In his Washington Examiner column today, Cato’s Gene Healy calls the space program the “biggest bridge to nowhere.”
In light of the space shuttle program’s cancellation, Healy points out that the average American enjoys little benefit from a federally-funded space program and that space exploration should be the domain of private enterprise. In fact, in a 2010 Rasmussen poll, the majority of Americans agreed with that statement.
As Healy points out, defenders of the space program primarily point to the program’s value as one that provides national glory, calling it “spacecraft as soulcraft.”
Healy doesn’t get into the flawed basis of the standard rationale for a subsidized space industry – that the space industry leads to the development of new commercial technologies. This tired argument, however, is as flawed as any other argument for government to provide anything other than “pure public goods.” I could point out the standard Austrian criticism that value is subjective and, because of this, policymakers can never make an unambiguous claim to improve social welfare through any type of government spending.
However, without getting into a pedantic discussion of economic theory to prove the wastefulness of a government space program, I can simply highlight that every dollar spend (or credit used) by government is a dollar (or unit of credit) that must first be taken out of the private sector. This pilfering limits the capital formation that would otherwise finance private-sector research and development on technologies that consumers actually demand. Public-sector R&D spending is typically far less efficient than private-sector R&D precisely because each dollar spent does not have to be justified by an anticipated consumer demand. Hence, government is free to waste R&D money on projects that may have no ultimate value to most consumers, even if a relatively small proportion of technologies developed through public R&D spending are eventually adapted for commercial use.
The lesson here: R&D should always be the realm of private enterprise because individual entreprenuers are subject to market discipline over their expenditures whereas government bureaucrats are not.