Why NASA Hired a Chief Economist

Bloomberg audio studios. Podcasts, radio, news. (upbeat music) - Hello, and welcome to another episode of The All-Boughts Podcast.

I'm Tracy All-A-Way. - And I'm Joe Wiesenthal. - Joe, have you ever met anyone at a party and you start, you know, you ask them the standard question, what it is that they actually do.

- Yeah. - And you just get a response that kind of blows your mind.

It's something that you've never even thought of before.

- First of all, can I say, my favorite question at parties, is what do you do? - I've heard that-- - I know, some people look down at it.

“- You look down at it, like, that's what I'm saying.”

- Ask me about my hopes and dreams. I don't care. I don't care. I don't care. I wanna know what you do.

No, I do. Like, oh, where do you live, whatever, okay. I wanna know what you do. I mean, look, in some instances, maybe people don't wanna talk about it,

but I figure people devote a big chunk of their lives to work. That's a pretty good icebreaker. So we need to renormalize that. - Absolutely. - And as podcasts hosts, we're always looking

for interesting people. - That's right. And sometimes you meet them at parties. This person that we're gonna be speaking to, we actually met at our party,

our tenure anniversary party. Someone else brought them. And I was introduced to him, and I said, - What do you do? - What is it that you actually do?

And the answer that came back was, I was NASA's first chief economist. - Amazing, sold. - Have you ever heard of that before? - I would have not, I mean,

“no, I definitely would have never heard of that before.”

I mean, I guess I'm not surprised in some sense. I'll say the one sense that I'm not surprised that NASA had, a chief economist, which is like, the economists seem to sort of be in every organization these days.

They have a lot of tools and their toolkit that can be applied to a lot of things, they're pretty good with statistical analysis, et cetera. But then also, you know-- - But this is stats in space.

- Well, then the other thing is, you know, I know that there's growing interest in the commercial applications space. So satellites are another one area. Obviously, defense, people talk about asteroid mining

and they'll fall over, see that in our lifetimes, but I know that that's the thing people are interested in. So although I would not have necessarily thought it, you know, I guess I'm not totally surprised that NASA's like, all right, let's bring in an economist in.

- Well, I was pretty surprised.

I guess I'd never thought about it.

- Yeah, I'd never thought about it. - But it turns out that not only does this role exist, but it sits at the sort of intersection of, I guess, a lot of public and private investment space exploration. And we've talked about this before,

this idea that NASA has perhaps been seeding a lot of territory in many ways to private capital space ex, especially, we've done tons of industrial policy episodes at this point and what the benefits are of government investment versus, again, private capital.

- And so I'm very excited to talk space economics, but truly the perfect guest. We're going to be speaking with Alex McDonald's. He served as NASA's first chief economist, as I said, and he is now a senior associate

at the Aerospace Security Project at CSIS, the Center for Strategic and International Studies. Alex, thank you so much for coming on all bots. - Thank you so much for this pleasure to be here. - Thanks for coming to our partners too.

- Yeah, that too. - Good party, I enjoyed it. - Awesome. - Excellent. - So, obvious question first, I suppose. What does a chief economist at NASA actually do?

- So, the position of chief economist is essentially one of the kind of three independent technical advisors to the administrator. I'll point out that all three of those positions were basically canceled at the beginning

of this Trump administration, but they had been essentially people who would be brought into the agency to advise the administrator on technical issues related to economics, chief economist, technology,

chief technologist, and science chief scientist. These are not positions that are responsible for implementing programs. They are essentially independent technical advisors to the head of NASA.

NASA is a $25 billion agency.

It has 10 different centers across the US, it has international partnerships, and of course, it has an extensive amount of contract for the private sector. And so, the role of the chief economist

is essentially to advise the administrator of NASA on whatever the administrator of NASA needs advice on, but it tends to be related to what are the markets that we're seeing?

“What level of investment can we expect in a given sector?”

Has this company actually raised money? Or are they perhaps maybe a misrepresented? These are all questions that come up in procurement and is strategy. I started at NASA in 2008.

So, that was when the space shuttle was still flying. We were beginning to think about part and with the private sector. SpaceX had received its first essentially contract from NASA, but had not launched anything to space yet.

So, as you can imagine, over the last 15 plus years, the role of the private sector has become very significant

And as a result, economic analysis became one of the types of internal services that essentially the senior leadership at NASA decided they needed. - That was fantastic.

Just real quickly, backing up even further, how did why you and that role? What were you doing prior to that role such that you got brought in for this? - So, for me, space economics was a real passion.

I remember very distinctly, 2005, when I was a master's degree student in economics up at the University of British Columbia in Canada.

“And I remember two things that happened that year.”

One was the flight of spaceship one.

This was the first privately funded, privately built spacecraft

to take humans above the one common line, above 100 kilometers, which is the kind of international definition of where space starts. And I remember as an economist kind of saying, that's unusual.

