Tube Earth Econ

Imagine someone plans to build a gas station far out in an isolated desert. They plan to sell gas and snacks to the truck drivers who come out to deliver gas and snacks. Want to invest?

No? How about if they also sell gas and snacks to passing explorers, out there to signal toughness? Yes, explorers won’t look as tough if they buy gas and snacks from your station. But if the station can lure enough not-so-tough explorers, maybe you’d want to invest.

How about if they also plan to dig oil wells and an oil refinery to make the gas they sell, and a hothouse farm and food processing factory, to grow food for the snacks they sell? How about if they plan to run all this entirely by robots? This plan would make me even less likely to invest. After all, you’d need even more customers to justify a larger scale operation, and I had doubts about enough explorer customers to justify a simple gas station.

This is my reaction to the recent news that some famous investors will spend millions trying to mine asteroids (see here, here, here). Their first product would be rocket fuel to sell to passing NASA rockets. I’m skeptical that NASA wants to buy enough fuel to cover their costs, and I don’t see a flood of other customers eager for robot space gas stations. This new firm also talks about shipping metals like platinum back to Earth, but that seems even crazier anytime soon.

To explore this general issue, let us imagine Tube Earth. While our Earth is a sphere of rock with a 40,000 km circumference, Tube Earth is a very long cylinder of rock with a circumference 1/6 as large, to give it the same surface gravity as Earth. Tube Earth also rotates 24 hours in a day, and has a sun nearby.  The closest spot on the tube to the sun is its “center,” which has Earth-like average surface temperature and seasonal variation. There would be less local temperature variation, as all nearby parts of a tube get the same sunlight.

A length of this tube about twice Earth’s circumference would have about the same surface area as Earth. Imagine that an area of this size held a mix of land and water similar to Earth’s continents. Imagine also that more such clusters of continents are spread all along this tube, spaced roughly twenty Earth circumferences apart. In between is mostly open ocean, with a few small islands.

The tube slowly gets colder millions of km from its center, as those places are further from it sun. Life is spread all along the tube, but so far humans and civilization have only evolved on one near-center cluster of continents. It would take an old style (~12 knot) sailing ship about 4 years to travel in a straight line from one cluster to another, and it would take a jet airliner about 40 days to fly there. Both would need refueling along the way.

My big question here is: how would history, and economic growth, have played out differently on Tube Earth? With all that land out there to colonize, how much more activity would be dedicated to spreading out across the tube? How far would be the furthest flag, subsistence farming town, and modern industrial city at any one time?

My guess is that Tube Earth would look a lot more like our Earth than most space colonization fans expect. Explorers would not have even reached the nearest other continent cluster until the 1800s, and even now there’d be only a few small colonizes there, mostly practicing subsistence agriculture. A several year shipping time would make it very expensive to import modern equipment, and greatly discourage the shipping of mining minerals or farmed food back to the central cluster. Mostly they’d work harder to get more minerals and food from nearby mines and farms.

By 2010 Tube Earth would be lucky to have one monthly airline flight to the next cluster, and a very expensive but welcomed internet connection. Lots of stories would take place there, and it would offer an escape for well-off religious or political refuges. But overall it wouldn’t matter much, because of its huge transport costs.

The key point to note here is that other continent clusters on a Tube Earth are vastly more hospitable and easier to reach than the nearest asteroids or the Moon are from Earth. And the rest of the solar system is even worse. So if other continent clusters would by now matter little for a Tube Earth, asteroids aren’t going to matter much on Earth for a long time to come.

Added: Karl Smith calls it “Invest for Prestige/Get Conned”

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  • Doug

    Pretty incisive analysis and I agree with most of it. But I think you’re missing one small wrinkle. With tube Earth the transport costs are symmetrical. In space the transport cost to get something out of Earth’s gravity well is orders of magnitude higher than to get it in. Slinging materials from the moon or orbit back into Earth is very cheap, because gravity does most of the work for you.

    Imagine the scenario where I sling one 10 gram self-replicating seed into space. It grows into an industrial mining operation capturing asteroids that pass through Earth’s orbit. It slings those bulky heavy materials back into Earth This is economically viable, whereas the same is not true for Tube Earth, because the transport costs are high going back to the primary cluster.

