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Guest: Dr. Matthew Weinzierl; Topics: Space economics, why commercial space is exciting, government risk factors, private sector strengths, space tourism importance and much more.
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We welcomed Dr. Matt Weinzierl to the show to discuss space economics, commercial space, the private sector, space economic analysis tools, why commercial space is exciting for economists, students and space, budgets, spending, inflation and more. A good part of our discussion centered around the Harvard Business Review article written by our guest and co-author Mehak Sarang on Feb. 12, 2021 titled "The Commercial Space Age Is Here." For archive listeners, it would be best if you read this article prior to listening to the program and many of the issues and points Matt made in the article were discussed in-depth during this interview.
Our discussion started by asking Matt to tell us what a space economist does that is different from typical economist activity. He suggested that space economics is similar to regional economics using Latin America as an example He also said the economic laws such as supply and demand are global and just as applicable to space as they are to Earth. Our guest named off several notable space economists, a few of which have been Space Show guests over the years.
Before moving on to a more specific space focused discussion, I took time to ask Matt about my usual rants on excessive government spending, our national debt, rising inflation and the possibility of government spending crowding out investment as the government spending increases. Matt had an interesting take on all of this which I related to the historic times of the huge debt for Mexico and Argentina and the role of Dr. Milton Friedman in resolving the debt problems of the time. I urge you to listen to this discussion but a few highlights are worth mentioning. First, Matt said that the US dollar shows strength which was not the case for the currency of Argentina or Mexico. In fact for the near term he did not see the strength of the dollar heading south. In addition, he said the US economy has shown great resilience to the problems of increasing debt, again on the near term. But then he shifted to looking out over a longer period of time and that is where the fundamentals might start impacting the US economy and private sector investment in commercial space as the government spending at some levels could start crowding out investment. He talked about budget constraints, new technologies, and the plausibility that some commercial investments might pay off in such a large way that they pay down on the spending and inflationary problems and actually justify the large debt to get the reward. Again, I urge you to listen to this entire discussion which took place over the first 15-20 minutes of our program.
Kim sent in our first email question of the day. Actually, Kim's was question consisting of three questions which she posted on the blog so while I read it on air, you can also read it verbatim. Kim thought that based on Matt's article from the Harvard Business Review that he might be underestimating the potential for NewSpace development, especially down the road when there are products built in space at a lower cost that can come back to Earth at an attractive cost, plus cost effective activities in general with space manufacturing. While no business case might exists today, the potential was there. Don't miss how Matt responded as his answer to Kim dealt with financial examples, politics, and other factors required to make the plausible reality. I used this question to ask Matt about one of my favorite rant subjects, that is counting that which may happen in the future which might be plausible as real today though it is not here yet real. In responding to my rant question, Matt talked about economic focus and other drivers. Division of labor and the role of dreams were mentioned. I asked if there was an economic rating system for the plausible such as the TRL system for technology development. Unfortunately, no such rating system was available according to our guest. The subject of large risks and uncertainty came up but once again, listen to what Matt had to say about such issues and concerns.
Fremont John called to complement Matt on the article but he pointed out the last few paragraphs focusing on moving beyond our Earthly geopolitical rivalries was of concern. John wanted to know just how we can keep in check such rivalries if that is an essential part of moving forward and getting more people to space and expanding commercial space. He suggested it may be hard to control Earth based geopolitical rivalries so he wanted to know how Matt recommended we do that. China and the US were the examples used by both Matt and John. You will have to listen to the discussion to here what Matt suggested. Following the call from John, Carol in Seattle sent in a note asking if economists were part of the space policy making team. Matt said yes, referred to Scott Pace and GWU and the economists at GWU but those also contributing to policy. Following Carol's questions I asked Matt for his personal goals and his expected outcomes for the work he does in the space arena. Listen to what he said as you might hear some surprising comments.
Matt was asked why he wanted to see more people in space. He had many reasons but he said he thought it would be important for his children and grandchildren. He talked about more people meaning more innovation, more problem solving with more beneficial solutions. He had more to say so do listen. You might want to comment on this on our blog so go forth and start posting.
Our guest received an email from a Tucson listener wanting to know if his students were excited about space and selecting the space classes for their study, many of which were electives. Matt talked about expanding student interest over the years. Hew also described his own business school classes which he said relied on commercial space case studies. Toward the end of the program he told us all how we could access his case studies online.
Todd from San Diego wanted to know how well the space community was doing in telling the space story to the general public and was it even necessary to do that. Matt talked about not getting caught in a bubble and then suggested our grade would be around a D. As for the part of the question about does the general public matter, listen to how he answered that. He compared space 30 years ago to today. By the way, his comments might indeed surprise you. Listener Randy in Chicago asked a two prong questions. The first part asked if there was a turning point or inflection point that would really jump start commercial space development. The second part was the opposite. Randy wanted to know if there was a big risk item out there that could take it all down. For the inflection point, Matt talked about space tourism. For the big risk, he talked about the orbital debris problem. Listen carefully to all of what he said so you can understand both the upside and the risk.
Matt was then asked how he saw himself in all of this . He said first, he saw himself as a scholar. He said he was neither a booster or a skeptic as he saw both sides and he wanted to encourage critical thinking and informed decision making.
As we were nearing the end of the program, I brought up the last paragraph from Kim's email regarding people thinking human spaceflight was toxic, damaging and such. I asked Matt how he would handle a student turning in a paper or making a presentation from that perspective. For sure you will want to hear what he said. Hint: After hearing his response, I asked Matt to talk about the role of serendipity in commercial space, human spaceflight, and finance. Before moving to the summary for today's program, I brought up opportunity costs and asked Matt about the argument that innovation would happen anyway if the money were not spent on space because it would be spent on another terrestrial project so while the end result might differ, we would still benefit from the innovation. This argument nullifies innovation as a result of space exploration because it equates potential innovation from other activities with a track record of proven beneficial innovation from the space sector. Matt had an interesting response to this question, a response worthy of your posting your own comments about it on our blog.
Matt summarized a few items for us, talked about other resources including the NASA economic office and director. In addition, he told us how to get copies of his class case studies so if interested, make you have pen and paper ready to write down the instructions.