How long have we been building our own spacecraft and doing that with private money? That started my PhD into the long run economic history of space exploration that became my first book of the long space age, essentially on the economic history

of where the money came from for astronomical observatories. And when you look at that, one will find some very interesting parallels. For example, the people who built the largest telescopes in the early 20th century, these were the Mount Wilson

and Mount Palomar observatories. They were funded by Andrew Carnegie and John D. Rockefeller, the two richest people in America at the time. Sound familiar? So this was a type of parallel that a number of us

were starting to think about in terms of how were going to get new money onto the table

“to advance our objectives in space exploration.”

And then the second thing that happened in 2005

was essentially the announcement of what was then called the Vision for Space Exploration. And this was the George W. Bush era plan to return to the moon, build a moon base and ultimately use the capabilities of one of ours.

And that basically told me that eventually we're going to need the economists in space because if you're building a permanent habitat somewhere else, that's head of earth, yes, that's the technology problem. Yes, it's an engineering problem.

It is also an economic development problem. You're going to need to think about where the revenue source is going to come for this, where might you see cost savings for new types of technologies. And so I had decided to go pursue space economics

as a field, did my PhD in that. I used to joke that once you do a PhD in the economics of space exploration, there's no world that can really employ you other than NASA. These days, that's not quite ace.

These days, there's such a growth in venture capital and private equity investment in space that actually it's a bit of a booming field to be honest. So I started my work at NASA Ames Research Center. So this is one of NASA's 10 centers out in Silicon Valley.

And I was bred out there to essentially start doing some of the economic analysis related to venture capital, how do we leverage these private companies. And essentially, as I did my work, I started managing some of the programs related

to encouraging commercial space development, made my way to Washington DC with the experiences that it had in Silicon Valley, working in some of the investors and some of the startup founders found my way to the office administrator.

And during the first 12th administration, that was when the Chief Economist position was created. - I have so many questions already and I'm already struggling to choose a particular path to go down because there are so many.

But one thing that stood out to me just then, you know, you talked about the sort of history of space exploration and the idea that you had these very rich industrialists who were funding the early stages

of, I guess, astronomy and observatories. At what point did the US flip into more of a government funded model for space exploration? And how did that actually happen? - Yeah, it's a great question.

“I think it's instructive to think about kind of”

how do we develop the capabilities to go on space in the first place? So the history of astronomical observatories in the US really begins with these wealthy funders. And there's a mix of motivations.

I break it down to these two types of motivations. One are signaling motivations. In economics, a signaling theory is the idea that you can incredibly transmit information by costly action, right?

This is kind of how you know something about someone when they're driving a Lamborghini versus, you know, say a Ford Pinto, right? You have some information about the individual, even if you know nothing else.

Similar with education. The classic signaling product that I can think of though is if you know that one country has launched something around Earth and another country has not, you know something about the technical capacities

of that country. Very similar in terms of astronomical observatories. These were very complex projects. They were about billion dollar projects if we do the kind of inflation adjusted metrics today.

And so the wealthiest people did these things. Fast forward to the 1920s and 30s when the technology for liquid fuel rocketries being developed. This year is actually the hundredth anniversary of the first flight of a liquid fuel rocket

by Robert Godder. That's why we did this episode. It was all time for the hundred year anniversary. That's right.

I always look at what's in January, you know?

I think what's going on. So he's working on this technology

He receives the vision of space exploration

“by reading science fiction when he's a teenager.”

He reads a war of the world in his local newspaper and then sequel to it an unauthorized sequel called Edison's Conquest of Mars. And he actually writes in his diary about a vision that he had while trimming a cherry tree

on his ant's farm and he decides that he's going to dedicate the rest of his life to space exploration every year after he celebrates what he calls his cherry tree day. So he's going out into the world trying to figure out

how is he going to get resources for this project. And it turns out that the largest funder for his early phases is in fact the Google hand family. He manages to actually convince the Google hand family to fund this work.

But when the second world war starts,

which is really when the U.S. government starts to get involved with rock and treat a very significant level, he starts working with a number of the generals and essentially gets funding to develop a jet assistant takeoff rocket to help planes takeoff more quickly

and he starts getting funding that way. So the second world war is really when governments across the world really start to get involved with rock and treat development. Most famously, of course, in Germany,

but also in the Soviet Union. And so after that point, the technology for rock and treat is essentially co-evolving as a weapon system and as a technology for taking humans off of the earth. That's really when the U.S. government gets involved,

NASA gets created in 1958 after the flight of Sputnik. And then you have the kind of dual development of essentially the civil program, which Sputnik NASA is, as well as a department of defense programs. And both of them are roughly kind of equally funded

for quite some time. - Well, what did we talk then about the flip side or the other direction you mentioned that when you were at NASA, we still had the shuttle program.

I've never understood why do we get rid of that?

Like why aren't we still launching shuttles and so forth? What was the sort of economic logic or national security logic or whatever, such that from the perspective of the government, we don't need to keep launching shuttles

and maybe we can begin the handoff

“for some of this more directly to the private sector?”