    • Mark M

      Cost of transport is why I think they want to mine rocket fuel very early. Transporting all that fuel into space is expensive, and they wouldn’t try to mine and refine it in space if the number crunchers thought it wouldn’t save money. Selling some of it to NASA may be part of that equation, but I’d bet the real driver is for the miner’s own use.

    • Dave Milovich

      Actually, once you get to “10 gram self-replicating” you will mine far-away Tube Earth continents. A single philanthropist can drop off a few seeds on the continents of an adjacent cluster. If the seeds can grow into an industrial mining operation, presumably they can grow harbors and a fleet of unmanned barges to ship valuable minerals to the home cluster. These barges might be slow and they might cost a lot of energy and materials to make and maintain, but folks living on the home cluster shouldn’t mind too much. After sowing the seeds, the only marginal cost to the home cluster is unloading the boats. The cost of the barges merely delays when the first barge arrives and delays when the arrivals reach, e.g., weekly frequency. The home cluster’s inhabitants could even choose to keep the barges. (In might be more efficient for the barges to be designed to be one-way in any case.)

      Of course, this is all academic unless Planetary Resources has secret blueprints for a self-replicating asteroid-mining seed.

  • Mark M

    Billionaires are pouring money into a high risk venture and your basic point is that it’s a high risk venture?

    Agreed. I’m not sure we needed such a long-winded explanation, but I agree anyway.

    It’s way cool, though, and I’m glad they’re doing it.

    • Vaniver

      Risk is a cost, that needs to be balanced by a benefit to be worthwhile. His argument is that there’s no benefit there that justifies the risks involved.

      • NMJablonski

        Clearly Diamandis and his investors think there’s sufficient benefit to offset the risk. They may characterize it vaguely as “vision”, but I think we can see the cultural, social, and technological opportunities that this project presents.

        Examining this project in terms of likely profitability misses the point. These guys aren’t looking for a sound investment. They want to place a bet on a project that, if successful, could change human civlization profoundly.

      • Poelmo

        Ah yes, the tragedy of purely profit-based thinking: it increases the efficiency with which people can build a canoe, but because no one ever took the risk of taking a canoe to the other side of the river to proof that there’s something valuable over there, no one wants to buy canoes in the first place.

        Thank god some humans have been endowed with vision and a sense of adventure, otherwise we’d still be sitting in our caves, arguing about the profitability of stepping outside.

      • Mark M

        The risk to billionaires is that they’ll end up with only several hundreds of millions. They’ll still be able to buy nearly everything they’ve ever wanted. They’re buying the status of outer space enterpreneurs and a place in the history books. It’s a win-win situation for billionaire investors because it buys status even if the endeavor fails.

        Meanwhile they’re putting people to work inventing, innovating, and manufacturing space exploratory, mining, and refining equipment. Even if they never mine a single asteroid, it’s an endeavor worthy of the billionaire’s club.

  • J Storrs Hall

    Actually they’re looking at near-Earth asteroids, many of which are easier to get to than the Moon.

    • http://www.uweb.ucsb.edu/~criedel/ Jess Riedel

      Could you explain this claim? The moon is a lot closer, so do you just mean that it’s not as hard for a spaceship to leave the gravity of an asteroid and return to Earth as it is from the moon?

      • http://nextbigfuture.com brian wang

        Less speed (deltav) is needed when going from earth to some near earth asteroids. Also. Less on the return. Therefore less fuel.and.smaller rockets

      • http://www.uweb.ucsb.edu/~criedel/ Jess Riedel

        OK Brian, that’s the appropriate definition of the problem. But I still don’t understand.

      • http://www.uweb.ucsb.edu/~criedel/ Jess Riedel

        Ahh, OK, I looked up the answer. The important idea is that you can’t just reach the moon, you need to land there safely. Since the moon has no atmosphere, you need to use rockets to slow yourself down. Now, NEO’s are further away and thus always take more delta-v to climb out of Earth’s gravity well and reach, compared to a moon impact. But once you reach them, there’s no gravity well you need to fight against to land safely.

        Here’s a cartoon picture which makes it obvious.

        Interestingly, the delta-v to land on the Moon isn’t much less than the delta-v to land on Mars, because you can use the Martian atmosphere to break.

