In the latest episode of Power and Consequences, we (Gary Gensler and Simon Johnson) explore the business of space.
The original space race was between the US and the Soviet Union; and for a long time (1960s-1980s) the Soviet Union launched the most rockets. By the early 2000s, the US and Europe ran at roughly the same pace in terms of the number of launches and payload (satellites) put into orbit. Now the US is far ahead of everyone, but China is coming up fast.
The sustained American success is not only the result of cumulative investments by NASA, but a concerted effort to have the private sector take the lead in the launch business. Also the European Union appears to have (arguably) underinvested in this activity. The US now has a lot more satellites than everyone else combined.
Does this confer a lasting advantage either on the US as a nation or on particular companies, such as SpaceX? The answer depends presumably on how other countries (and companies) respond – as well as whether Low Earth Orbit and Radio Spectrum Allocation can accommodate a lot more satellites. (Watch out for the Kessler Syndrome!)
How much of a broader innovation edge results from leading the way into space? There were great hopes for this in the 1960s — but then there were questions whether the evidence that the “space program helps economic development” was compelling. (Simon and Jonathan Gruber discuss this experience in Jump-Starting America.)
With SpaceX becoming so dominant in launch and low earth orbit communications, has the US political economy changed and even created the modern equivalent of an East India Company (as argued by Alessio Terzi and Stefano Marcuzzi)? Will this undermine the US process of creative destruction (as emphasized as a problem for Europe by Philippe Aghion, winner of the 2025 Nobel Prize in Economics).
Some additional reading:
This useful paper on the history of commerce in space: “Evolution of the Space Economy: Government Space to Commercial Space and New Space,” by Walter Peeters. Or read this Federal Aviation Administration 2023 short excerpt ‘Origins of the Commercial Space Industry’.
A comprehensive Report on the Space Economy, by the European Space Agency, covers 2023 and 2024.
A concise analysis of the current SpaceX situation and valuation, “Is Elon Musk’s SpaceX Really Worth $1.75 trillion?” by John Cassidy of the New Yorker.
Other resources we found useful include: Orbital Radar, and Jonathan’s Space Report (lots of raw data!)
And here is a link to Arthur C. Clarke’s 1945 proposal for Geostationary Satellite Communications. As for Howard Hughes, read this short bio ‘The Life and Legacy of Howard Hughes: Aviator, Filmmaker, and Billionaire’ or tune in to watch Leonardo DiCaprio’s portray Hughes in Martin Scorsese’s ‘The Aviator’.
