Kudos to Bezos and the Space-Flight Billionaires

Senator Bernie Sanders is cranky about Jeff Bezos’ trip into space Tuesday morning.

Many Americans are struggling financially, the Vermont socialist declared on Twitter, while “the richest guys in the world are off in outer space!” The lesson, Sanders concluded, is that “It's time to tax the billionaires.”

Senator, please! Bezos is a history-making pioneer. The commercialization of space is well underway, and like the development of other new frontiers, it will benefit everyone, not just the rich.

The Bezos space company, Blue Origin, seeks to make space travel cheaper through reusable launch vehicles. Cheaper is a relative term, of course, and it’s likely that the immediate future of space tourism is as a weightless playground for the super-rich. But the knowledge gained from space tourism will gradually democratize it. The National Aeronautics and Space Administration reports that the development of commercial launch systems has already lowered the cost of reaching low-earth orbit by a factor of 20.

The easier it is to get to space, the more attainable it will be to engage in profitable and innovative space activities. Progress is already being made. Take Sierra Space’s Large Integrated Flexible Environment Habitat, designed to facilitate in-space manufacturing, pharmaceutical and medical research, agriculture and tourism. It could also serve as a staging site for missions to the moon, or deeper into space.

The past decade has seen an explosion of investment in space commerce. The economist Matthew Weinzierl has documented that investment in start-up space firms rose from less than $500 million per year from 2001 to 2008 to around $2.5 billion per year in 2015 and 2016. The space-analytics company BryceTech reports that in 2019, space companies raised $5.7 billion in financing, up from $3.5 billion in 2018. This trend will continue.

These new companies are engaged in a range of activities, include space access — like Blue Origin — along with providing more useful, higher quality images of earth, building launch and satellite communications capabilities, improving supply chains, creating secure facilities in space and developing the abilities to mine asteroids and colonize the moon and Mars.

Often, funding for these ventures comes from very wealthy individuals like Bezos, Tesla Inc. chief executive Elon Musk, and Virgin Group Holdings Ltd. founder Richard Branson, whose own space plane took him 54 miles above the earth earlier this month. They are rich enough to finance the high costs needed to enter this market. And they have the stomach necessary to take the risk of losing huge sums of money — and face — if their investment in space commerce fails.

The benefits of space commerce — new medicines, cheaper manufactured goods, faster internet in remote parts of the world, new agricultural methods — will take time to reach everyone. But they surely will come.

The backlash aimed at the achievements of Bezos and Branson amounts to reflexive billionaire-bashing. “Every billionaire is a policy failure,” goes a popular left-wing slogan. According to Sanders, “billionaires should not exist.”

Bezos made his fortune founding Amazon, which has transformed the U.S. retail sector. He was rewarded handsomely for his vision, hard work and the risks he took along the way. The Bloomberg Billionaires Index pegs his net worth at $204 billion, making him the world’s wealthiest person.

But there’s persuasive evidence that the rest of society has benefited much more than Bezos. In a 2004 paper, economist and Nobel laureate William Nordhaus found that only a “minuscule fraction” of the total benefits to society from new technological innovation accrues to the innovators. The vast majority of the benefits of technological change go to consumers. Nordhaus estimated that entrepreneurs themselves capture about 2 percent of the total benefit of their innovations.  

According to my back-of-the-envelope calculations based on Nordhaus’s findings, Bezos has created over $9 trillion of value for the rest of society.

He’s not done. By pioneering space commerce, Bezos and his contemporaries are creating a legacy that will last long after their detractors’ concerns are a distant memory, and the benefits of this new frontier have transformed life for the better in ways we cannot imagine today.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Michael R. Strain is a Bloomberg Opinion columnist. He is director of economic policy studies and Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute. He is the author of “The American Dream Is Not Dead: (But Populism Could Kill It).”

©2021 Bloomberg L.P.

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