- Yeah, it's a great question. I mean, the shuttle really was an incredible vehicle. But of course, as I'm sure you're familiar, there were a couple of fatal accidents with the station, first the Challenger disaster and then the Columbia accident.

So essentially, the decision was made after the Columbia accident that there was no way to make the vehicle sufficiently safe at a regular rate of flight that would be economical and that it was time to move on to a safer, more economical form of human space flight.

What's interesting in many ways with the development of vehicles like Starship is that the idea originally behind the space shuttle is very much the same idea that is now motivating the development of Starship at SpaceX.

Low cost, refilly reusable aircraft like operations.

That was not ultimately achieved in the space shuttle.

You can look back at the original economic estimates for what NASA thought they would be able to fly the space shuttle at and they turned out to be rather optimistic roll to do what was delivered. We'll see where we get to on Starship.

“But I think it's just important to recognize”

that it's really part of the same engineering and kind of economic capability thrust shuttle to Starship. It's the same idea we want low cost, reusable aircraft like operations so that we can do more in space. Ultimately, the shuttle was deemed to be no longer safe

after the Columbia accident. Blue Urban Commission was kind of fielded and they decided that it was time to move on to what then became the commercial crew program. And that came around at the beginning of the first

Obama administration. At the time, it was very controversial. You can certainly go back and watch some of the hearings where you've got people like Neil Armstrong who are arguing that this is not a good idea for the nation.

At the same time, there was essentially a need with a NASA to figure out how to offload some of the operational responsibilities for human space flight because NASA was seeking to go back to the moon and ultimately on to Mars.

One of the things that's defining for NASA's strategic landscape is it's budget history. But your history is very easy to describe. It starts in 1958 at a relatively low level. It peaks massively in 1966 at the peak of the Paul program.

And then it declines very significantly until 1972 and it has basically been inflation flat ever since. Our ambitions, however, have not been inflation flat. Our ambitions continue to increase. And so as the agencies have been figuring out

how do we achieve our ambitions, we figure that we would basically partner and figure out how to leverage commercial capabilities and private investment. (upbeat music)

- Have you ever seen the chart of the NASA budget

- It's unbelievable. - In the 1960s, it fought over 5% of the entire federal government budget at least according to this chart that I pulled up on Reddit just now.

- No, but I'm pretty sure I've seen this chart before I think it's right. - Yeah, I think I know the one thing-- - I'm just like a staggering level of the federal government spending was at one point

through NASA, and then of course it's sort of declined into relative oblivion, but it's kind of extraordinary. - Well, on this note, Alex, you're talking about NASA's ambitions. How would you broadly define those? Because it seems if you say that NASA exists for security

and as a signal to other countries that we have superior technology to them, you could justify basically any element of spending as we seem to have done in the 1960s, but if you say that we actually want some sort of return

on investment in terms of jobs, or I don't know, some sort of multiplier effect on the economy, then you're kind of thinking about different things. - Sure.

Of course, one of the challenges that I always ran into

is that there's this pre-neverquest for calculation on the return on investment, which I always had to patiently explain

“that this was not an investment, it's an expenditure, right?”

You can't actually calculate a return on investment in the way that you can for an actual private sector investment. You can, however, calculate the economic impact. And so every two years, I would be responsible for the release of our economic impact report.

And for those curious, that is the highest level resolution data that NASA releases publicly about where it spends its money. And it spends its money across all the 50 states. - Okay, this is famous, right?

It has to. - It has to, exactly, because it is a public program. It is there to meet the needs of the American people as determined by the representatives in Congress. And so that is a kind of part of the agency's responsibilities

and missions are essentially defined by that combination of congressional mandates and presidential direction, right? Just like any agency. And so what have been the consistent requests

by Congress and presidents, to NASA? Well, over the last 40 years, let's say, the post-apollo era and even the post-Shuttle era.

We are now on the third attempt to return to the moon

and build a permanent habitation there.

“The first was called the Space Exploration Initiative”

under George H. W. Bush. Then it was as I mentioned in the Vision for Space Exploration, under George W. Bush. And today we are working on the Artemis program, which I was incredibly involved with.

And essentially, it is very much, we are using a different strategy now than we've used in the past, but it was essentially the same interest. There's only one world relatively nearby,

only three days away, that is the moon. There's also only one planet nearby that you can plausibly land on, that is Mars. I happen to personally be a big fan of fly-by as a Venus, but that's actually kind of outer intuitively

because it is so impossible. But when you say personally, you don't mean that you're flying past Venus yourself, right? Just in theory. I'd be happy too, but I don't think it ends for that.

But the benefit of Venus is that it is literally so hot and high pressure that it is impossible to land on, so it stops both engineers and politicians from trying to.

“That's actually a benefit from a program management”

perspective sometimes. But anyways, the real goal continues to be Mars, because Mars you can land on, and there is increasing signs of potential a previous life having been on Mars.

