he might as well do some other important things, and do them ALL as a package. Such a package might include:
1) Zero-G, Zero Tax.
2) Investment Tax Incentives for investments in space transportation.
3) Eliminating the loopholes in the Commercial Space Act of 1998, which requires that the federal government purchases. A number of loopholes to the Launch Services Purchase Act were introduced in the 1998 revision.
4) Expanding COTS. Take a portfolio investment approach.
5) RLV x-vehicles (Real x-vehicles … not a y-vehicle in x-vehicle clothing like we had with the X-33. Also, instead of throwing all our eggs in one basket like the X-33 … many smaller x-vehicles.)
Of course, all this is a fantasy, as Newt has a very small chance of ever being President.
– Al
Hi Al,
You may or may not be right about Newt’s odds of being elected President, but — the results that come out of his ‘American Solutions Days’ at the end of September could conceivably become a starting point for discussion by one of the major party platform committees (OK, I’ll be realistic — by the GOP platform committee).
That said, your prize steps and your list are both good ideas. I happen to agree with #1, #2, #4 and #5 on your list wholeheartedly (and would probably agree with #3 if I was smart enough :-)).
The folks over at American Solutions [http://www.americansolutions.com/] would probably be interested in hearing from you. Who knows? Your ideas could end up being more than a fantasy…
Regards,
Bill
Fair enough. I used the term “promote” in the sense of policy initiatives and legislation, or the lack thereof. (I shall endeavor to be more exact in my language in the future.) It’s one thing to talk about how great prizes are, but it’s something else altogether to turn those words into action. Given that the level of “stupidity” in Washington probably hasn’t gone down in the last decade, it suggests that, in a hypothetical Gingrich Administration, large space prize proposals would have a low priority.
Given that the level of “stupidity†in Washington probably hasn’t gone down in the last decade, it suggests that, in a hypothetical Gingrich Administration, large space prize proposals would have a low priority.
Except there’s a difference in what you can accomplish as Speaker of the House with a hostile president, and what you can accomplish as president with a Congress of your own party (or even with the opposite one). I would think that if by some miracle Gingrich were elected, he could at least push the prize concept a lot farther down the road, as long as he doesn’t overreach with a twenty-billion-dollar Mars prize.
The lack of support for prizes in Washington, especially large one, may also be an indication that Congressional staff members know much more about the economics and values of prizes then the individuals advocating them. This is especially true of ones that are designed to jump start new industries. The record of success for prizes, especially in stimulating NEW technology is far more sparse then many folks realize.
And many of the successful ones were successful simply because they were in a range of requirements that allowed individual hobbyists or small groups using limited funding to compete and they were simple acceleration of existing technological trends. Even with industrial prizes, the ones that have been successful involved challenges that could be addressed with internal research funds of a corporation, not ones that would have required raising a large amount of outside funding.
NASA current Centennial prizes fit this pattern well. A $20 billion Mars prize, even in increments doesn’t as would be the case for most big dollar, big challenge ones.
Incidentally the X-prize also fits this pattern. None of the teams that needed external funding were able to raise enough to make a serious try at it. The only team that was successful was Paul Allen’s team who invested around $25 million, about a third of what a good American Cup Racer costs. This implies that the largest practical space prize would be in the $75-100 million range IF its something spectular enough to interest a billionaire or two into going after it.
Now the X-prize was the exception in that a radical solution to the problem was found in the Spaceshipone design. However it appears limited to use in sub-orbital flights and the jury is still out if it will be able to be translated into a successful commercial design. Only Spaceshiptwo will demonstrate that.
Meanwhile most of the other x-prize firms, some with very practical designs that could have made the transition to orbital service, have simply vanished since they saw little hope of competing with the billionaires that the X-prize attracted to the field. There are probably 2 or 3 still kicking, but they have little chance of raising the funds now to close their business models for space tourism. So basically all the eggs for a suborbital space tourist industry are in two baskets now. Richard Branson’s VG and Jeff Bezos’ Blue Origins, which was not a x-prize hopeful. It will be interesting to see which one, if either succeeds.
But its just as possible both might fail and in the process destroy any chance for a space tourist industry for a generation or more, souring the investment pool. And this is the risk with prizes, the winner may not be suitable for commercial success and the evolution of an industry is set back rather then accelerated.
It was over 12 years after Lindbergh’s that transatlantic passenger service started with a very different design, a flying boat. It wasn’t until after World War II that land based planes begin transatlantic service. And the only prize driving it was the potential of revenue. Which is why I always find it amusing how those promoting prizes claimed that the Orteig prize stimulated technical innovation. The Spirit of St. Louis was not a technical breakthrough. That is an urban myth. It was merely a Ryan’s M-2 mail plane model (first flown in 1925) redesigned into a flying gas tank with all extra weight, like the windshield, eliminated and extra fuel tanks added. The other entries, like Admiral Byrd’s Fokker Tri-motor which made the flight a month later, were also basically standard designs modified to carry extra fuel to the very limit of “safe†take-off weight. And it fit the pattern as well since the amount of funds needed was within range of small groups or firms seeking PR from it. And its also why no serious attempts were made before the development of new long range aircraft in the mid-1920’s.
So a $20 billion Mars prize might sound nice, and fit with the current prize mania, it would produce no tangible benefits. In the best case it would do no harm. In the worst it will undermine any NASA effort to research Mars, undermine the VSE and make private human space development look like more of a stunt then as a viable commercial venture to investors. It could well set America spaceflight back a generation or two.
Just out of curiosity, could Congress appropriate prize funds and have them stashed in an escrow account in a bank with defined conditions for payout at some future time? “Defined conditions” might need a bit of thinking about.
While I’m surely guilty of it myself on occasion, I find it amusing that Mr. Matula puts forth his opinions as demonstrable and factually based facts.
Rand,
If you are able to find and errors of fact go for it.
Tom,
I believe that Rand is referring to assertions you make like:
MATULA: So a $20 billion Mars prize might sound nice, and fit with the current prize mania, it would produce no tangible benefits.
This is clearly your opinion, and although you state your opinion with certitude, you could be wrong.
– Al
I don’t know. Gingrich’s speakership seemed like a four-year-long graduate level seminar. No real surprise given that he’s a former college professor. I think a Gingrichian presidency would be worse.
I think he and the country would be much better off if he stayed more or less where he is. Let him do something with X-Prize on this. Or form his own non-profit to fund it.
Al, the rest of the paragraph:
…is opinion as well. I actually agree with it, but I can’t agree with the vociferousness with which it’s stated, as though it’s indisputable reality.
MESSIER: I don’t know. Gingrich’s speakership seemed like a four-year-long graduate level seminar. No real surprise given that he’s a former college professor. I think a Gingrichian presidency would be worse.
Mr. Messier,
This is an ad hominem attack. You don’t say what it is about Gingrich you are against, which provides nothing to respond to.
Personally, I did not care for Gingrich’s political “style” — as he brought with him a slash & burn kind of politics — but I understand why he adopted it. I think he failed as a “leader” to the extent that a leader should lead by example with their personal life. Whatever your opinion about his style or personal life, once you started listening and engaged him on substance, there was a lot of substance to be found (which I can’t say for 95+% of Members of Congress).
On substance, of the 10 parts of the “Contract with America”, which ones were you against?
Were/are you against a balanced budget? (It happened under Gingrich.)
Were/are you against welfare reform? (It happened under Gingrich.)
Were/are you against the line item veto? (It happened under Gingrich, but was ruled unconstitutional by the Supreme Court. A truly awful decision for the country IMO. Note that Gingrich actually transferred some of Congresses power to a Democratic President, because he believed it was the right thing to do.)
Were/are you against the policy that the Members of Congress should be subject to the same laws that they impose on the rest of us? (It happened under Gingrich.Note that Gingrich did not make ANY friends in Congress by doing this. He did it because he believed it was the right thing to do.)
How about term limits on Committee/Subcommittee Chairs? (It happened under Gingrich.)