        Here are some delta-v’s.

      • http://daedalus2u.blogspot.com/ daedalus2u

        The “emergency” return from an asteroid is a lot easier too. You just use an ion drive and use your habitat as the “ship”. When you are about to hit the Earth’s atmosphere, you get into your re-entry vehicle.

      • Mark M

        The effort is strictly robotic. There is a lot more tolerance for g-forces and a lot less concern about an emergency recovery.

        I’d be willing to bet that the research and mining robots are never intended to return to Earth, which would reduce their cost quite a bit. Either shuttles or something else that can survive re-entry and navigate the payload to a safe landing will bring materials to Earth.

  • Vaniver

    While I agree that Tube Earth is better than space exploration, I’m not sure I agree with your analysis of Tube Earth. I mean, one of the primary benefits America had over Europe was that the natives were mostly dead- so radically different political and economic options were on the table. You could sustain ~13-14 children per women for several generations, and without old grudges or claims to create conflict or ease rent-seeking, you have a bit of a growth edge for at least a century or two. Similar benefits would be available to groups that spread onto new continents.

    But a four year trip is much longer than a two month trip; economic and scientific integration between the continents would be very difficult. A ‘transatlantic’ cable would possibly be the province of a unified continental government, but would be unlikely to be something private investors could put together. Temperature and climate fluctuations also suggest beneficial flora and fauna transplantation is unlikely. After a few centuries spent populating the new continent, how far behind would they be? Probably too far to catch up, especially if the history of Tube Earth is one of exponential growth.

  • Denval

    [ “Billionaires are pouring money into a high risk venture and your basic point is that it’s a high risk venture ? ” –Mark M ]

    No, they merely ‘say’ they will pour in their billions.

    Maybe they have another angle or agenda for this odd ‘proposal’.

    The logistics & economics of proposed asteroid-mining are absurd from the getgo… so even the most enthusiastic space-cultists & space-cadets would soon smash into reality in any serious effort.

    If fools and their money are soon separated — how’d they get that money (billions) in the first place ?

    Something very bogus about this whole asteroid media story.

    • V

      There is only a modest correlation between wealth and intelligence.

    • Mark M

      I didn’t say they were pouring in billions, which seems unlikely. I said they were billionaires, pouring in money, not pouring in all their money.

      You seem very much like a conspiracy theorist. The proposal doesn’t make sense to you so you believe something is being covered up. Perhaps the nefarious purpose is for the evil billionaires to steer an asteroid into the Earth, causing an extinction event? Billionaires may be building and fortifying their secret lairs right now so they can survive and rule the planet after all the governments collapse.

      Or it could be that you just don’t have enough information. Even if it comes out close, billionaires can invest in way-cool high-risk proposals without impacting anything else in their lives. Kind of like how many people buy designer jeans when Lee’s will do the job just as well.

  • http://www.uweb.ucsb.edu/~criedel/ Jess Riedel

    This new firm also talks about shipping metals like platinum back to Earth, but that seems even crazier anytime soon.

    Honest question: why couldn’t they do the following? Send out a small robotic spaceship to land on a ~10m asteroid and use its thrusters to adjust the asteroid’s orbit to include an earth flyby in 5-10 years. When the asteroid gets near earth, send a second spacecraft to slow it down to a high-earth orbit (HEO, roughly lunar-distance). I believe this is already proposed. The second spacecraft applies a spray-on ablative heat shield in HEO. Then the asteroid is sent on a re-entry trajectory, to land in the Sahara or Antarctica.

    The only thing you need to do is apply a good enough heat shield that the asteroid isn’t vaporized, and my laymen’s understanding is that this isn’t hard from HEO. (Most earth-impactors are on completely different orbits than earth around the sun, so the relative velocity is much higher.) By the time the rock hits the ground, it should be traveling at its terminal velocity. Then, scoop up the platinum.

    • Gulliver

      @ Jess Riedel

      Honest question: why couldn’t they do the following?

      Most of any asteroid is stuff of which Earth already has in abundance. There’s still plenty of rare earths in many because it’s a lot easier to break up an asteroid than dig metals out of the planetary crust, so even a fraction is a platinum mine, and some asteroids have a lot higher fraction of valuable elements than others. But a lot of the stuff in an asteroid is the kind of stuff you’d want to get into orbit, including the sort of stuff out of which you’d make an ablative heat shield.

