Question

Both NASA and SpaceX are developing their own heavy lift rockets. NASA has spent $15billion (WITH A "B") developing their heavy lift rocket , the Space Launch System (SLS) over the past 16 years and it will not fly for another 2 - 5years. SpaceX has spent $500million (half of 1 billion) and launched their heavy lift rocket - the Falcon Heavy - in early 2018 and this rocket is now operational, after only 6 years in development and is the most powerful rocket on earth. Furthermore, the Falcon Heavy is a superior vehicle in that it is 80% reusable and costs $90-100 million per launch, while the SLS is expected to cost over $1billion per launch (ten times more than SpaceX).

What do you think are the reasons why the private sector can accomplish a similar goal at a dramatically lower cost, in a fraction of the time, while creating a superior and more innovative product relative to the government sector?

What are the reasons why the private sector is more efficient? Why is the government sector so inefficient? What are the motives of members of the U.S. Congress when making policy using government agencies and taxpayer money? What are the incentives of private aerospace companies hired by the government to build NASA's rocket using government/taxpayer money. What are the incentives of private aerospace companies building their own rockets using their own money? What does Garver mean when she says that the nation must decide if we want NASA to be a "space program - or a jobs program."

Are there things that the government does better than the private sector? Are there issues that we should not trust to the private sector? What do you think should be the role of government relative to the private sector? This is not a clear-cut easy answer and it is a very advanced topic!

In your answers you may want to refer to some of the following ideas:

- incentives of congressman using government/taxpayer money vs. private investors/business-owners using their own money

- constituent pork, policymakers insistence on certain technologies to protect district jobs

- policy changes across administrations.

Answer 1

NASA is a government organisation and is developing a heavy lift rocket, named Space Launch System (SLS). It is being developed since 16 years and will take approximately 2 to 5 more years to be launched. $15 billion have been spent on this project. Further, it costs $1 billion per launch for SLS.

However, a private company named SpaceX is developing a heavy lift rocket, named Falcon Heavy. It has been developed within 6 years. $0.5 billion have been spent on this project. Further, it costs $90-$100 million per launch for Falcon Heavy.

Clearly, in terms of cost per launch, cost to develop the project and time taken, the private sector has proved to be much more efficient than the government sector. The reasons behind why private sector is much more efficient is that private sector only works with the profit motive. The only thing which concerns a private sector is how could it increase its profits. Therefore, it spends a lot of money in Research and Development (R&D) and tries to bring out the best possible way to do a thing. The most efficient and cost efficient way is looked upon by the private sector and the cots are reduced. Also, corruption usually prevails in the government sector, which hampers the timely work of the government sector and is not the case with the private sector.

The motives of members of the U.S. Congress, when making policy using government agencies and taxpayer money is to maximize the welfare of the economy, and not the profit. Therefore, the U.S. congress sometimes overlooks a cost-effective or time-effective alternative if the U.S. Congress feels that it could be negatively affecting the people, even if the number of people affected by it is too less. Also, they try to utilize the amount received from the taxpayers in various areas and thus, usually run out of the funds in the treasury. Therefore, while making the decisions, the U.S. Congress also things of other areas in which that money can be utilized and analyses if other alternatives are more important for the people of the country.

If government hires the private aerospace companies, then they get the recognition by the government. Also, there is an availability of the funds and cheap labor and raw materials can easily be available at subsidized rates, at all times. However, if the private aerospace companies decide to work independently, then they get the autonomy to do whatever they want. They don't have to face the corruption and dirty politics in decision making and they can take decisions based on what is best for them, ignoring to maximize the society's welfare.

By saying 'space program - or a jobs program', Garver meant that the government needs to decide whether NASA is working for the betterment of country or for the people. If it is working for betterment of country, it should act like a space program and should be funded properly and in a hefty way so that the progress is not hindered. However, if it is working for the betterment of people, it is more like a jobs program and in such a case, private sector should be motivated to work.

Government sector is best doing the work which private sector cannot do. There are certain projects which need hefty investment and usually, private sectors are not interested in them. Therefore, government sector is best to jump into such programs. Also, in case of defense and national security, government sector is best to have the control, since private sectors cannot be trusted in such sensitive areas and trusting private sectors in it means putting the national security at stake.

Finally, the role of government should be to motivate the private sectors to work at best of their capabilities and also, to increase the participation by the private sector in the areas where they can. In the areas where private sectors cannot be included, government should give 100% in that areas and focus should be in doing their best in those areas.