Donald Trump’s presidency was a disaster. But not everyone in the administration was complicit in its seditious finale. Many good men and women worked for Trump. Thanks to them, the dumpster fire was at least somewhat contained. There were policy improvements on a few key issues. One of these, highlighted in the final Council of Economic Advisers report, was the law and economics of outer-space policy.
The space-focused chapter in the CEA report lists a number of victories. These include establishing USSPACECOM as a combatant command, inaugurating the U.S. Space Force, continuing the NASA–SpaceX partnership, and starting preliminary international cooperation on the Artemis Accords. All of these are important and come with immediate or imminent benefits.
But the most interesting part of the report deals with something far more speculative and exciting: outer-space property rights. Decades from now, we may look back on the Trump administration’s innovations as having laid the groundwork for celestial capitalism.
Few have been as optimistic about the prospects for private enterprise in space as I have. But even I must admit that this is a long-term goal. The global space economy currently totals only about $366 billion. For comparison, global GDP is over $80 trillion. Furthermore, 76 percent of the space economy comes from satellites and satellite services. The remainder is almost entirely government spending. In other words, the space economy is still barely a drop in the sea of the global economy, and the public sector is still the biggest player.
But there are signs things are changing. Superstar launch-provider SpaceX, a private company, is now the go-to source for rides to low-earth orbit. And SpaceX’s CEO, Elon Musk, has ambitions to travel much deeper into space: Initial tests of his Starship super-heavy rocket have been far more promising than the over-budget, underperforming NASA equivalent.
In addition, NASA announced that it’s paying for moon rocks, establishing a precedent for harvesting and transferring ownership of space resources. And the Artemis Accords explicitly allow for “the extraction and utilization of space resources,” an important step for securing international buy-in to a property rights regime.
We are on the cusp of an economic phase change. The era of government-driven space exploration and development is waning; the age of public-private partnerships is waxing. As corporations and markets take on additional duties, the private space economy can better stand on its own two legs. One day, governments may be just one customer among many.
We need a system of rules to make these changes a reality. That’s why property rights are so important. As the CEA report notes, “Although applications like space mining and space solar power satellites might be decades away from being profitable enterprises, it is worth laying the foundation for the emergence of future space industries now.”
The report emphasizes the necessity of a well-functioning property-rights system for economic prosperity. Building on the work of eminent property-rights economists such as Yoram Barzel and Harold Demsetz — as well as contemporary development economists such as Daron Acemoglu, Simon Johnson, and James Robinson — the CEA makes a strong case that the time to solidify celestial governance institutions is now.
Property rights are not costless to define and enforce. Any system for protecting property rights uses up resources that could be used for some other valuable purpose. It follows that a property-rights system is desirable insofar as the benefits it creates, in terms of incentives for investment and stewardship, exceed the costs. At the beginning of the space age, when the only real players were the U.S. and the USSR, the costs of establishing property rights in space simply weren’t worth it. But now, the spacescape looks quite different: “As access to space and other space technologies have increased, the benefits that companies can expect from engaging in economic activity in space have grown,” the report reads. “These increase the benefits of property right specification, as ensuring investors have clear expectations about how benefits accrue across society will lead to higher gains from investment.”
Compared with the norms a half-century ago, when the first major space treaty was ratified, the benefits of property rights are higher and the costs lower. We gain more from establishing space property rights: Various celestial projects approach technological feasibility, such as in situ resource utilization, enabling astronauts to “generate products with local materials.” We also give up less: It’s getting easier to monitor and enforce space resource claims. “This decrease in the cost of enforcement, along with the increase in the benefits from setting investment expectations, implies that the optimal level of property rights specification should increase.”
The concrete payoff of stronger property rights is a larger stream of commerce. The CEA report estimates from baseline projections that private investment in space would have reached $23 billion in 2028 without reforms. But thanks to the aforementioned improvements in space property rights, investment is expected to double, reaching $46 billion by 2028. Since investment, which is a cost, depends on the expectation of higher benefits down the road, a reasonable interpretation is that Trump’s space policies increased celestial wealth.
Whether that forecast is accurate depends on many other variables. To paraphrase Niels Bohr, it’s difficult to make predictions, especially about the future. Nevertheless, the prospects of space capitalism are enticing enough to give it a go. The report’s authors are correct: “Property rights enhancement, coupled with public-private partnerships, can solidify the long-term health of the commercial space economy.” Let’s hope that this is one area where President Biden seeks to build on, rather than roll back, the work of his predecessor.