How about the requirement that the federal government pay for any mandates that it forces onto the States? (It happened under Gingrich.Note that Gingrich again was giving away some of Congresses power. He did it because he believed it was the right thing to do.)
How about the $500/child tax credit? (It happened under Gingrich.)
Yes, Newt is a flawed individual … even deeply flawed in his personal life … but he also produced many admirable results for our nation in the short period of time that he was the 3rd ranking elected leader of this nation. The balance of power between Clinton & Gingrich was actually a very productive time for this nation.
In my opinion, the Republican Party has gone off track since Gingrich quit his office and left the religious right at the wheels. Not only is the Republican Party worse off, but our nation is worse off too. Again, just my opinion.
– Al
It was not am ad hominem attack. It was more a comment on his political personality. He talked incessantly during his tenure, far too much for most people to stomach. He was a brilliant tactician in the minority, where he could be on the offensive (despite blatant hypocricy on a number of fronts, most prominently on family values). But it seems to me that he eventually wore out his welcome with the public (and even many of his own fellow Congressman) with his style. The thing that crystalized it for me was when he gave a self-indulgent nationally televised speech (some sort of state of the contract speech) after being speaker for 100 days (or thereabouts). This is not what I want a speaker to do. It’s not what most Americans wanted. Go to DC, do what you said you were going to do, and don’t bother us much with it.
I don’t think his style plays well for a president. I always think of him more as Patton, a great tactician and a fierce warrior not necessarily concerned with niceties. Not necessarily presidential material. America’s more attuned to electing people like Ike. They liked Ike. And understandably so.
I’m not going to debate his various policy achievements or failures here. I was less thrilled with a number of his policies in various areas. Nor am I much impressed with his foreign policy rhetoric. But, that’s an argument for another day (if we ever meet at a conference, we can sit down over beers and discuss it, if you’d like).
What the advocates of prizes continually ignore is that Congress has remained highly skeptical of them. They might ask why that is, if the criticism is at all legitimate, and how to deal with it. They should do all of this before proposing more of them and beating their heads against a wall.
The fact that Newt even mentioned anything space related at least demonstrates it’s on his mind. I seldom if ever hear any comments from any of the other possible contenders! However getting congress and or the senate to agree on anything worthwhile in this day and age is next to impossible.
Actually having a candidate that has some realistic concept, interest and understanding of the space program and current private space developments would be a major plus. Most of the past presidents have been clueless. Taking action based on their advisors who seem to be for the most part woefully inadequate. The current space initiative is about as close as we’ve come to an actual vision since the days of Kennedy
Doug: The fact that Newt even mentioned anything space related at least demonstrates it’s on his mind.
That’s precisely the problem. He’s always had space on his mind. He talked a wonderful talk at several conventions I attended before he attained power, and he even wrote a book about it. When he became Speaker, he chose to engage in divisive ideological battles that (in my opinion) did little or nothing to advance the Republic, let alone spaceflight, and, at least in the former arena, left us worse off than we were before. This tells me where his priorities were and probably are, and I would expect little different from Newt as President, whatever he says.
While I wouldn’t today, the much younger Donald of the time would have happily overlooked the other issues and voted for his spaceflight agenda. Instead, I ended up completely disillusioned with the man. On the issue that mattered to me, he most certainly did not keep his promises.
— Donald
“The lack of support for prizes in Washington, especially large one, may also be an indication that Congressional staff members know much more about the economics and values of prizes then the individuals advocating them.”
“What the advocates of prizes continually ignore is that Congress has remained highly skeptical of them. They might ask why that is, if the criticism is at all legitimate, and how to deal with it.”
Unfortunately, the Congressional criticism, what little currently exists, has nothing to do with whether prizes are a good instrument for technological innovation and has everything to do with parochial, pork-barrel politics. Appropriations staff have only stated that they are reluctant to dole out dollars to programs where the likely winners cannot be predicted with any certainty ahead of time. Translated, they’d much rather put those dollars to work on earmarks for their home states and districts, or on traditional contracts and grants where there is some certainty about who the competitors will be and who might win.
“This is especially true of ones that are designed to jump start new industries. The record of success for prizes, especially in stimulating NEW technology is far more sparse then many folks realize.”
This is a very misleading and inaccurate statement, proven wrong by multiple historical examples. For example, the Frech government/military put out a technology inducement prize for food preservation techniques that resulted in the canning industry that underlies the much of world’s food processing today. European technology inducement prizes were also won for various chemical processes (involving alkalis, IIRC) that are also critical to various industries today. And this is ignoring well-known examples of technology inducement prizes like the British Longitude Prize, which revolutionized maritime navigation.
Heck, NASA’s predecessor, the NACA, was founded as a reaction to the success of European aviation prizes!
“So basically all the eggs for a suborbital space tourist industry are in two baskets now. Richard Branson’s VG and Jeff Bezos’ Blue Origins,”
This is also a very misleading and inaccurate statement. It ignores other efforts underway to develop commercial suborbital human vehicles — both funded and/or led by proven performers — including the recent funding of XCOR by Boston Harbor Angels, the current round of Benson Space fundraising, and the Space Adventures effort.
It also ignores the impact the X PRIZE proof-of-concept had on COTS, Space-X, and Kistler in terms of accelerating commercial orbital human space flight efforts. It also ignores the impact of the X PRIZE internationally, like the recent ESA study contract on commercial human suborbital spaceflight.
Prizes should not be portrayed as a panacea for all that ills the human spaceflight world. But neither should small, working federal prize programs go unfunded by Congress (as NASA’s prize program has for a couple years running) because of parochial politics and/or poorly researched and assumed mistruths about the effectiveness and impact of past prizes.
I doubt any $20B Mars Prize is likely to happen, with NASA requesting just $4M for Centennial Challenges this budget cycle. However, there’s a Mars Prize that was won just a few days ago: the $5,000 University Mars Rover prize by the Mars Society.
http://www.marssociety.org/portal/c/urc/frontPage
If we could figure out a creative accounting way to multiply prizes amounts we’d have the $20B.
Personally I’d be satisfied to get a few challenges like the ones described here (slide page 16 and on, except the LLC already exists) kicked off:
http://calspace.ucsd.edu/spacegrant/Presentations%20at%20Conferences/March%202006%20DC/Centennial%20Challenges.pdf
“Unfortunately, the Congressional criticism, what little currently exists, has nothing to do with whether prizes are a good instrument for technological innovation and has everything to do with parochial, pork-barrel politics.”
Well, if what you say is the real reason, then we might as well give up, right?
You seem to be missing the point–the advocates of prizes seem to be pushing the same solution over and over again and failing to recognize that they are not convincing the people who have the money. The question is, can prizes be advocated and managed in such a way that they will get support? If not, then give up and go home; find another solution.
“Well, if what you say is the real reason, then we might as well give up, right?”
No, we should demand better Congressional decisionmaking and representation. It’s bad governance on its face that Congress denies funding to a program built on a model of successful innovation that literally goes back centuries, that has demostrated its ability to successfully generate new innovations, and that has managed to do so through private non-profit partnerships that have cost the taxpayer literally nothing — practically zero overhead. (Personally, I’m at a loss to find a more efficient R&D program in the government besides NASA Centennial Challenges. Even DARPA doesn’t do as good a job managing its Grand Challenges.)
It’s especially bad governance when, instead of funding NASA prizes to the tune of a couple tens of millions of dollars, Congress pulls stunts like earmarking $20 million a year for a lunar robotic program office that will have no missions to manage, that has only proven its ability to run up mission costs to the point of cancellation, and that will be located at a NASA field center with a bad track record of mission management.
Forget space policy. We shouldn’t stand for such nonsense from the point–of-view of fiscal policy. Who wants give up on having their tax dollars spent so poorly?
“You seem to be missing the point–the advocates of prizes seem to be pushing the same solution over and over again”
And you’re missing the point that the Congressional argument for withholding funding — such as it exists — is not legitimate.
“and failing to recognize that they are not convincing the people who have the money.”
You also seem to be missing the point that this “money” is actually “our” money — yours and mine.