We continue to learn a lot by our robotic missions there. There's going to be some very interesting indications that there may have been a life there in the past. It's a very interesting world. And of course NASA also does robotic missions

out to the other planets. The moons of Saturn and Jupiter

are truly some of the most incredible objects

in the night sky in our solar system, right? You have moons like I/O that have volcanoes, let's view lava hundreds, thousands of kilometers above the surface of these planets. You have worlds that are actually ocean worlds

underneath these massive ice caps, like Europa and Enceladus. Enceladus has water geysers, so it's actually possible to imagine building a probe that could just kind of land under one

of these water geysers, open up an aperture, and then assess what might be in that water. And then one of my favorites, of course, is the Moon of Saturn Titan. Titan is the only moon that we have that has an atmosphere.

It's actually you can't really see through it, but it does have lakes, except the lakes are not water, they're made of methane. And we want to have a mission on the books, Dragonfly, which is for me one of the most exciting missions

that NASA's doing, to send a robotic helicopter to this moon of Saturn, and explore it to learn about this different type of liquid cycle based on methane rather than water. It's a fascinating solar system,

and one of NASA's core made it is to explore that, and I could keep going. You've also got the largest number of Earth scientists employed by one agency in the world. Huge amount of the climate data that the world relies on

comes from NASA. It also is responsible for aeronautics basic research, a lot of the basic research for fundamental green aviation, electric aviation is funded through NASA.

at the end of the day, NASA's always looking for ways

to make that tax dollar go farther,

“leverage partnerships, leverage private sector investment.”

- That was great. And I just want to say like, personally, I'm very pro going to space. I'm very pro landing on the moon again. I think it would be really cool

if in my lifetime someone landed on Mars. I think it's very cool, but why? So if there's going to be private money invested in this, other than the fact that, okay, maybe there can be a return from the private dollars

because they'll get a public dollars because they could do more. From the economist hat, is there a rationale for some of these projects that you see beyond just, this is very interesting and cool?

Could it ever turn into return on an investment in the classic sense? - So the most classic example that I have of where the economic return came from some of these types of investments

really does come from the Apollo program and the early rock tree development in the 1960s. So during that time for about three years, 75% of all global semiconductor demand came from these rockets. Oh yeah, what does that mean?

It means that this was a technology that was pushing the boundaries of capability, the technical capability, and it needed this new thing, the semiconductor, in order to be effective. That meant that semiconductor manufacturing

got to scale up at a level that it would not otherwise have probably been able to do based on consumer demand. - If I recall from chip war, it was also the fact that space was scarce on the shuttle and therefore it helped create the impetus

to miniaturize a lot of this technology which then unlocked various consumer electronics goods. - Exactly. The Apollo guidance computer being the other example of that. So that's exactly right.

So when you're pushing the technology frontiers for this kind of challenging objective, like going to the moon or going to Mars, you do push the capabilities and that results in the kind of famous case for spin-off effects.

And if there's one thing that I would just love to correct

“is this idea that spin-off effects are things like Tang, right?”

Or these types of words. - I forgot about that. - Worth it, we got Tang, worth it.

- Right, and that's always used as a kind of,

we say, oh, well yeah, okay, we got some Tang out of it. But the reality is spin-off effects are semiconductors, right? It is really fundamental technologies in the modern world. Another example of that is the ways in which we now have very advanced space-based internet, right?

In part this stuff came from a government demand for rocketry, right? SpaceX, it's first major service was providing the government with cargo to their national space station. Well, that's a pretty high-mass demand.

It's not a small payload to get cargo to the space station. You've actually got to be able to launch a fair bit into orbit. Well, once you've already established a demand for something that is high-mass, well, whatever high-mass things can you launch up into space

using your existing infrastructure? Turns out, the principal demand for space-axis rockets are its own products right now, Starlink, and that's also part of the plan for orbital data center. So these are things that emerge from pushing the technology,

from setting really difficult goals. So there's a real economic truth to that whole Kennedy statement and we do these things not because they're easy because they're hard. And when you do hard things create new technology

and new capabilities. Can you extrapolate something like the semiconductor experience to, I guess, creating some sort of lunar base? Because I get it for semiconductors. We have computers on Earth that makes sense.

But if you're building a base on the moon, it would seem to me that for at least a very long time, your principal customers are going to be NASA and maybe the Department of Defense. Right, and also potentially other international partners.

OK. So right now, the Artemis base camp, as it is being developed, is imagining participation from, for example, the Japanese astronauts in European Space Agency astronauts. And Canadian Space Agency astronauts.

Actually, the US is committed to landing two Japanese astronauts on the lunar surface.

First time the US has ever committed to an international partner

landing on lunar surface with it. And we're now about less than a month away, depending on when the launch actually happens. From Artemis, too, the first time that we've returned to the moon since 1972 and the very first time ever

that a non-American will be on board for a mission that is leaving Earth orbit, Canadian astronaut Jeremy Hanson. And so the international element is a key part of it as well.