      The simplest plan is to place an asteroid at the Lagrange-1 point where the Earth and Moon gravities cancel out. Mine the valuables, wrap or spray them in heat shields manufactured on-site, and drop them in the desert or shallow ocean if they’re small enough not to cause tsunamis.

      My personal guesstimate is that it will be the late 21st Century before we see the first asteroids moved into cislunar orbit, and the process itself will take a couple decades. The missions will be fully robotic. I doubt self-replicating nanomachines will be ready for prime time by then, and I have my doubts that they’ll ever be able to operate in vacuum, but a team of ordinary macroscopic robots should be able to build a fuel refinery, mine and factory. Early moon colonies might be manned for political reasons, but I doubt we’ll see those until around the same time. I’d guess very small Mars research colonies by mid-22nd Century, but probably 23rd Century before domed agricultural colonies.

      All in all, I think it will take a few thousand Earth years to colonize the solar system, megayears to seed the galaxy. I’d love to see it and participate; but if I do it will almost certainly be as what Robin calls an Em. I don’t think it will never happen unless our technological civilization totally collapses. Technology advances apace and our reach extends concomitantly, making space colonization a more economic prospect as costs fall. But the people who thought back in the 20th Century that we’d have moon settlements by now were extremely overoptimistic and severely underestimated the technical engineering challenges. I’d like to point and laugh with the rest, but a lot of those starry-eyed optimists invented the modern world, and it seems imprudent to laugh at the giants on whose shoulders one stands. Now that we’ve done a few decades of operating machines and astronauts, we have a much better understanding of just how large the tasks entailed. John von Neumann was right after all: robots first, humans second…perhaps with Ems in between.

      Does that make me a space enthusiast? Are the only choices never or tomorrow? All hail the era if instant gratification, where you’re either a naysayer or a space cadet.

      Not you, Jess. You gave a solid proposal and I hope my answer was of some help. But I find the now or never signaling of many intellectuals to be so much posturing.

    • http://daedalus2u.blogspot.com/ daedalus2u

      When small iron meteors hit the Earth’s atmosphere, they heat up and are oxidized with the iron being vaporized. The boiling point of platinum is ~1000 C hotter, so the iron and nickel get vaporized out leaving the Pt group metals behind.

      There is a technique to recover the little nuggets of Pt group metals from these micrometeorites and by assaying the oxidative state, determine the O2 content of the atmosphere.

      These can be recovered from geological strata and used to infer the O2 level of the atmosphere.

      • Gulliver

        @ Jess Riedel

        Replying to your question about delta-V and fuel requirements down here so I don’t double post.

        You might find this interesting:

        http://www2.jpl.nasa.gov/basics/bsf4-1.php

        …in particular the first section on Hohmann transfer orbits which are central to planning deep space missions whether you want to move a probe or an asteroid.

        And if you take these sorts of calculations to their logical conclusion you get this:

        http://www.urbanghostsmedia.com/2010/08/celestial-superhighway-the-interplanetary-transport-network/

        These sorts of things are one reason space exploration and colonization doesn’t analogize particularly well with Robin’s admittedly very creative Tube Earth model. In some ways space exploration is a lot harder and in other ways it’s a lot easier than reaching those far off continent clusters would be.

        @ daedalus2u

        Neat. I never thought of using micrometeorite fragments for paleoclimatology, but it makes sense. Of course it would help to have some idea of the rock’s reentry angle.

        I’ve read decades old proposals to use the differential boiling points of metals to essentially centrifuge asteroids and asteroid fragments.

    • Mark M

      People would be concerned about the safety of steering an asteroid at the Earth. What happens if it hits someone? People are everywhere – even in the middle of the Antarctic and the Sahara. We’d also be concerned about the margin for error and the environmental impact from the landing. Meteors that strike the Earth belong to the country where it falls, so if it lands somewhere that hadn’t already agreed to give it up the investment would be lost.

      There doesn’t seem to be a physical reason it can’t be done, but that doesn’t mean it’ll be socially or politically possible to do it.