Fortunately we live in a democracy where the same people don’t always have to make the same decisions regarding how our money get used. That’s the point of forums like this one.
And some of us (myself included) have actually brainstormed ways for such prizes to get funded outside of NASA and Congress. In fact, a lot of us contributed to a thread on this topic just last week. See here:
http://www.spacepolitics.com/2007/06/04/a-real-lunar-lander-challenge/#comments
If you’ve got some brilliant sources for prize funding, please saunter over there and share them with us.
A follow-up post with a more complete list of technology inducement prizes have initiated and/or transformed whole companies and/or industries:
1714 – Longitude Prize
In 1714, the British government offered the Longitude Prize for a method of accurately determining a ship’s longitude. Prizes of 10, 15, and 20 thousand British pounds were offered for solutions of varying degrees of accuracy. John Harrison was awarded the top prize in 1773, and his system revolutionized navigation and maritime trade.
1775 – Alkali Prize
In 1775, King Louis XVI offered a prize of 2,400 livres to anyone who found a commercially viable artificial process for the production of alkali. Naturally occurring alkali was used in paper, soap, and glass production, but discovery of an artificial process in 1791 by Nicolas Leblanc enabled much greater production and launched the French chemical industry.
1795 – Napoleon’s Food Preservation Prize
In 1795, Napoleon’s Society for the Encouragement of Industry offered a 12,000 franc prize for a method of food preservation to help feed Napoleon’s army. Nicolas Appert devised a solution using champagne bottles in 1809 and was awarded the prize in 1810 on the condition that he publish his methods. The discovery marked the beginning of the canning industry.
1820 – Montyon Prizes
In 1820, the French Royal Academy of Sciences began offering large monetary awards after a private donor established the Montyon Fund for prizes in medicine… In the mid-1800’s, private contributions to the French Royal Academy lead to the establishment of dozens of additional monetary prizes. These included the Jecker Prize, established in 1851 “to accelerate the progress of organic chemistry  Charles Friedel was among the winners of the Jecker Prize for his now famous Friedel-Crafts reaction.
1823 – Turbine Prize
In 1823 the French Society for the Encouragement of Industry offered a prize of 6,000 francs for the development of a large-scale commercial hydraulic turbine. The prize was won in 1827 by then 25 year-old Benoit Fourneyron. His turbine was placed in the public domain and was immediately implemented across Europe and helped to power the burgeoning New England textile industry.
1895 – Chicago Times-Herald Prize for Motors
In 1895, the Chicago Times-Herald offered a $5000 Prize for Motors to be awarded for the development of “practicable, self propelling road carriages,†as determined by a 54-mile race. The winner was J. Frank Duryea. Even more than the prize money, the publicity generated did much to promote investment in automotive innovation.
1903 – Deutsch-Archdeacon Prize
In 1903, French Aero Club members Earnest Archdeacon and Henry Deutsch de la Meurthe offered a prize of 50,000 francs to the first pilot to fly a heavier-than-air vehicle in a 1km circular course. Henry Farman won the prize in 1907, and went on to become a commercial airplane manufacturer.
1909 – Rheims Airshow Prizes
Also in 1909, several prizes for speed, distance, and altitude were offered at the Rheims Airshow. Glenn Curtiss won two prizes for speed, including the Gordon Bennett Prize, and launched an airplane manufacturing business with his winnings.
1919 – Orteig Prize
In 1919, Raymond Orteig offered the $25,000 Orteig Prize for the first non-stop flight between New York and Paris. The prize offer expired in 1924 with no attempts before Orteig extended the deadline. By the time Charles Lindbergh won the prize in 1927 in his famous plane, the “Spirit of St. Louis,†nine competitors had prepared to make the flight and three had already tried and failed. Lindberg’s success sparked a boom in American interest in aviation.
2001 – Innocentive
The now independent company InnoCentive was founded by Eli Lilly in 2001 as a registry for scientific innovation prizes. Companies post specific scientific needs, a prize amount, and a deadline. The innovator providing the best solution is awarded the prize. To date, over 80 prizes have been awarded.
2005 – Grainger Challenges
In 2005, the National Academy of Engineering announced the first in a planned series of Grainger Challenges, offering a $1 million first prize and $200 and $100 thousand second and third prizes for the development of economical filtration devices for the removal or arsenic from well water in developing countries. Over 70 entries were submitted, and Abul Hussan was announced the winner in 2007 for his SONO filter that has already been implemented to provide safe drinking water to 400,000 people.
For those advocating lunar/asteroid sample return prizes, these two may be of interest:
1991 – FCC Pioneer Preferences
In 1991, the U.S. Federal Communications Commission (FCC) established the Pioneer Preference Program, offering a reward of preferential licensing (worth many millions of dollars) for the development of new spectrum-using communications services and technologies. Five companies received the reward before the program ended in 1997, and a sixth, Qualcomm, was granted the award for its development of digital wireless technology after a legal appeal.
2000 – Goldcorp Challenge
Also in 2000, the gold mining company Goldcorp introduced the Goldcorp Challenge: the company released all of its geological data on an underperforming Canadian mine, and offered $575,000 in prizes including a grand prize of $105,000 for the most accurate predictions of where to dig to find the most gold. Over 1,400 people participated from 50 countries, with 80% of 110 identified digging sites yielding significant quantities of gold. A partnership of two Australian companies using computer fractal technology won the grand prize in 2001.
The text above is excerpted from http://www.keionline.org/index.php?option=com_content&task=view&id=29.
Again, we shouldn’t oversell prizes. For example, there are a few failed prizes listed at the website above.
But neither should we make false claims constraining the limits of inducement prizes. History clearly shows that they can be a powerful tool for innovation.
Given the history above and the management and results of NASA’s prizes so far, the program deserves more funding, including a substantial increase over the paltry $4 million in the FY 2008 request. The program has proven itself at a funding levels in the millions. It’s way past time to see how well the program does at the tens of millions.
My 2 cents… FWIW.
There have talks about getting advertising dollars into space apps. Well, what about reinstation of something like CATS prize by a company ? Budweiser paid $1Mil for balloon flight around the world.
What about a prize to send a can of Budweiser to orbit and bring it back ? A beer around the world or something like that.
Once that is done, a beer that would have been on moon would be nice to have as well.
Sell the idea to a couple of competing companies, and you should be set.
Anonymous,
Wow. I learned a lot from your list.
This list of successful prizes needs to be published MUCH more widely.
I encourage those who are members & leaders in space groups such as:
* Xprize Foundation
* NSS
* SEDS
* Space Access Society
* Space Frontier Foundation
* Space Transportation Association
* ProSpace
* Personal Spaceflight Federation
* AIAA
and anybody else who is interested in the topic of prizes to forward our goals in space …
to publish this list, and distribute it widely.
SOMEBODY should write an op-ed on this, now that it is publicly available information from our anonymous friend.
– Al
I second Al’s comment. Thank you Anonymous!
Does anyone have any news about what’s going on (if anything) with Mr. Biglow’s America’s prize?
— Donald
Yes there were many failures, most of which are excluded from lists like this one, which is why prizes were replaced by grants in the 20th Century as a way for advancing technology. For example the website misses the Longitude Prize offered by King Phillip III in 1598 and a similar one offered by the Dutch in the same year. But then the technology for clock making was not advanced enough for the conditions of the prize. Even the Longitude Prize offered in 1714 took over 60 years to win and the inventor had to wait decades for payment while other clockmakers stole his intellectual property.
And from that same website you cited.
http://www.keionline.org/index.php?option=com_content&task=view&id=29
some other examples of prizes that advanced technology.
And we know how computer innovation was driven in the 1980’s and 1990’s by the Fredkin Prize.
[[[1980 – Fredkin Prize
In 1980, computer scientist Edward Fredkin offered a $100,000 prize for the first computer chess program to beat a reigning world chess champion. IBM’s Deep Blue Chess team won the prize in 1996 when their machine defeated Gary Kasparov.]]]