“I think the lunar economy is one of the ones that's”

going to be a little bit farther down the road. I think one of the ones that's coming up, sooner, is what's called the low Earth orbit economy, and this refers more to commercial space stations. One of the biggest contractual competitions right now

is the competition for who will get the contract for a private space station from NASA. So NASA already, starting in 2010, as I mentioned,

with the commercial crew program. That resulted in the space act.

“Dragon capability and the Boeing Starliner capability.”

Right now, those vehicles are going to their national space station. The plan, however, is to retire their national space station the latest state that's been thrown out being 2032. After that point, there would be, in theory, one or more fully commercially owned space stations.

There are companies that are raising money, a couple of them have actually announced

hundreds of million dollars investments

in the last couple of weeks. What are they going to be doing? Well, they'll be hosting NASA astronauts. They're going to be hosting international astronauts. It's going to be training, but they're also

going to be conducting fundamental research in microgravity. Microgravity is a very interesting phenomena, because not only do you have no gravity, but because you have no gravity in a pressurized environment, you also have no convection.

And that allows for different phenomena than you see on Earth. So for example, you're able to grow crystals larger. You're able to develop things like fibroptic cables, more pure that may increase the transparency of them. We are still searching one product

that we can actually make in space, especially profitably, and make it again and again and again. We're still on the R&D phase. And we won't work it out for a long time. So it may be a while before we see one of these things.

But there is a huge research effort going on across the world to figure out how do we leverage the removal of gravity in the production of many things. And semiconductors is one of the other areas that we're starting to see a lot of investment in.

“So I think that one, I think is easier to understand.”

Our domain team is a zero gravity environment on Earth. Pretty close to the source of mass. But when you're flying around the Earth, you inherently have that property. And people are really exploring how we can make new use

it out of it and make new products. - It's going to be an interesting race, Tracy, if you think. Who is going to make something economical first? Sort of that zero gravity space or anyone in crypto?

Where is it in this tree? Will it deliver something of economic value first? No, but for real, so speaking of actual economic value and you briefly alluded to it in one of your answers. One of the things you hear is data centers in outer space.

And Elon is very bullish on it, but of course he has a rocket company. So of course he would say so. I can't tell is this just thing that people on podcasts and Twitter talk about or from your perspective

from what you can tell is the real plausibility that given intense compute demands. And I have to imagine it's like maybe the cooling bills, a little lower up there that maybe this could be like a real thing. - Yeah, obviously one of the currently hot debates

with an engineering economic analysis in space, how much sense does this make? There's actually been a few folks who put on really, really good calculators on lines. You can kind of look up orbital data center online calculator.

And the profitability depends on a number of factors. What do you assume the launch cost is?

“How often do you assume these GPUs are going to fail?”

How effective do you assume the radiators are going to be for getting rid of the excess heat? There's a lot of different variables and given the fact that we don't have any orbital data centers of scale, it's hard to know exactly

what their profitability is going to be. I'll say one of the big obvious benefits is not a technological one. It is simply that you probably don't need to go for extensive permits.

- No, yeah, for real. - But it's a real advantage. - There's no space in these who are getting a plan about that, yeah. I mean, you may end up depending on how large these things are and how many of them are and what kind of,

what essentially reflectivity they have. So one of the things that we're now starting to see is with a cost-lational size of starlink. These are about 10,000 satellites in space, right? The vast majority of satellites that are in space right now

that are operational are owned and operated by space in 10,000 or so. Costillations have now been approved and submitted to the ITU

and various ones submitted to the FCC at the million

satellite scale. Already a large amount of the night sky people are very familiar, fly over these levels. A orbital data center would be significantly larger and potentially more reflective than a starlink. So if you've got hundreds of thousands of these up there,

you might start really seeing them a lot. How much do we care about that, right? These are kind of social public choice issues that we're just starting to think about. - Speaking of stuff that we might be able to see

are space elevators plausible at all this idea that we could have space elevators instead of rockets to bring stuff up. - I love it, you know, I haven't had a good space a lot of very question for a long time.

So thank you. - Maybe that's something about their plausibility, but go on. - Well, you know, they're fun idea, right? I mean, Earth City Clarke, I mean, it's a beautiful kind of vision.

And as far as I understand, they're very reliant on high performance carbon nanotubes and a covalent apologies.

And the joke I've always kind of maintained is, you know,

I will wait until we have a bridge or a swing set made out of carbon nanotubes before I get too excited for the space elevator. In order for them to work, they would need to be about 36,000 kilometers in length, right?

Because your goal is to get them into a place

If it's not in geo, then it's gonna be continually moving around

“and, you know, that doesn't really work.”

So it's got to be in an orbit

that it's basically staying above the same place on Earth.

That's your synchronous orbit. 36,000 kilometers away. These are gonna be very long carbon nanotubes. So I'm not, I'm not planning on that at any time. (upbeat music)

- You know, you're obviously focused on the economics of particular projects. But I imagine the technology matters as well. How do you actually evaluate the technology because as outsiders to the space, space,

space, pun, no, I won't do it. I resisted joe. As outsiders to this particular topic, it's very difficult for us to get a handle on what seems feasible.