  • Evan

    Another factor to consider is that the opportunity cost for robot ships in space is less than human sailors on Tube Earth. Those human sailors sailing ships for four years could be doing quite a lot back on the main continent that would be more productive. The materials used to make the robot might be useful too, but not nearly as useful as a human.

    If you could cheaply and easily train monkeys or dogs to sail cargo ships back and forth between continent clusters Tube Earth colonization and trade might be more plausible. But overall, Robin’s analysis is still fairly incisive.

    Would ems make asteroid mining easier or harder? On one hand, ems would be faster, so fast that the time lags for communication might seems like weeks or years to them. On the other hand, they could spend a lot of their time in “sleep” mode if they get too bored.

  • http://lukeparrish.rationalsites.com Luke Parrish

    Lately I’ve been thinking space-based computing makes more sense.

  • http://eradica.wordpress.com Firepower

    Imagine someone plans to build a gas station far out in an isolated desert. They plan to sell gas and snacks to the truck drivers who come out to deliver gas and snacks

    THIS is precisely how Palm Springs came about.

    Add a dash of Rat Pack flair – voila.
    Now, it’s a hot strip mall – with trailer parks.

  • http://nextbigfuture.com/2012/04/falcon-9-and-planetary-resources-arkyd.html Brian Wang

    The first product is not fuel. The first products are information (and satellite imagery) and rental of usage of space telescopes and space telescopes.

    The 20 kg mass produced space telescopes will provide arc second resolution and when pointed at earth would have a couple of meters per pixel. The first scopes could be launched piggy backed onto launches that were not full. A dedicated Spacex Falcon 9 ($54 million) launch could put up 100 to 300 of the space telescopes.

    The first two phases are to put up a lot of space scopes and then put up space scopes with some propulsion so that they can leave earth orbit for close up viewing of asteroids. I think each scope would cost about 1 to 5 million.

    The mining part of it does not come into play until after the viewing and characterization phases. Then it would be to get the water and convert it to fuel.

    The existing satellite market is a $260 billion industry. If you were to provide refueling of existing satellites to lengthen there lives that is a business with a few billion per year in value.

    The satellite imagery market is a multi billion market.

    I also have detailed information on how I think they could tackle the mining and industrialization of space in a profitable way. Their actual plans are stil secret.

    I think Robin analysis lacks the details around the cost and technical aspects which results in the wrong conclusions and wrong analogies

    • V

      So you’re just a satellite manufacturer, and all this asteroid mining stuff is mere hype, right?

  • http://nextbigfuture.com/2012/04/planetary-resources-early-revenue.html Brian Wang

    Planetary Resources plans to put mass produced 20 kilogram space telescopes into low earth orbit starting at the end of 2013

    It will use laser communication to transmit information back. The lens look like an 12 inch diameter telescope.

    It uses star cameras for orientation

    It uses reaction wheels to point itself. Use that basic stability and enhance it to subarc second pointing.

    They can point to the earth and get 2 meter resolution of the ground.

    Planetary Resources can choose to make themselves very profitable before any material is mined. Satellite imaging, space telescopes and space data sales are markets that will work.

    Can easily monetize the 2 meter satellite imaging via google Earth. Provide google earth with higher resolution and more frequent updates for non-city areas.

    Sales of commercial data reached $1.3 billion in 2010 and continue to grow strongly. The U.S. government remains by far the largest consumer of commercial EO data, primarily for defense purposes through the National Geospatial-Intelligence Agency (NGA). Following consolidation in the U.S. industry, the industry has grown strongly—by a 23 percent compound annual growth rate during the last five years—largely in response to growing requirements for defense applications. Furthermore, the private sector is showing signs of increased development, particularly for location-based applications.

    Every major ground observation station and astronomy institution would want to get a Arkyd space telescope to enhance their ground observation. If the Arkyd scopes get into the sub-$2 million range they will sell hundreds to thousands of the telescopes.

    • Poelmo

      Yes, they aren’t sending harvesters into space just yet. Other people here mentioned that visiting an asteroid is easier than visiting a moon or planet, that is also correct (because the asteroid has lower gravity).

      “This new firm also talks about shipping metals like platinum back to Earth, but that seems even crazier anytime soon.”

      Really? Do you know what prices gold, platinum and rare earths go for these days?