And even the successful Alkali Prize shows two of the problems with prizes – intellectual property ownership and getting the money you won.
[[[1775 – Alkali Prize
In 1775, King Louis XVI offered a prize of 2,400 livres to anyone who found a commercially viable artificial process for the production of alkali. Naturally occurring alkali was used in paper, soap, and glass production, but discovery of an artificial process in 1791 by Nicolas Leblanc enabled much greater production and launched the French chemical industry. Unfortunately for Leblanc, the French Revolution destroyed his alkali factory and prevented the King from giving Leblanc his award. Leblanc committed suicide in 1806, and it was not until 1855 that his heirs received the prize payment from the French government.]]]
Industry stole his invention, without compensation, while the King lost his head before paying the prize.
Same with the famous Nepoleon prize for food preservation.
[[[1795 – Napoleon’s Food Preservation Prize
In 1795, Napoleon’s Society for the Encouragement of Industry offered a 12,000 franc prize for a method of food preservation to help feed Napoleon’s army. Nicolas Appert devised a solution using champagne bottles in 1809 and was awarded the prize in 1810 on the condition that he publish his methods. The discovery marked the beginning of the canning industry.]]]
I expect the patent rights would have been worth far more the 12,000 francs, even in 1810.
Actually there is a very solid literature in economics on prizes and their role in innovation strategies. I will provide a reading list below tomorrow for those interested in actually learning something about prizes and technological development beyond the current hype.
However the Senate already knows the real advantages and limitations of prizes as Molly Macauley, a Ph.D. in economists who works for the group Resources for the Future testified on it at the Senate hearings on the Centennial prizes.
A copy of her testimony is located here.
http://www.rff.org/Documents/RFF_CTs_04_macauley.pdf
It’s a pity space advocates ignore it. Instead, they believe like the Soviet economists believed, that prizes are the ultimate solution and a substitute for markets and ROI. The results of Soviet economic policy show the risks of basing a national technical innovation policy on prizes as many libertarians propose…
Also from the website http://www.keionline.org/index.php?option=com_content&task=view&id=29
[[[1931 – Soviet Committee for Invention
In 1931, the Soviet Union implemented a Committee for Invention offering payment for new inventions determined by a sliding percentage of the cost savings produced after three years of use. Non-monetary social privileges were also offered as rewards. The patent system was left in place, but application fees were high and patents were made less valuable by market controls. The amount of the rewards was increased in 1942 after innovation declined, but by most accounts the rewards remained too low to promote optimal levels of innovation. The system continued until the collapse of the Soviet Union in 1991.]]]
Yes, if only they offered larger prizes, like space libertarians want NASA to do, then the Soviets would have been able to leap past the West in technology… And maybe if you balance your flywheel just right you will get perpetual motion…
Again prize have a place in space development, but you need to develop and implement based on conditions that have actually worked in the past. And Billion dollar moon prizes and 20 Billion dollar Mars prizes are far beyond those conditions, which is why space advocates proposing billion dollar prizes are seen as fools in Washington and discredit the movement even further.
Key to remember is that prizes only are successful if the goal is within the reach of individuals or small groups that are self-funding. Its not something you based an investor driven business plan on. If it’s a firm it must be within their limits for “high risk’ R&D or Publicity budegts. Second key point is that the likelihood of an solutions increases with the number of serious contenders. The more difficult the challenge the smaller this pool of real contenders (those who are able to self-fund their efforts at the prize…) become. So the key is to keep the prize amount low enough to bring in the “garage†innovators. This has been true with every single prize listed so far. They were ALL ones that an individual, or small group of individuals, could win with their own funds or at most the help of a single large patron.
And if this seem authoritative to some, then I guess is just because they are stated with the same belief as that of an engineer stating their opinion on some inventors latest scheme to violate the laws of thermodynamics. I know many space advocates seem to think that economics is not a science like physics, but then that is also why most space start-ups end up as failures.
The X-Prize of ten million appears to be approaching the maximum level, since only two teams raised substantial funding and only one had the funds needed to actually try for it. And it was a close call as Burt Rutan won it less them three months from when the monetary prize disappeared. And the solution is not one scalable to orbital flight as many had hoped, providing the low cost breakthrough needed, but is instead limited to sub-orbital.
So I place the upper limit for a prize at around $70-100 million as that is the entry level for American Cup Racing – a sport of billionaires. But that high level would likely eliminate the majority of the most innovative entrants. So again the 20 billion dollar Mars prize is shear nonsense, like proposing NASA replace the Ares I with an anti-gravity spaceship…
But feel free to propose a new perpetual motion engine to Congress. Who knows, they may even fund it.
Also, last time I checked the America Prize for orbital was dead as Bigelow learns the reality that markets do not follow products. Build it and they won’t always come.
Dr. Matula,
I agree with you that prizes are not be-all/end-all solution or any kind of panacea. There are real limitations to prizes. However, they could be used more often, and in an effective manner.
I agree with you that there is a financial limit (and that $20B is almost certainly too much) but I disagree with you that $70-100M is the limit. I would suggest that both Musk and Bezos are already taking a prize-like attitude to their investments in space transportation, and that they are each investing more than $70-100M. If you add Beal and Tito and Allen, I am thinking that the limit is higher.
I also agree that prizes are not a good motivation for companies (prizes are too risky … they like contracts) but a properly designed prize might motivate a billionaire or two.
If we wanted to motivate additional billionaires, an approach that “we the people” could *test* is to announce a prize that is MORE than what it would cost to do this if somebody was really innovative, but still less than traditional aerospace approaches. In other words, let them make a profit, as long as “we the people” also greatly profit.
In addition, as I said above, I believe that a package approach, that included prizes, but also included the following makes more sense than a prize approach alone. Most of these initiatives are focused on private companies (both big and small) which are missed by prizes.
1) Zero-G, Zero Tax.
2) Investment Tax Incentives for investments in space transportation.
3) Eliminate the loopholes in the Commercial Space Act of 1998. (Meaning, expand & enforce the existing law that requires U.S. government agencies to buy commercially provided services wherever possible.)
4) Expand COTS. Take a portfolio investment approach to diversify the risk. (Any third-rate venture capitalist can tell you that you need to invest in 8-10 companies to have real diversification.)
5) RLV x-vehicles (Real x-vehicles … not a y-vehicle in x-vehicle clothing like we had with the X-33. Also, instead of throwing all our eggs in one basket like the X-33 … many smaller x-vehicles.)
– Al
PS — Bill, I encourage you to contact Newt’s office group, if you really like these ideas. Alternatively contact Jim Muncy, who also used to work for Newt, and encourage him to contact Newt’s group on this line of thinking. I am guessing that you probably know Mr. Muncy. He would be a much better at this than I.
Thomas: the Soviets would have been able to leap past the West in technology…
When it comes to space and other large scale technology, “US good, Soviets bad” is far too simplistic a view. It’s worth noting here that many of the engines now used to launch our good capitalist rockets were developed by the Soviet Union, and are often superior to their Western counterparts. There are some fields in large scale technology development where Soviet methods proved every bit as good as American methods, and occasionally superior, and some American success stories used methods that would make a Soviet apparatchik blush (Apollo, which according to Siddiqi was far more centralized than the disjointed Soviet effort; the nuclear weapons industry; the Freeway system). It is very dangerous to draw conclusions about what will work in the future based on pro-Western propaganda. Yes, prizes are not the solution to all problems, but using dubious comparisons between Soviet and American technological histories says little about what prizes can and cannot achieve.
— Donald
Donald,
Where the Soviets excellence is in grinding through to a solution. When their rockets where too small for launching nuclear bombs they just built them bigger. The U.S. instead made the bombs smaller. Their engines are better because they never abandon the old rockets and old engine slike we do for a fresh start. Instead, like VW, just kept on refining them.
Hi Al,
I agree with that agenda. I am in favor of Zero-G/Zero-taxes and pushed for a similar bill in New Mexico in the 1990’s. Tax holidays are always a good incentive for entrepreneurs.
