Most people agree that government programs are wasteful, and many are unnecessary. But even small government advocates have a soft spot for NASA. It’s pointed to as an example of a worthwhile government program because, after all, not only does it have a really cool mission, but it’s also resulted in microwaves and memory foam! These are valuable contributions that justify it’s value, even if space exploration itself hasn’t proven enough.
Not so fast. Let’s put on our economist lenses and look a little closer to expose five common myths about the value of NASA:
Myth #1: It’s worth it. This is a claim without a test. Without a profit and loss model, how can anyone know the value of NASA inventions and spin-offs products compared to the cost of the program? Why not let a voluntarily funded outfit do space exploration work and pay for it by selling usable discoveries they make in the process? That would reveal the value of such inventions to consumers over and above the cost of research.
It’s impossible to judge the value of big expenditures absent a market. Imagine a company that picked an ambitious effort, like digging the world largest, deepest pit, and continued to fund it to the tune of billions a year. I’m sure some interesting and useful stuff would be found down there, and some new technologies would result from all the efforts to dig deeper. But it’s hard to imagine these side benefits being sufficient to draw an entrepreneur into such a venture.
It’s not enough to simply point to cool gizmos as proof of the value of a program.
Myth #2: We’d never have a bunch of cool tech without NASA. This is of course impossible to know. But what we do know is that the existence of NASA attracts many great technological and scientific minds. These are not minds that would otherwise be sitting idle. They would likely be doing much the same thing – inventing, solving problems, and creating stuff. Many of the spin-off technologies from NASA would certainly have come from other organizations. Maybe even better things would have resulted.
It is also worth remembering that none of the NASA technologies were created in a vacuum. Invention is an incremental and messy process, full of simultaneous discovery, back and forth modification, and adaptation. Because NASA gets the credit for something doesn’t mean it emerged from the secret NASA chambers untouched by any other researchers in the world. This was stuff that was being tinkered with the world over. If it has commercial value, there’s a good chance it will be discovered and put to use. Who has more incentive to do so; an organization that doesn’t need to make widespread use of its technologies to survive, or a business that does?
We can’t know what would and would not have been invented without NASA, but it seems pretty odd to grant the assumption that a government agency is more likely than a market institution to innovate.
Myth #3: It’s doesn’t cost that much. Maybe $18 billion a year is not that much compared to all the other stuff taxpayers are being forced to pay for. But the costs of NASA are not just monetary; there’s opportunity cost. In high-tech areas with highly skilled workers, the opportunity cost is very high. What else might those people be doing to create value for the world if they weren’t there? What projects are not happening because NASA is? Opportunity cost is a big deal.
Not only is NASA an attractive option for a lot of really smart people because it sounds cool, but the fact that every other industry has become so heavily regulated and restricted makes other options artificially less attractive. We all lose as a result.
Myth #4: They can spend our money better than we can. Economic value is subjective. As such, it’s impossible to know whether someone is happier with how you spent their money for them than they would be if they spent it themselves. The best proxy is behavior. What people freely choose to do with their money reveals what they value most at the time of choosing. The mere fact that government programs can’t get by asking for voluntary contributions reveals that people value the uses to which they would put their money more highly than what government does with it.
When people spend their own money not only do they put it to their highest valued use, but their actions affect prices, which in turn send signals to producers and entrepreneurs indicating what kind of stuff people want more of. More effort goes into producing more and better of that stuff, which creates even more value. As preferences shift, so do production patterns. This is an important process with complex feedback mechanisms that help to continually create real value for individuals in society.
You can’t create progress for all by taking money from everyone and giving it to a small group with no requirement that they respond to the demands of the many. If you try, not only do you rob people of short term value by taking away their first-best spending option, you mess with the signals and incentives in the system ensuring that less of what people value will be produced in the long run.
Myth #5: Those smart scientists will innovate rather than waste money. This may come as a revelation, but scientists are people too. People respond to incentives. When your lifeblood is determined by the political process, you will cater to the demands of that process. Public Choice reminds us that the political process results in irrational, uninformed, biased and downright silly decisions. It rewards all the wrong things, and punishes all the right things. NASA faces the same calculation, knowledge, moral hazard, and incentive problems every other bureaucracy faces. Explore the boundaries of the laws of physics though they may, they cannot break the laws of economics.
Conclusion: Relax, I don’t hate space exploration and neither must you to oppose taxpayer funding for it. You may counter these myths by saying, forget spin-offs, space exploration is so important it trumps any other consideration. You may say, sure, non-government space exploration is happening now, but without NASA we wouldn’t have had it for the past 60 years. If we didn’t put a guy on the moon back then, would that be such a loss? Maybe all those resources could have produced better things in that time. Maybe the demand for space exploration wasn’t high enough, or the costs not low enough, until recently. Maybe NASA was crowding out other space exploration alternatives. Who knows. What we do know is that free people have proven, throughout all of history, to be far better at generating progress for humanity than government schemes and programs.