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Lesson 9 Archive Notes: June 2, 2010

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Space Show Classroom Lesson 9:  Launch System Economics & More

 Tuesday, June 1, 2010

 Archive Notes and Program Information

 The Space Show Classroom Lesson 9 can be downloaded or heard at:

  http://archived.thespaceshow.com/shows/1372-BWB-2010-06-01.mp3

Guests: CLASSROOM.   Dr. Henry Hertzfeld, Dr. John Jurist, Dr. Jim Logan.  Topics:  Lesson 9 Launch Systems Analysis and Economics. Please see The Space Show Classroom blog, Lesson 9 Archive Notes for information about this show ( https://spaceshowclassroom.wordpress.com).  Lesson 9 focused on launch system economics, markets, demand, and the definition of commercial versus government launchers.  In our fist segment, our guest panel expert, Dr. Hertzfeld, defined commercial which as you will hear was no easy task to do.  While we considered definitions based on the type of contract, even the nature of the customer, we ultimately looked to the party assuming the risk to determine if the launcher or even industry was commercial or not.  This is a must listen to discussion so don’t miss it as its comprehensive and our guests do a superb job in evaluating commercial as opposed to government.  I asked Henry for the track record of government as an enabler of industry and mentioned the usual examples of airmail the railroads, and interstate highways.  As you will hear, government has the potential to be an enabler of private industry but in the examples cited, Dr. Hertzfeld pointed out that there was already demand and a market so what government did was to improve development of an existing market.  This is not the case for the launch industry because here the market for commercial other than for satellites has not yet been developed so government as an enabler must actually attempt to develop a market, not just make it more efficient.  Again, don’t miss this discussion.  We then turned our attention to examining cost plus contracting as opposed to fixed price contracts.  We talked about COTS which is actually a Space Act Agreement and a Requirements contract, something that was used frequently by the coal and railroad industries and has some similarities to the launch industry.  Listeners asked about lowering launch prices to stimulate market development and demand and compared to the idea to putting products on sale or cutting prices such as with cars or airplane tickets.  As you will hear, Henry said the launch demand is inelastic so lowering prices does not mean much.  As Dr. Jurist pointed out, often by law or regulation government is required to contract for the lowest possible price so a company could not lower prices for new customers and keep prices at existing levels for the government customer.  That said, there have been examples where government arranged to pay higher fees for something to stimulate others but as you will hear, the market in these cases already existed.  Our discussion turned to examining risks.  It was said that in some cases, with a fixed cost contract the bidders will bid up their contract prices to compensate for unknown and uncertain risks so often fixed price contracts can be more costly than other types of contracts.  Before this segment ended, we talked about the possibility of seeing a truly commercial launch industry evolve in several years where one does not partner with the government which is the case today.  Our panel suggested that because of extremely regulated nature of the launch industry, partnering with the government is going to be the nature of the business.  When asked if there were terrestrial industrial or business examples of this, the nuclear industry was cited.  In our second segment, we talked about the upcoming Falcon 9 Space X launch and the possibility of undue pressure on the company given the launch timing and the space policy debate going on in government.  We talked about keeping shuttle flying and it was said the downside of this was the amount of money it would take to keep it flying.  We talked about the GAP and then about the problems caused by the continuation of cancelling government programs.  This led to an entire discussion on the subject, the consequences of one program cancellation after another on those thinking of careers in the field, education, and more.  As you will hear Dr. Logan say, this process is demoralizing.  X-33 and Venture Star were cited among many other examples.  This discussion took us back to talking about the uncertainty risk and the consequeseunces for having a system with this type of risk in the project.  Later we talked about the Field of Dreams approach, that is build it and they will come.  Our panel did not think highly of this approach to space development let alone the launch industry.  Nuclear rocket propulsion came up again and while all of us want to see nuclear rocket propulsion developed, we were not sure it would change the demand curve of the elasticity of launcher demand.  We agreed that the culture in the U.S. is still going to be a challenge to overcome to do anything nuclear in space plus the various NPT’s do not permit nuclear propulsion in space.  Toward the end of this segment and the program, I asked our panel why we don’t fund space development and treat it with the importance all of us believe space represents for our future.  I’m not sure we came up with a plausible answer to this often asked question but it does seem to require an answer, especially as we look at new space policy designed on limitations and what can be afforded or not afforded.  If space is so vital, affording it should not be a question.  Henry even said that government could choose to pay for space development even in these hard times.  Its a political choice and a leadership issue.   I then related a personal experience that I recently had at a local film festival.  While it was based on the old question of why go into space when we have so much to do on Earth, this happened last month and I asked our panel members to address it.  Listen to the story. On the next Open Lines, you can let us know what you might have done in such a setting.  Remember that all questions and comments are posted on the blog at https://spaceshowclassroom.wordpress.com.  Emails sent to me will be posted on the blog.