Same with tax credits and other incentives. I would just offer the solar home heating industry as a cautionary tale. When the federal incentives went away in the late 1980’s so did most of the industry, so may sure the incentives will stay in place for a set period long enough to mature a market.
You could try to eliminate the loopholes, and I would support it, but I suspect that just as with federal tax laws, no ones will be found. The best way to ensure that the government buys commercial is make the price low enough and service high enough to make it unacceptable politically to do otherwise. Still it is worth it to keep the pressure on.
Yes, the Wildcat Ratio – 8 wells are dry holes, 1 break even, and 1 is a real gusher. I wouldn’t object to expanding COTS, however I expect it would be hard to find 8-9 qualified firms. Perhaps 1 or 2 more, but after that its hard to see who you would find that had the financial and technical qualifications to compete. And this the problem with an industry with high barriers like space launch.
However, another problem with COTS is you have only 1 ISS and only 2-3 flights a year, not enough to get economies of scale for even on supplier.
I am very much in favor of x-vehicles and that I believe is the best way to stimulate the alt.space start-ups, building smaller demo versions of what they are proposing before going for the full size systems. Afterall at the end of the day COTS would only provide a marginal existence for a single winner. Xcor’s recent contract with the USAF is a good example of that model and why they were able to raise angel financing. However I would not let the program be managed by NASA. The USAF has a far greater self-interest in RLV technology and launch technology in general and A far better track record. Just keep in mind that all the government sponsored launch systems developed in the last 20 years (Pegasus, Taurus, Minotaur, EELV) have been from USAF, not NASA funding. That should tell you where to go for innovation in launch systems and sad to say its not NASA.
Interesting NASA two most spectular failures, (while the Ares I is actually a failure in being…) were based on designs for Stars Wars that the USAF/SDI rejected out of hand. That should say something about where the real space launch expertise is…
In terms of SpaceX and Blue Origins, from everything I know they are looking to serve new customers, not win prizes. SpaceX started because Elon Musk wanted to send a robot to Mars for the Mars Society and found no cheap launch alternatives. Blue Origins is more secretive, but Jeff Bezos is basically a space fan who always wanted to go into space and is now rich enough to build his own ride. I don’t think prizes with impact their plans one way or another.
However its possible if the prize is spectular enough to attract the interest of corporations. I always though one way to deal with the NEO threat was via a NEO prize. Basically the prize is if you are able to change the orbit of a NEO by minute of arc over a year you get to keep it
BTW this isn’t as crazy as it sounds. One definition of “Celestial Bodies†is any object too large to move artificially. If you pick up a micrometeor in space (like in the recent genesis mission) you are able to claim ownership since its no longer a Celestial Body. A NEO prize simply establish that principle with U.S. Space law without violating the OST providing a means for individuals and corporation to own NEOs free and clear. Add to it that any revenues from it are tax free and you WILL get the attention of corporations and Wall Street.
After all, the prospects of controlling trillion of dollars of wealth from a NEO with an investment of a few billion would be enough to excite Exxon-Mobile let alone a space billionaire or two It moves prizes from the stunt category to the wealth category. Best of all the cost to Congress of a NEO prize is right – exactly zero. And oh yes, there will not be a single NEO prize, but the number awarded would be unlimited –LET THE SPACE RUSH BEGIN….
Thomas: “Actually there is a very solid literature in economics on prizes and their role in innovation strategies. I will provide a reading list below tomorrow for those interested in actually learning something about prizes and technological development beyond the current hype.
However the Senate already knows the real advantages and limitations of prizes as Molly Macauley, a Ph.D. in economists who works for the group Resources for the Future testified on it at the Senate hearings on the Centennial prizes.”
Tom: I for one am interested to see your list. I may have already read some of it like Dr. Macauley’s testimony, but I’m sure to have missed at least some.
For anyone that’s seriously interested (it isn’t light reading), I have links on the Space Prizes blog (http://spaceprizes.blogspot.com/) to a number of academic and political papers on the economics of prizes (in the “Papers” section on the right side). A lot of it has to do with the pros and cons of patents vs. a system based on prizes (eg: for pharmaceuticals). There are other subjects, such as designing prizes for ecological or agricultural efforts. Dr. Macauley is linked, as is a Space Show radio interview she did that features prizes as well as other topics. Even if you don’t want to slog through the papers, it’s interesting to note that there are so many non-space people proposing prizes and investigating their advantages and disadvantages. There may be some common interest here.
What I’ve gotten out of all of this is that clearly there are advantages and disadvantages of prizes as compared to other mechanisms like grants and cost-plus contracts. What works in one case won’t work in another. Selecting useful and appropriate prize “subjects” is important. Also, proper design and management of prizes is important. I think the folks at the X PRIZE Foundation and Centennial Challenges “get it” on these topics. A $20B Mars Prize seems kind of wild to me, too. I do think there are a lot of untapped resources that prizes can easily reach in small space startups, NSS/PS/SFF/MS/etc, rocket clubs, astronomy clubs, grad schools, R&D labs in bigger companies, etc. I could easily see Centennial Challenges remaining productive with an order of magnitude more prizes (some perhaps an order of magnitude larger than the current ones). Prizes are just another problem-solving tool, and the space industry is one that needs some more tools to help it keep from rusting in place.
Thomas: BTW, I finally got around to responding to your NEO bounty post (busy weekend…) on the Lunar robotics thread. A while ago I had a different type of NEO idea (see the post) …
Here’s an old Mars Society document that has a section on a “Mars Prize” about the size of the one we’re discussing. The prize part is on pages 10-11. You can see that it proposes a few smaller prizes to develop “building blocks” for the big prize.
http://chapters.marssociety.org/usa/dc/pdfSRC/BriefingBook2001.pdf
Even the smallest prize in this proposal is huge compared to the prizes that are actually out or trying to get funding. It’s also more difficult to (for me) to picture them making more money long-term after the prize is won. However, they are at least in the ballpark of what the Aldridge Commission recommended for prizes.
Thomas wrote: “A $20 Billion prize for the first Space Solar Power Satellite would be far more practical. At least that has the potential to generate revenue, and societal benefits, beyond the prize.”
What about a much smaller-scale demo of in-space power beaming, for example to power a 2nd satellite, or to provide power to emergency equipment for disaster areas on Earth?
Ray,
Smaller prizes are better. Even better still would be a government agreement to purchase power from a SSPS at a stated cost for a stated time period, say 10 years or so.
Thomas: Where the Soviets excellence is in grinding through to a solution. When their rockets where too small for launching nuclear bombs they just built them bigger. The U.S. instead made the bombs smaller. Their engines are better because they never abandon the old rockets and old engine alike we do for a fresh start. Instead, like VW, just kept on refining them.
I fully agree with every word. It changes nothing of what I said. Maybe we could learn a lesson or two from Soviet technological history — about avoiding high costs by adaptation to technological reality rather than fighting it; about not “high-techining everything to death;” about trading risk for success (Mir); and about not wasting money reinventing the wheel.
— Donald
MATULA: Their engines are better because they never abandon the old rockets and old engine alike we do for a fresh start.
This can be misleading.
You can make a good case that their “rockets’ are better because they evolve them and never throw them away. The venerable Soyuz of today is a direct discendant of the rocket that launched Sputnik and Gagarin.
However, the Soviets also invested a LOT more than we did in rocket “engine” development in the 1970s and 1980s. While the U.S. essentially downselected down to one engine investment program in the 1970s (the SSME), the Soviets were investing in, and testing, dozens of new engines. Even though they cancelled the N-1, they continued to improve the NK-33 and NK-43 until they were amazing engines.
That is the reason we are using their rocket engines today.
– Al
“‘So basically all the eggs for a suborbital space tourist industry are in two baskets now. Richard Branson’s VG and Jeff Bezos’ Blue Origins,’
This is also a very misleading and inaccurate statement. It ignores other efforts underway to develop commercial suborbital human vehicles — both funded and/or led by proven performers — including the recent funding of XCOR by Boston Harbor Angels, the current round of Benson Space fundraising, and the Space Adventures effort.”