Just in terms of basic physics, versus what seems feasible, both in terms of reality and also the money that it might actually cost.

- Yeah, it's a great question.

One of the things that I loved about working at NASA was that, you know, you're working with some of the smartest people in the world. They're all working for, you know, public good. And you're just trying to figure out,

you know, what's the right thing to do for the country. And the way that the agency evaluates these types of technologies and projects is through teams. And you have a team with a number of different capabilities and skill sets.

So you'll have people who are very familiar with systems engineering, combined with people with experience and expertise and material sciences, throw an economist, throw an alloyer, and you all, as a team evaluate, you know,

what is this, what would it take to make this thing real, you know, what benefits would it have? And, you know, you do these types of grass roots, engineering, economics, assessments of these projects. And part of the kind of, you know, the joy

is that you tend to do these things dedicated for days, weeks depending how long, you know, or how serious of a procurement it might be. But a lot of that kind of stays kind of behind the door, so to speak.

So we don't put as much of that out. And when we do, it'll be in these kind of procurement announcements where you kind of will talk about the strengths and the weaknesses of a project. If you really want to kind of get a sense

of how the agency does these types of valuations, next time there's a very big procurement that is coming out of the agency, like we did for the human landing systems to return human to lunar surface,

go look at the procurement assessment. The agency does on the projects. - How long are those assessments typically? - You know, they can be dozens of pages, right? And they'll get into some of the technical issues.

You know, obviously, this proprietary technology involved, so, you know, it's not like it's giving you the kind of blueprint diagnostics necessarily. But there's a lot of information in them. And so that's the benefit of having a public agency

like NASA is that it does have to actually put out these types of assessments publicly.

“- Wait, are we really sending people back to the moon next month?”

- We're sending people back to the moon in a fly-by. - Oh. - So the Artemis 2, which you will take for crew in the Orion around the moon and then return on a roughly, you know,

kind of weak-long mission to give her take. - And then what's the timeline for when we want to land on the moon again?

- That is the $25 billion question.

There has been a change in the way that the agency has approached its lunar landing efforts. So in the Apollo program, NASA did rely on contractors, relied on grubbing, the grubbing lander system,

that they built, but that was ultimately owned and operated and kind of managed by NASA, right? With shift to commercial services and operations, that is not the case right now for NASA's landing plans. The landers are owned and operated and managed

as services by SpaceX and Blue Origin. And so there isn't quite the same level of insight and certainty, you know, and you might say that there's some arbitrary certainty in kind of government timelines, which is absolutely true.

But we don't quite know at the same level. For example, a NASA has not clarified publicly how many refueling flights they expect to be needed for a first-lander of Starship. In part, because that depends on this performance

of Starship and we don't quite yet know. We're still waiting on the version 3 flight coming up here in the next month or two. So there's a lot of uncertainty around when that landing would be.

The NASA Administrator, Jared Eisenman, just announced a change to the Artemis campaign, inserting a flight in between this next flight of Artemis 2 and the projected landing. And that would be equivalent to the old Apollo kind of nine

mission where you're going to test docking the lander with the crew module in Lower Thorough. And the agency suggested actually that, if both landers are ready, the Blue Origin Space X-Lander may be a lower orbit Orion might dock with both of them.

So long way of saying, there's still a number of technical steps that need to go.

“I think the agency has targeted 28 for landing,”

but we will see. The architecture for lunar landing this time is not as simple as it was in the Apollo program. It involves a lot more launches, at the point where we don't get quite even know how many.

has a Mars obsession, and he's not just interested in exploring whatever lakes or potential. You know, he's actually talking about colonizing Mars, but I don't totally get that. I'm sure I could read a book on it.

In fact, I think there is a famous book that inspired everyone, I gotta read that. But like, there's no oxygen up there, it must be pretty miserable.

“Like, what's the idea behind actually living on Mars?”

And does that seem, you know, I have to say, just to back up for a second, like I don't think we'll ever see a space elevator in our life, but I absolutely think there will be one eventually and if it happens in a thousand years,

that's a very short time at the grand scheme of things for human history. So like, but like, okay, so maybe we don't,

we never see Mars in my lifetime.

But what is the idea generally? Beyond behind the idea that Mars is a theoretically habitable location that maybe could be economically productive or useful to decamp to in some way? - Yeah, I think you're asking kind of one of the most

fundamental existential questions about our, you know, journey into space, right? In theory, we have a long time to go, right? We've got approximately one billion years give or take until this planet becomes uninhabitable, right?

And so ultimately, as H2 wells would have it, it's all the universe or nothing else, right? Either we manage to escape the planet of our origin and we have further experiences and expansion adventures out amongst the stars or we don't.

So part of the long run vision is that eventually, humans will figure out how to leave not just our planet but our solar system. However, we do not have a real good understanding of how we would at all make that possible today.