      Besides, if they mine their own fuel and use robots (which they manufactire themselves) and solar energy as much as possible they can largely detach their operation from Earth’s money-based economy by cutting out all the middlemen (if you control all stages of production your costs will drop a lot, that was how the Soviet Union was able to maintain a ridiculously large military and it’s one of the ways many megacorporations today keep their costs down), meanwhile they do make money selling their minerals on Earth, which they can use to pay their shareholders and buy the few materials they can’t get from space.

      About tube Earth. Australia was like one of those “clusters” for a long time, it took sailing ships 8 months to get there from Europe. On tube Earth all inhabitable clusters would be inhabited by humans in the year 2012 for the same reasons that Europeans settled other continents in the colonial age: not to make money for corporate overlords in Europe but to make money for themselves in the new clusters, to just get away from oppression in the homeland or for the adventure. radiocommunication between clusters would be frequent in 2012, while superfast catamarans (or submarines) and zeppelins (powered by solar or nuclear energy) would provide regular shipping between the clusters without the need for midway refueling (I thought it would be obvious tube Earth would develop different technologies to deal with their world, but apparently it’s not…)

      • V

        Really? Do you know what prices gold, platinum and rare earths go for these days?

        Most types of rocket fuel are made from oil, so what price do you think will rise faster?

        Besides, if they mine their own fuel and use robots (which they manufactire themselves)

        out of rock?

      • Poelmo

        @V

        “Most types of rocket fuel are made from oil, so what price do you think will rise faster?”

        Why would they use oil-based fuel from Earth when they can mine water (hydrogen and oxygen) in outer space, and use solar-powered (or hydrogen) railgun launchers on asteroids for the return trip?

        And FYI: gold, platinum and rare Earth prices have indeed increased faster than the price of oil.

      • Salem

        if you control all stages of production your costs will drop a lot

        lol.

        But I agree that your proposals make as much economic sense as those of the CCCP.

      • Poelmo

        The math speaks for itself: if you own the shares of n steps in your supply chain and all those companies have a 20% profit margin then you save 0.8*(0.9)^n-1 percent on your supply costs (for n=5, you already save a third of your non-HR costs). Competition is not affected because your suppliers and their competitors are still comepting for your investment money (if one of your suppliers becomes complacent you just sell your shares of them and buy up one of their competitors).

        In addition, resource extracting corporations such as “Planetary Resources” can cut costs even further by being smart about their resources. After all, would an oil company buy gasoline from a competitor at market prices for their service vehicles? Of course not, they’ll make sure their vehicles refuel at the company’s own gas stations. Similarly PR would not buy circuit boards for their robots at market prices: they’d give some of their own platinum to the (most efficient) circuit board supplier, so that supplier can produce the circuit boards cheaper.

        It’s all about cutting out middlemen: why let other shareholders reap the profits?

      • V

        So they are supposed to extract water from the asteroid rock, electrolyse it and cool the resulting hydrogen and oxygen to temperatures far below the “nighttime” temperature of the asteroid to make cryogenic LH2/LOX rocket fuel. All using only photovoltaic power. Sure.

        And even if that was somehow technically possible, how many passing rockets must they refill to make the business profitable?

        How many probes can the RKA, NASA, ESA, JAXA, CNSA and whatever send?

        Moving the asteroids to Earth to mine rare metals seems also infeasible. Platinum price is about 50K$ / Kg.
        Launch price to GTO is about 17K$ / Kg on a commercial Ariane 5, reaching a NEO asteroid and landing on it would cost more. How many kg of platinum can you recover for one kg of payload? I suspect far less than one.

      • Dan Weber

        GEO orbit is about 3 km/s. If all you want to do is drop the rocks onto the Earth (something I’m skeptical about but will accept for now) then you only have to decrease the speed to about 1.5 km/s and it will hit the surface. It’s even easier from higher orbits (0.83 km/s if you are 1 Lunar Distance away).

        No one who is not a billionaire should invest in this, because they will probably lose money. (If PR was planning an IPO at any time in the next 5 years I would call them a scam.) But I still think it’s awesome and will make things better for whoever tries next.