Of course, we now also have the EADS Rocketplane XP-clone to add to this list:
http://www.personalspaceflight.info/2007/06/14/eads-reinvents-rocketplane/
http://www.personalspaceflight.info/2007/06/14/eads-reinvents-rocketplane/
http://www.transterrestrial.com/archives/009189.html
http://www.livescience.com/blogs/author/leonarddavid
Although I doubt they’ll be successful raising the $1.3 billion they claim to need without resorting to Airbus-like subsidies from European governments, the fact that EADS — Europe’s largest aerospace/defense company — is making a foray into this market certainly adds another level of legitmacy and probability that the market will support a number of going concerns.
Again, it demonstrates the potential power of technology inducement prizes. A $2 million hole-in-one insurance bet created a $10 million prize that garnered around $25 million in spending by the winning team alone which in turn has legitimized a market where competitors are looking to spend low hundreds of millions (Virgin Galactic) to more than a billion dollars (EADS) each.
If that ain’t high leverage, I don’t what is…
Anonymous,
If that is not enough leverage, start your descriptive list with the cost of the book that tells the story of the Orteig Prize that Gregg Maryniak bought for his friend Peter Diamandis.
– Al
Anonymous: Although I doubt they’ll be successful raising the $1.3 billion they claim to need without resorting to Airbus-like subsidies from European governments,
If the Europeans are willing to subsidize a new space industry, more power to them. If we don’t, shame on us. Orbital tourism is hardly the mature industry that should be required to compete on its own. (And, what is COTS if not a subsidy for launch vehicles that their owners dream eventually to turn in to orbital tourism vehides?) Once the industry is firmly established, subsidies should be banned, but we are a long way from that point now.
— Donald
“If the Europeans are willing to subsidize a new space industry, more power to them. If we don’t, shame on us. Orbital tourism is hardly the mature industry that should be required to compete on its own.”
There’s nothing wrong with incentivizing the development of new industries, especially those that convey a public good like renewable or carbon-free energy sources (although space tourism hardly falls into that category). But there’s a big difference between federal R&D grants/contracts and state R&D tax breaks, and federally subsidized loans a la Europe’s Airbus or America’s Amtrak. As a U.S. citizen, it’s not my place to tell the Europeans how to run their private sector, especially given their long history of state-owned industries. But I would argue that European government loan subsidies in sectors like aeronautics and IT have done more to hurt than help their development on the other side of the Atlantic. It’s hard to find examples on either side of the Atlantic where European-style government loan subsidies have produced an independent, profitable, going concern, nevertheless an independent, market-leading competitor. Governments are notoriously bad at picking the right private sector solution; the government loan subsidies choke off much greater amounts of private sector investment and competition; and it’s very difficult to wean companies off government loan subsidies once they become reliant on the low cost of capital.
This article:
http://www.flightglobal.com/articles/2007/06/14/214632/pictures-astrium-aims-for-2012-suborbital-tourism-flights.html
Indicates that government loan subsidies will be part of the $1.3 billion financing package for the EADS suborbital effort (assuming it goes forward).
“The financial plan envisages a potential expenditure of around €1 billion and includes refundable loans and regional development funding.”
Although again the amount speaks well of the power of prizes to change paradigms and prime the pump of new industries, I’d argue that the Europeans will doom their suborbital tourism industry to unprofitable solutions that will require taxpayer support for decades to come if they provide these loan subsidies to EADS, especially in such huge amounts. It’s Airbus all over again — the American private sector invents a market solution and the Europeans think the only way they can get in on the action is to fund a copycat with government-subsidized loads. They’d be much better off telling EADS to develop a more cost-competitive solution (probably using Ruskie carriers and rocket engines) and incentivizing the development of the industry through ESA and member-state space agency microgravity research flight contracts (something Griffin has promised but failed to do in the U.S.); ESA and member-state R&D grants, cost-sharing, and prizes; member-state tax and spaceport incentives (a la California and Oklahoma); and smart regulatory regimes (a la FAA experimental rules and Virginia’s insurance solution).
Again, it’s not my place to criticize the Europeans, but it always amazes me how they’re always so willing to copy the technical elements of an American market solution but not the financial elements. The two go hand-in-hand.
And while we’re discussing the relative advantages of different government incentives and subsidies, tax incentives should probably be at the end of the following “to-do” list:
“1) Zero-G, Zero Tax.
2) Investment Tax Incentives for investments in space transportation.
3) Eliminate the loopholes in the Commercial Space Act of 1998. (Meaning, expand & enforce the existing law that requires U.S. government agencies to buy commercially provided services wherever possible.)
4) Expand COTS. Take a portfolio investment approach to diversify the risk. (Any third-rate venture capitalist can tell you that you need to invest in 8-10 companies to have real diversification.)
5) RLV x-vehicles (Real x-vehicles … not a y-vehicle in x-vehicle clothing like we had with the X-33. Also, instead of throwing all our eggs in one basket like the X-33 … many smaller x-vehicles.)”
I say that not because tax incentives not effective, but because they are so incredibly hard to get enacted at the federal level. They require the cooperation of various congressional ways and means and treasury committees that have no vested interest in supporting space activities (private sector or otherwise). A lot of lobbying effort could be expended for a very slim (I’d probably argue zero) chance of passage.
That lobbying effort should be put into efforts with a greater chance of payoff. A better funded NASA prize program and COTS program (and suborbital microgravity flight contracts) should be at the top of that list, followed by more difficult measures such as killing Ares I and forcing NASA to go all-commercial for LEO transport per the Commercial Space Act, with the most difficult measures such as the enactment of new X-vehicle programs at the end of the list. I’d be tempted to leave tax incentives off the list entirely as they’re almost laughable to those who actually control the nation’s tax legislation and policy, but it can’t hurt putting them at the end of the list when talking to other space folks.
My 2 cents… FWIW.
While I’m tempted to agree with most of your analysis, Anonymous, and in fact some years ago wrote an article about Europe needing to invent more and copy less (in relation to Galileo), I think you belittle the European efforts a little too much. You fail to mention Arianespace. Also, while they’re down at the moment, Airbus has been and will continue to be a major threat to Boeing. We guaranteed that when we let Boeing buy McDonnell Douglas, since customers will want to ensure they have at least two suppliers. While Airbus has major structural problems, it would not have happened at all without the European model. To dominate, I agree with you that Airbus needs to do more than build a bigger and better copy of the decades old 474 (A380) and the 787 (which will be decades old by the time the A350XWB finally enters service). However, the Asians have done quite well by building cheaper copies of someone else’s ideas, and the Europeans can probably do the same by building better copies of someone else’s ideas. Every market I can think of that Airbus is in today was pioneered by Boeing, but individual business lines at Airbus have, nonetheless, done very well indeed.
(Ironically, European companies complain bitterly about Boeing’s supposed military subsidies, but the last time I looked military work forms a larger percentage of most large European aerospace companies than it does at Boeing.)
As for orbital tourism, it was a European company (albeit one that doesn’t often behave very European!) that coughed up the money to invest in SpaceShipTwo. American companies were free to do so and, for whatever reason, declined, which is distressingly typical. This suggests to me that we need some combination of the European and American models, rather than a pure version of either way. If a major European aerospace company manages to get European governments to invest in suborbital tourism, the long-term effect is likely to be a greater chance of industrial success and a larger market.
I won’t discuss Amtrak as too far off topic, except to ask the wider question, why is it that in the United States passenger train travel is the only method of transportation that is expected to get by without massive subsidies?
— Donald
“I think you belittle the European efforts a little too much.”
I really don’t mean to belittle, and again, like I said, it’s really not my place as an American citizen to tell Europeans what their industrial policies should or should not be.
That said, the reality is that entities (I hesitate to call them companies) like Airbus, Arianespace, and our very own Amtrak cannot exist without large government loan subsidies. In the case of Airbus and Arianespace, that’s not true of their American counterparts. It’s the difference between a quasi-private, government-owned agent and a true, for-profit, privately owned business.