And so part of the thought is we're gonna need to learn how to live out in space for extended periods of time. The longest that we live in space these days is about one year. There have been Russian missions in the past that have lasted longer in the lower th orbit,

but our medical docs, these days at NASA, pretty much don't clear anyone beyond one year. So the idea of going to Mars is kind of developed over the centuries. For a long time, we thought that there would be

much more habitable, right? We thought there might be oxygen there, there is. There's a really good book that's come out in the last couple of years called City on Mars. Which really kind of goes through some of these things

that you're talking about, which is that really might not be that nice from a place to live.

“When you ever get the question of where do you want to go?”

I often say Venus because it's kind of a one year

and back mission because ultimately, I want to stay on Earth.

It's literally where all of the restaurants are, right? But there are restaurants anywhere else in the solar system. And so there's a kind of sense of that frontier mentality that I think appeals to some people's narratives, even if they don't necessarily spend a lot of time

on any frontiers themselves. And I think that idea of going out to a new world and learning from that world is also a different related motivator, right? There is a scientific interest of exploration.

What can we learn from this genuinely different alien world? And what can we learn about ourselves or learning to live on it for decades centuries? There's a cultural argument that some of my friends kind of really like, which is this argument

that goes back to our VC Clark, which is that fundamentally, it's about getting variation in humanity, variation in the cultures of humanity. What will we learn, what kind of different humanity will emerge from life and other worlds?

We don't know, but that seems like an interesting question and interesting exploration. So I know you spoke previously about how private capital

has always had a role in space exploration

to various degrees.

“But when you look at 2026, I think some people would argue”

that a lot of territory has been seated to private companies like SpaceX. When you think about your framework of looking at this, are there certain places or things or missions that you think are better for federal funding

to take on versus private capital? Yeah. For me, the big determinant is whether or not this is something that is going to require public dollars for essentially the foreseeable future.

That there really are options, as far as we can reasonably assess for there being private markets. So for example, on launch vehicles, there were private markets.

The US went from having essentially zero market share of global launches in 2007 to now basically having 75% or above because of the success of SpaceX. So there is a global market in launch.

So also global market in satellite internet. So these are ones where it makes sense to have private companies in the lead. There may be kind of natural monopoly challenges, so you may think about how you can manage that in the future.

But we do that in other industries too. So for me, the reason we're experimenting in space stations is because we think that might be an area where there really might be some commercial market.

We've actually seen multiple different private missions that have been paid for. They're not yet at kind of a very significant share of the market for human space flight, but it certainly a lot more than it was 10 years ago

For me, some of the things that we need to make sure

kind of stay within the public domain within kind of NASA management operation includes things like operating the moon based. It is going to be a very expensive proposition. There may be some elements to that

that it makes sense to have a private sector experimentation and it potentially even infrastructure ownership. For example, you can imagine a world where you might have a baseline power system on the lunar surface that is kind of owned by the government.

But if there is kind of interest in expanding that, well, maybe you have some private sector kind of, you know, take on some of the rest to see whether or not they have some other infrastructure options there. If we don't have that privately owned,

“then I think there might be some challenges of kind of pushback, right?”

To what extent do you want your tax dollars going to fund Jeff Bezos's moon based versus, you know, the national lunar research station?

I think people's answers on that are potentially different

and given the fact that it's essentially public tax dollars are paying for all these things. I think that's something we need to consider. So, you know, the standard answer is that we have the government take on these higher risk activities

where there really is no market demand. But I also think that we need to think about this as an infrastructure play for a long period of time, we're going to be reliant on publicly funded resources for these things.

And I think therefore there needs to be some public management of that through agency like NASA. - We can have private companies doing some of the lunar services like catering. The space station, we could get like sedexo

or one of those companies to handle that. I'd be comfortable outsourcing some of that. What is the deal with lunar territory? Have governments tried to claim slices of the moon?

“Let's say it was the US base station on the moon.”

Would we then say that that is American property, that area, what is international law established with regards to claims on the moon or elsewhere? - Yep, great questions. So this was actually resolved in the sixties

with the outer space treaty, 1967. So prior to any human landing on the moon, essentially the powers of the world including the Soviet Union and the US and China all decided we don't want the same type of kind of territorial acquisitions scramble

that we've seen in human history to take place on the moon. But there was an agreement that essentially there will not be any assertion of national territory and under national law, there are no private sector actors. So essentially there won't be any ownership of territory.

However, there is ownership of the assets that you put there. So any moon base that you put there, any physical infrastructure would be American infrastructure. But just like in Antarctica, there are provisions within the outer space treaty

to allow other countries to come and visit these facilities. They can notify and say we'd like to come visit your facility to make sure that there isn't any on toward military activity happening there. So there's this principle of reciprocity of visitation

that's established and the idea that we can also mine has already been established.

So what I always like to say is that,

no matter what business idea that you have on our surface, you can probably engage on it right now if you can make the case with the exception of property speculation.