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Comments»

1. Ernesto A - June 2, 2010

The Earth protects us from Galactic Cosmic Rays (CGR’s) and other emissions due to its magnetic field. I’ve sometimes wondered if anyone had evaluated/experimented with an artificial magnetic field to protect the contents of the vehicle/capsule/mini-planet?…. yes, it’s a hairbrained idea, but its similar to the only thing that protects us from those deadly CGRs.

BooBooBear

2. Jim Davis - June 4, 2010

This was an interesting show. I wish I could have heard it live.

I have a big issue with the comments towards the end of the show about how to respond to people who complain about space spending vs hunger, poverty, et al. The tack taken by all three panelists seemed to be a huge nonsequitur. No one complains about weather satellites, GPS, communications satellites, etc. What they complain about is *manned* space. At some visceral level the public realizes that the money spent on manned space has not returned commensurate benefits.

This is a trap that space advocates fall into with distressing frequency. They defend Apollo, Shuttle, ISS, Constellation, etc by pointing to benefits which has no logical connection to them.

If you want the public to get behind a manned program like Constellation then the benefits of *Constellation* have to be spelled out.

Sadly, the public seems to grasp this point better than space advocates.

3. drspaceshow - June 5, 2010

Jim, I beg to differ with you. I hear this complaint all the time, not just from those at the film festival. The general public does not divide space up between science and human spaceflight, its all the same to them. Sophisticated space enthusiasts make the division you are talking about, not the general public. When regular folk start to understand the way they benefit from space, the objections don’t disappear but they drop substantially. When I made my comments, I was not talking about human spaceflight versus the rest of space. .

By the way, on the show yesterday, I asked Dr. Schrogel yesterday about this question as I was seeking the European perspective. You should hear his response as it was illuminating. He said this type of question has tapered off in Europe because the average European has a higher sense of space awareness and the role space plays in everyday lives. They know that space development makes a difference in their lives unlike the general public in America.

I frequently use the OECD reports when talking to members of the general public. I talk about these on the air all the time, both of them. They are titled “Space 2030” and each one is about 330 pages. They don’t have anything to do with human spaceflight because it was not part of the study. That said, the reports show how space can and should be used to improve the lives of people all over the world and to enable governments to do a better job for their populations. The typical response to the Space 2030 reports among the general population is an eyes wide open “I did not know that” and it does penetrate the person’s views and were one able to continue to reinforce the space value over time, the person would completely change their perspective. I am sure of it but the problem is in being able to follow up and stay with the person and the subject for a period of time. That does not usually happen.

To summarize a rather long post, again, not once when this question is asked of me as I told on the program, has anyone divided space between human spaceflight and scientific missions. To the general public, space is space. They think we are spending far more than what we are on space in the national budget and they think that money can be better used on their favorite issue such as ending hunger. Many do not even understand that all of the space money is spent here on Earth. Furthermore, within the space enthusiast and cadet community, I have never heard anyone question the value of space spending but I have heard the story I told many times and in many different formats. But again, I’ve never heard of anyone dividing space up as you mentioned when complaining about spending on space versus other issues. Nobody I know has ever said this part of space is OK, let’s not spend on human spaceflight. Now we have questioned the value of human spaceflight on The Space Show, wondering if the payback for it is as high as for other space but that investigation is on The Space Show with a sophisticated space audience. Its not coming from the general public. While there might be some out there that think and question as you suggest, I have yet to meet even one person doing that.

David

4. jmj - June 6, 2010

Historically, the human space flight program has contributed greatly to benefiting humanity. The development of some medical instrumentation was partly funded by NASA. I point to technologies developed for precise measurement of bone mass, long-term cardiac ambulatory monitoring, and generic physiological monitoring as used in intensive care units, coronary care units, operating rooms, etc. Those technologies would have been eventually developed anyway, but the process was greatly accelerated by the human space program. For example, precise bone mass measurement allowed testing and perfection of effective therapies for osteoporosis, which is a huge benefit to our aging population. Holter monitoring was dominated by DelMar Avionics in the 1970’s and the interest was driven by Deke Slayton’s grounding for paroxysmal atrial fibrillation if I recall correctly. SpaceLabs made a lot of ICU and OR physiological monitors in that same era. Such simple things as decent ECG electrodes for long term use came from NASA projects. Lunar Corporation did and still dominates bone monitoring equipment. It was a direct spinoff from NASA grants to the University of Wisconsin Medical School.


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