“We guaranteed that when we let Boeing buy McDonnell Douglas, since customers will want to ensure they have at least two suppliers.”
Absolutely right, and we’ll probably never see either Airbus or Boeing’s market share dip below 25-33%. But based on the disparity between A380 and 787 orders, I’d venture that Airbus is going to sink to within shooting distance of that market share in the coming years.
“As for orbital tourism, it was a European company (albeit one that doesn’t often behave very European!) that coughed up the money to invest in SpaceShipTwo. ”
The key to this conundrum is that Virgin is a _British_ company. Not surprisingly, U.K. industrial policy and companies are much closer to U.S. models and companies than their French, German, Italian, and other European counterparts.
“This suggests to me that we need some combination of the European and American models, rather than a pure version of either way.”
To the extent it suggests anything, I’d argue that a U.K. company suggests the opposite — it reinforces the American model. Virgin Galactic has much more in common with, say, Blue Origin than EADS, for example.
“I won’t discuss Amtrak as too far off topic, except to ask the wider question, why is it that in the United States passenger train travel is the only method of transportation that is expected to get by without massive subsidies?”
You won’t get any argument from me on this point. We need to rationalize Amtrak one way or the other. I was just using it as an American example of European-type, quasi-private, government-owned agent backed by federal loan subsidies.
FWIW…
ANONYMOUS: I say that not because tax incentives not effective, but because they are so incredibly hard to get enacted at the federal level. They require the cooperation of various congressional ways and means and treasury committees that have no vested interest in supporting space activities (private sector or otherwise). A lot of lobbying effort could be expended for a very slim (I’d probably argue zero) chance of passage.
Anonymous,
I agree that the tax incentives are the most difficult item on the list to pass. However, the context was “What is the policy that a truly pro-space President (e.g., Newt) could/should promote?” If Newt were to become President (which is highly unlikely) he could achieve some dramatic space policy initiatives, as he will have the full power of the Presidency behind him. In this case tax incentives become possible as part of an overall tax bill. The Congress would likely give a President what he (Newt) wanted … of course the Congress would use the President’s desires to get something they wanted (probably incentives for certain key members favorite industries).
In all other cases, passing tax incentives become much more difficult.
I assert that a successful path forward for RLV x-vehicles is easier, and more achievable. We have already gotten there, once in the 1990s, and I believe there is a lot of latent support that remains from then. I believe that we (as an industry) have gotten distracted … and I detect a growing desire to go back to a focus on developing much lower cost launch in many sectors of the industry … from companies both big and small.
If you recall, the one competing initiative in the 1990s was the EELV program (and its predecessors). That initiative is complete … and I think that everybody is now looking for “what is next?” Other than paying for some incremental improvements to the RS-68, or Americanizing the RD-180, I don’t see any major government initiatives on the horizon for big ELVs.
With some focus by various interest groups and companies, and smart marketing, I believe we could see RLV x-vehicles back on the agenda as a top priority in the near future.
– Al
Even adjusted for inflation, the $10 million X-Prize was probably the largest prize in history and is clearing approaching the limit for practical prizes. I am being generous when I place that limit at a $100 million. And that limit would only work if there are major markets waiting for the winning entry, and even for the also rans.
Al,
Exactly. The Russians invested directly in the development of new rocket engines. They did not offer prizes for them.
Hi Ray,
Sorry for the delay. I got busy with my day job. Here is the list of articles I indicated;
Arrow, Kenneth J. (1969). ‘Classificatory Notes on the Production and Transmission of Technological Knowledge,’ American Economic Review, 59: 29-35.
Che, Yeon-Koo, and Ian Gale. 2003. Optimal design of research contests. American EconomicReview 93 (3):646-671.
Crawford, Elisabeth 1980. The prize system of the academy of sciences, 1850-1914. In Robert Fox and George Weisz, editors, The organization of science and technology in France 1808-1914, pages 283–307. Cambridge University Press, Cambridge.
Crosland, Maurice 1979. From prizes to grants in the support of scientific research in France in the nineteenth century: The montyon legacy. Minerva, 17(3):355–380.
Crosland, Maurice and Antonio Galvez, 1989. The emergence of research grants within the prize system of the french academy of sciences, 1795-1914. Social Studies of Science, 19:71–100.
Hanson, Robin Hanson 1998. Patterns of Patronage:
Why Grants Won Over Prizes in Science. http://hanson.gmu.edu/whygrant.pdf
Harry Paul. The trouble with prizes. In From Knowledge to Power, The Rise of the Science Empire in France, 1860-1939, pages 288–293. Cambridge University Press, 1985.
Llobet, Gerard, Hugo Hopenhayn, and Matthew Mitchell 2000. Rewarding Sequential Innovators: Prizes, Patents and Buyouts, Federal Reserve Bank of Minneapolis Research Department Staff Report 273
Macauley, Molly K. 2005. Advantages and disadvantages of prizes in a portfolio of financial incentives for space activities. Space Policy 21 (1):29-39.
Moldovanu, Benny, and Aner Sela. 2001. The optimal allocation of prizes in contests. American Economic Review 91 (3):542-558.
Nalebuff, Barry J., and Joseph E. Stiglitz. 1983. Prizes and incentives: Towards a general theory of compensation and competition. Bell Journal of Economics 14 (1):21-43.
National Academy of Engineering (NAE). 1999. Concerning federally sponsored inducement prizes in engineering and science. Washington, DC. http://newton.nap.edu/catalog/9724.html.
Shavell, Steven, and Tanguy van Ypersele. 1999. Rewards versus intellectual property rights. Cambridge, MA: National Bureau of Economic Research.
Jack Sommer. A radical proposal for reorganizing research support: Lotteries, prizes. The Scientist, pages 11,13,17, June 10 1991.
Taylor, Curtis R. 1995. Digging for carrots: An analysis of research tournaments. American Economic Review 85 (4):872-890.
Wright, Brian D. 1983. The economics of invention incentives: Patents, prizes, and research contracts. American Economic Review 73 (4):691-707.
The research is clear on the conditions for successful prizes. It must be a task a group of individuals are able to accomplish with self-funding, or a single patron. If a firm it must fall under their high risk R&D budget. This is the key limit on the pool of applicants and the smaller the pool of applicants the less likely it is a prize will be won.
Given how close the x-prize came to failing, only a single team was able to raise the funds to make an attempt a bare 3 months before the prize vanished, shows how critical this is. And it took that team 2.5 times the amount of the prize to succeed.
Other factors include the promise of commercial markets following the prize. The high start-up cost of Virgin Galactic, some $275 million and counting, makes it clear that even if some of the other teams had won they would not have had the deep pockets to take their entry to market as Burt Rutan/ Paul Allen were able to do.
And this leads to a third guideline. Structure the rules to favor an entry that is competitive in the marketplace after the contest. The classic failure in this regard was Richard Feynman nanotech prize of 1959 of $1000 to build a motor 1/64 of an inch wide. The winder simply used existing jewelry tools to make it creating no technology of value to nanotech.
In terms of the lunar prize below, or the Mars prize, no follow-on markets exists to sustain the technology, so likely solutions would be one off stunts, not major breakthroughs. So there would be even less incentives then the X-prize.
Even adjusted for inflation, the $10 million X-Prize was probably the largest prize in history and is clearing approaching the limit for practical prizes. I am being generous when I place that limit at a $100 million. And that limit would only work if there are major markets waiting for the winning entry, and even for the also rans.
X PRIZE?
No.
V-prize!
http://spaceports.blogspot.com/2007/06/transatlantic-v-prize-being-organized.html
http://www.v-prize.com/
Movin on up the alphabet…
MATULA: And this leads to a third guideline. Structure the rules to favor an entry that is competitive in the marketplace after the contest. The classic failure in this regard was Richard Feynman nanotech prize of 1959 of $1000 to build a motor 1/64 of an inch wide. The winder simply used existing jewelry tools to make it creating no technology of value to nanotech.