“If you want to go build a hotel on the moon,”

you can afford to do it and you can just put it down. You'll get the license to do it. You don't own the territory, but you can put it there. If you want to mine something, the space actor 2015 that was approved by Congress and signed into law,

establish that if you mine it, essentially you want it. So if you take something from the lunar surface, that's been established. The Artemis Accord Signatories have all basically signed up to that.

So that's now a very popular proposition around the world. And if you think about it, we've already established that. When we brought back rocks from the Apollo program, no one debated that the United States could essentially do what it wanted with that.

And U.S. gave it her out to countries around the world, used it for scientific purposes. So we've already established a lot of those principles, but the idea that there's going to be territory is one that currently they have a space treaty.

I would argue, thankfully, kind of establishes is not one that we're going to be competing over. How often do you think about the economic impacts of an alien invasion? Only on Fridays. This is not like a thought experiment

that they assigned to all NASA economists. You know, it's a great point. When the agency reestablishes the position, we should absolutely make that a requirement of reporting out on that.

Obviously, in an alien invasion, it would probably be pretty catastrophic. I would certainly recommend to any listeners, the three-body problem series, but if they have read it, it's absolutely fantastic and it's pretty clear case

that it would be rough time. All right, Alex, thank you so much for coming on a lot. Thank you for coming to our party. I'm so glad we actually met and I did get to ask the question of what it is that you do.

So really appreciate it. Thanks, it was a real pleasure. (upbeat music) Joe, that was fascinating. We part of me just like hearing what we're up to now

when it comes to space exploration and the answer it turns out is a decent amount.

I kind of wanted to ask for an economist

to take on the procurement process of NASA as well, but we're gonna have to have Alex back on. - Procurement is actually, I wanna do more on that specifically because I imagine that there's a lot of small startups in both the space and defense area.

I mean, we know there's a lot of defense tech startups and I assume there's a lot of space tech startups. How you actually evaluate those ones? I mean, it's actually really impressive thinking about back in space exit 2008.

- Yeah. - When it was long before they had sort of proven that they could do reusable rockets at scale and now we've all seen the videos and they still blow my mind every single time,

that was a really good bet. And it was like, I'm sure a lot of people thought that there was completely implausible or whatever, very recently in history. So that's pretty extraordinary.

“I am also, I'm still, and I think that's right,”

I looked up this chart again and Wikipedia page, four and a half percent of one point the entire federal budget was NASA, which just seems like so hard to believe. Right now this was like a really big part

of what the government was spending money on. - Well, this is the thing, if you couch it in existential terms, then the upward limit of your budget becomes, I guess not infinity, but four percent pretty good.

- I do wonder, like, it does not seem implausible to me that we have another Sputnik moment with China. What if tomorrow's like, we're landing a little landing? - This is the other thing I want to ask about how NASA differs from China's space agency.

- But look, cause what if, you know, they're like, yeah, we have someone landing on the moon next week or something like that, like, it seems plausible at some point. - They've tried to suddenly build a space elevator. - They figured out, they figured out reusable rockets.

You know, what the name of their reusable rocket is, the long March 10. - Really? - Yeah. - That's good. - Yeah, it's a good name.

Anyway, yeah, I thought there was a great conversation. And I just was like, I don't, you know, I'm pretty skeptical of the fact that any time soon we're gonna get, like, actual economic productivity out of space, whether it's from mining,

I don't know, maybe the data centers thing will happen, but I'm still pro-spending money on going to space just for the sake of it. I think it's inspiring. If we saw some people land on the moon

and hang out there for a while. - Well, I mean, it would be a bunch, it was such a better video condition. You know what I'm saying? Like, it wouldn't be those, you know,

we could see it in the high dev and they could do stuff and say those greeny things that maybe some people were thought shot on, like I said.

“- So why don't you just use AI to pretend to be on the moon?”

- Well, let's see it. Would you go to the moon? - Yeah. - It depends on how far developed that particular technology is. - I would definitely go.

I mean, as long as I thought it was like plausible and other people were going, I'd go. - I would need a certain amount of successful missions

before I agree to, you'd be on the first one.

- I'd be on the first one, let's do it. - All right, all right. Well, in the name of all blots, maybe I would consider-- - Yeah, for content, do it for content. - For content, that's right.

Okay, shall we leave it there? - Let's leave it there. - This has been another episode of the All Blots podcast. I'm Tracy Alloway, you can follow me at Tracy Alloway. - And I'm Jill, why's it thought you can follow me

at the stalwart? Follow our producers, Carmen Rodriguez, at Carmen Armin, Dashal Bennett, at Dashbot and Caleb Brooks, at Caleb Brooks. And for more Allblots content, go to blumber.com/Audlots

for a daily newsletter into all of our episodes. And you can chat about all of these topics 24/7 in our Discord discord.jg/Audlots. - And if you enjoy Allblots, if you want Joe and I

to be on the first space flight to the moon

in the name of Allblots content, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free.

“All you need to do is find the Bloomberg channel”

on Apple Podcasts and follow the instructions there. Thanks for listening. (upbeat music) (upbeat music)