      • V

        But these rocks are not in Earth orbit, they are in solar orbits

  • John

    “if you control all stages of production your costs will drop a lot, that was how the Soviet Union was able to maintain a ridiculously large military and it’s one of the ways many megacorporations today keep their costs down”

    This is so stupid that it hurts. The whole trend towards outsourcing business processes (that every big company you have heard of is participating in) is a result of the fact that the opposite is true – specialisation and short supply chains are far more effective than in-house.

    Also, the Soviet Union was able to have a large military because it underinvested in everything else and had a far larger share of government in GDP.

    “Do you know what prices gold, platinum and rare earths go for these days? ”

    Prices still have to rise at least 10-fold for this to be even remotely economically viable in the next 30-40 years.

    • Poelmo

      “The whole trend towards outsourcing business processes (that every big company you have heard of is participating in) is a result of the fact that the opposite is true – specialisation and short supply chains are far more effective than in-house.”

      This is a non-issue. If suppliers work better if they feel independent then just buy their shares or create a subsidiary supplier. The point is not that these suppliers have to look dependent on paper, the point is that their profits should flow back to you, so you can cut costs in the end. You’ll find that many corporations outsource to their own subsidiaries or companies they own a lot of stock in (Apple own a lot of Foxconn stock for example). Meanwhile some countries have legal limits on foreign ownership or have a lot of stock owned by the state that is not for sale, so that’s why you can’t just buy up all you supplier factories and mines in China.

      “Also, the Soviet Union was able to have a large military because it underinvested in everything else and had a far larger share of government in GDP.”

      Yes, they underinvested their resources in other areas where their economy was dysfunctional, but they were able to get a lot more hardware for a less money. I can assure you it would not have cost their government $1 trillion to build the F35.

      • John

        “If suppliers work better if they feel independent then just buy their shares or create a subsidiary supplier. ”

        You are, of course, reasoning ceteris pribus which is invalid in this case because, in order for your argument to be true, you require the existence of the current system of suppliers which will not exist if firms produced everything inhouse. Economies of scale are real and they are impossible in a lot of sectors without outsourcing.

        Moreover, you probably have never worked as a manager as you grossly oversimplify the role of company politics and inefficiencies that come with the layers of managers and embedded responsibility that are absolitely necessary for the existence of vertically integrated large companies. Most companies today, even with all the outsourcing going on, are so terribly inefficient that if we actally had real entrepreneurship in US and Europe, the top 100 companies in S&P 500 and their European equivalent (I am actually unaware if there is one) will not exist in 5 years as they will all be bankrupt.

      • Poelmo

        @John

        It doesn’t have to be “inhouse”. That’s why I talked about buying stock. The current system of suppliers would still exist, only the names of the shareholders would change (only a little since many corporations already own stock of their suppliers).

        Corporate politics shouldn’t be worse than today because it’s the shareholders who are continously infusing the corporation at the end of the chain with money, just like investors do all the time when trying to save a broken corporation.

  • http://nextbigfuture.com brian wang

    Spacex has gotten far lower costs by vertically integration. The space industry had excessive in inefficient division of operations to satisfy political demands. Make parts of the shuttle in dozens of states to get the congressional votes. Overcharging was rampant in this system. Spacex is about ten times cheaper and development costs were up to one hundred times cheaper.

  • http://eradica.wordpress.com Firepower

    This is America.

    So, talk of International Satellite Hydroponic Soy Farming is a stretch.

    Find a way to grow weedwackers, Pizza, and Pizza delivery”persons” and watch the bucks flow in.

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  • Doc Merlin

    You are missing the point entirely. Its so much cheaper to send materials back to the earth than it is to send them out. But even if we were sending them out, it would still be viable.

    1) It costs spacex about 2.5k per kg to send something into LEO. Currently gold and plat are > 50,000 dollars per kg.

    2) The reason for the volatile materials depots are partially for their own use. Getting things into space is expensive, getting things from space to somewhere else in space isn’t that expensive, if you are willing to do it slowly. (more or less)

    3) This isn’t status seeking but rather part consumption and part profit seeking on part of the billionaires. The consumption part is because they really want to their boyhood scifi dreams come true.

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  • Brandon Reinhart

    Long term, is there value in having a terrestrial society? Gravity wells seem expensive energy wasters. If you can mine in space and collect free energy for various uses, what do you need the surfaces of planets for? I understand colonizing stars, but not colonizing planets.