Dr. Matula,
You are mistaken. By classifying it as a “failure” you are leaping to the conclusion that Feynman’s objective was to develop new technology or to build a nanotech industry.
This motor has been on prominent display, for many years, in the physics building where Dr. Feynman used to work. I saw the display in the early 1980s when I was a student, and Dr. Feynman was still alive, and I believe it was there long before I ever set foot on campus.
If Feynman’s intention had been to develop “new technology” or to kick-start the nanotech industry, it would have been quite easy for someone of his stature to persuade somebody to fund another prize, of much more challenge. All he had to was ask, and people would have jumped at the chance to fund such a prize. The fact that he did not strongly suggests that he considered the prize to be a success.
– Anonymous Caltech Alumnus
Al: If you recall, the one competing initiative in the 1990s was the EELV program (and its predecessors). That initiative is complete
But, they’re barely being used. Is the program a success if it produces a rocket (the Delta-IV) that the company doesn’t really support and that no one wants to buy?
— Donald
CalTech Alumni
Richard Feynman offered two prizes for $1,000 of his own money with the hope of jump starting nanotechnology.
The first was for an electric motor. The full story is here.
http://news.bbc.co.uk/2/hi/science/nature/3785509.stm
Tuesday, 8 June, 2004, 11:23 GMT 12:23 UK
Small world’s big achievement
By Roland Pease
BBC radio science
Some quotes:
[[[Richard Feynman had specified a working electric motor no more than 1/64th of an inch on a side, confidently expecting making such a device would take an entirely new approach to engineering. Bill McLellan proved him wrong.
“He’d seen a lot of cranks come in with motors who didn’t understand the challenge and I brought in a big box, and he said ‘Uh-oh, here’s another one of them’. And then I opened my wooden box and there was my microscope, and he said ‘Oh! Nobody else brought a microscope!'”.
But Feynman had to agree, the motor met his specification.]]]
And
[[[“Feynman’s disappointment was he didn’t get the new method,” says McLellan.]]]
So Richard Feynman himself regarded it as a failure.
So in summation the verdict of the literature and my statement that Richard Feynman prize was a failure stands. Indeed as indicated he felt that way himself.
And it isa lesson to be careful how you state the conditions of the prize. For example if the X-Prize had provided a requirement of two paying passengers, instead of the equivalent of dead weight we would have a sub-orbital tourist industry today instead of the promise of one. But of course under those conditions its also likely the prize would have never been won. Still history will tell if it was a false dawn, like Apollo.
I SAID: If you recall, the one competing initiative in the 1990s was the EELV program (and its predecessors). That initiative is complete.
DONALD SAID: But, they’re barely being used. Is the program a success if it produces a rocket (the Delta-IV) that the company doesn’t really support and that no one wants to buy?
Donald,
It depends on who you ask.
If you asked those in the DoD who made the decision to start the EELV program, they would say “Yes, the EELV program is absolutely a success”. They would point to the 50+ successful DoD launches in a row, and point out how much more reliable that the Atlas V & Delta IV are than the Titan IV. If you talked to them privately, they would tell you that the “cost” of launch is not that important compared to reliability, or as they like to call it … “mission success”. The DoD spends 2-5 times as much on the satellite today as compared to the launch, so they really don’t care about the cost of launch. The DoD does not care that much about the fact that the Delta IV is not commercially competitive. They also don’t care about the fact that Boeing lost their shirt by making a poor investment decision.
However, if you asked the Boeing senior executives, and their BoD, whether they considered the Delta IV to be a business success, they would say that “No, we will never recover an adequate ROI on the very large private investment that we put into the Delta IV.” The rumor is that Boeing put in well over 1 Billion dollars of private investment into the Delta IV — matched by $500M from the DoD — based on the widespread belief in the late 1990s that there were much larger commercial launch markets to be captured.
My previous point stands — the parts of the DoD that design, develop and procure new launch systems are getting itchy. They are looking for the next thing to focus their talents and energy upon. The EELV is essentially complete, and it is a success from their perspective. There are small upgrades to make, but nothing really to fix.
– Al
Al: I agree with all of that. My point was more on the other side of the stupidity of not really using these already-developed and successful assets. Boeing is ignoring the long term. The commercial market will recover and eventually expand. If Boeing has pushed hard to get the Delta-IV used in the VSE, that might have been another route to getting back their investment. They’re ignoring the Space Station market, which is a real, extant market. Maybe they could do something really insane and use the Delta-IV to try an expand the overall market through, say, asteroid mining. The Delta-IV is built from the ground up to reduce costs through high production rates and Boeing should be doing everything in their power to attain that. They aren’t.
— Donald
Donald,
If you lose a upwards of a billion dollars on SeaLaunch, and then another billion dollars on the Delta IV, then that makes you a little gun shy about your ability to assess the commercial potential of space ventures.
They have bid on the ISS cargo delivery market though. If you are saying that they could/should have invested their private $$ in an ISS cargo system, that is an interesting point.
Maybe they know something that SpaceX and RkP does not.
– Al
It may be worth pointing out that a unique large prize is optimal only if cost is linear in effort. If costs raise quicker (say at a quadratic rate) then several prizes may be optimal. A good example is important architectural contests that offer 3-5 prizes, sometimes quite large. This is all spelled out in “The optimal allocation of prizes in contests” by Moldovanu and Sela, published in the American Economic Review, 2001
Just arrived here & have found this an enlightening discussion.
I don’t agree that large prizes are necessarily not going to work. Yes they would be beyond the guy & his brother teams (the Wrights & Rutans) but Exxon might well decide that an extra $20 bn on the ledgers was enough to make something like an atomic spaceship capable of reaching not just Mars but other places worthwhile. Though I do agree that cutting it into a lot of smaller prizes for steps along the way might work better.
In any case what is the downside? Offer $20 bn for the first Mars landing, if it is American & the Chinese get there first – no payout & the government still has the $20 bn. Perhaps a lot of people saying we should have put up $40 bn & let a small bank fail but the economy is not worse off than if no prize had been offered & the Chinese still got there first. Equally this is not a competitor with NASA. Nasa get $18 bn & would want much more for a Mars ship but they get this annually. A $20 bn prize would probably take 15-20 years to be won & so is amortised over that period & government can certainly afford $1 bn a year or less depending on what interest rate is applied. Equally whatever Feynman may have felt if you say not creating an entire new industry for an investment of $1,000 is a failure you have pretty tough success standards.
In the same way an X-Prize for getting various lengths & strengths of nanotube might have a much more innovative effect than letting much of the universe’s wealth go to whoever makes one 31,000 miles long & has a space elevator
My feeling is that the reason X-Prizes aren’t the normal way of doing things is because most government expenditure isn’t to achieve things but, as suggested above, to pay off political favours & provide permanent jobs to public employees. Cynical I know.
I was also impressed with the number of historic prizes mentioned. I have also mentioned another 2 – http://a-place-to-stand.blogspot.com/2008/06/historic-x-prizes.html
– Celluliod, which did indeed start a new industry came about because “in 1863 a New York billiard equipment distributor announced a 10,000$ prize for an artificial ivory”. They were running out of elephants.
– Somewhat earlier than that Archimedes got out of his bath shouting Eureka because he had figured out a way to win a prize put up by the king of Syracuse for measuring gold.
Looking through Sobel’s book Longitude I found a mention of the early Spanish Longitude Prize mentioned above & a similar Dutch one which were classed as a failure because they werem’t won. There is some backstory. Galilleo put forward a method of timekeeping making use of the timing of the orbits of the moons of Jupiter but it was judged, correctly, as unusable from the rolling deck of a ship. He did nevertheless get a gold chain from the Dutch. However this did work on land & where there was enough time for observation & thus directly created land maps resembling modern ones. Thus while a failure in its set objective & thus costing Spain nothing, it was actually pretty successful. This is an example of how good science almost always pays off even if serindipitously. In these terms it is remarkable how few of the prizes have failed to achieve anything & even those ones have been worth the money – ie zero.