Financing Starships

A science advisor to the not-entirely-realistic recent movie Gravity said:

Often a story worth telling can fall apart if there is a complete dedication to perfect science. The goal is to make everything seem grounded enough in the physical world that it seems real. So story trumps science every time. (more)

Even the science fiction that tries hardest for realism usually sacrifices it for a better story. It isn’t just that authors make accidental mistakes due to a lack of attention. Quite often, realism gets in the way of the story, because realism conflicts with our tastes in stories. That is, many features we want in stories (like good beating evil) are intrinsically unrealistic.

This is why I think it important to highlight story unrealism, especially the unrealism intrinsic to the stories said to be most realistic. Its not just gotchas to show off how much you know, or teach in the process. Its also to counter the popular illusion that stories are how-to manuals, there to teach us about reality in a fast and fun way.

Many have praised Charlie Stross’s novel Neptune’s Brood, released in July. I also enjoyed it. But economists such as Krugman and Tabarrok have praised its econ realism, and I haven’t found anyone criticizing that. So I guess such criticism is up to me (again). (I have thought about related issues before; see here, here.)

The following quotes give the setting of Neptune’s Brood. (Worry not; I give no spoilers.)

Starships, of necessity, travel light. The cost of building and launching one is crippling – and the cost of building one that could carry the millions of bodies with different skills that it takes to render an new star system fit for habitation would be impossible. So we make do by sending starships with only a skeleton crew. The job of the starship’s complement is to build a beacon and trade for skills with the neighbors, to solicit immigrants via laser transmission and build new bodies for them. …

Slow money is a medium of exchange designed to outlast the rise and fall of civilizations. It is the currency of world-builders, running on an engine of debt that can only be repaid by the formation of new interstellar colonies, passing the liability ever onward into the deep future. … By design the slow money system is permanently balanced on the edge of a liquidity crisis, for every exchange between two beacons must be cryptographically signed by a third party bank in another star system: it take years to settle a transaction. It’s theft-proof too – for each bitcoin is cryptographically signed by the mind of its owner. … Suppose I wish to hire you – in another star system – to loan me a copy of your soul as indentured labor for a decade or two. …

Slow money … is an investment vehicle. … It’s so stable that interest rates are microscopically low – 0.001 percent compounded interest really racks up over a few centuries. All new colonies start off by going heavily into debt, in order to attract the new skilled specialists they need to address whatever critical problems they failed to foresee and plan for before departure; once they’re stable, it can take them millennia to earn their way up to a positive balance of payments, and so they tend to avoid borrowing further. But sometimes people in mature planetary civilizations do borrow slow money, for certain long-term projects. … Terraforming worlds, for example. ..

Starships are prohibitively expensive. They cost millions of slow dollars, with a construction time measured in decades, and a flight duration in centuries.In view of which inconvenient fact, it’s almost impossible to imagine how an aggressor might recoup the cost of a warship’s construction. … There is no sensible way to profit by invasion and conquest. (pp.109-111,267)

So, in this story setting our descendants have over millennia colonized many stars via hugely expensive starships traveling at about 1% of the speed of light. Starship investments take millennia to pay off. So far, so good.

On some points Stross seems ambiguous, but I can interpret him as reasonable. For example, Stross doesn’t make clear if it costs more to send bits to a distant star via laser or via starships. If ship bits are cheaper, you’d cram most bits needed into the ship, and only use lasers to send a few corrections later. However, if laser bits are cheaper, the ship itself would only hold bits needed to create a receiving station, and most bits would come later by laser. And if laser costs got low enough, rich tourists might even travel about by laser. Stross doesn’t say explicitly, but since his book has many characters traveling around via laser, he seems to have the cheaper laser bits in mind.

Also, Stross talks about interest rates, but doesn’t distinguish between time and space interest rates. Interest rates are exchange rates – how much stuff you get elsewhere if you give up stuff here now. For time interest rates, that elsewhere is here but at a different time, while for space interest rates that elsewhere is now but at a different place. Time interest rates are positive – you get more later if you give up stuff now. But space interest rates can be negative – the further away from the center of the colonization wave that you want to get stuff, the more that will cost you.

There is a zero interest speed where exchanging for stuff at that ratio of distance to time away has a zero interest rate. Since Stross says slow money has a microscopic interest rate and is repaid by new colonies further out in space, we might interpret this as saying that slow money is paid out at near a zero interest speed that is near the colonization wave speed. This would allow time-interest rates, paid back at the same place, to be much higher.

On other points, I find it harder to see this scenario as reasonable. For example, the high apparent innovation rate in this civilization conflicts with long starship flights. Innovation is the rate at which you get better outputs for the same inputs. The faster is innovation, the less durable you want your capital equipment to be, since you expect better new designs soon. But starships are very durable capital equipment; the opportunity cost of sending out a starship using old tech would be huge compared to waiting for better tech.

Also, this scenario seems to have star systems sending out more starships while they still have lots of room to grow fast locally – the systems we see are not very congested or used up. But the main reason to burn vast quantities of resources to deliver a tiny quantity to a distant star a century later is the expectation that one can grow resources much faster out there than you can back home, to eventually make up for that huge loss and lag. And once you got growing out there you’d keep going until fast growth opportunities ran out, forcing you to start the cycle over again. As long as fast local growth is possible, local investments should easily beat starship investments.

There is also the issue of what starship ventures can use to pay back their initial investors — I can’t buy Stross’s Ponzi scheme wherein shares in future starship ventures are sufficient. Some revenue could come from new star systems using lasers to send back info goods such as news, stories, movies, and innovation. But in a low innovation civilization I don’t see how this could add up to much relative to the cost of a starship. Instead, it seems to me that most starship revenue must come from selling travel. People stuck back in crowded and used up systems might pay dearly to get away to where resources are plentiful and fast growth is possible. So contrary to Stross, colonies wouldn’t be paying to attract skilled immigrants; immigrants would learn skills in the hopes of slightly reducing their huge costs for passage to a distant star.

If starship bits were cheaper than laser bits, most starship passage revenue would come before the ship was launched, and so little financing would be required past the launch date. And if laser bits were cheaper than starship bits, most revenue might come as late as soon after the starship reached its destination, making the journey duration the timescale of debt repayment. Either way, I don’t see why debt would be favored over equity financing. And since debt and repayment could both happen in the same location, where the starship began, I see little need for complex cryptographic protocols across many stars that take years to complete. And little need for a different kind of money.

Looking away from the finance issues, the book seems to focus on post-humans with human level intelligence who all run at the same speed with the same sized bodies, all apparently at human speed and size. Personalities seem typical of young to middle aged adults today, and the breadth and flexibility of organizational roles seem typical of small firms today. While minds can be copied and are in principle immortal, society doesn’t seem much changed as a result. Artificial intelligences are still stupid. None of this makes much sense to me except to make it easier to tell a story to typical readers today.

So which of these errors are intrinsic to stories, rather than accidental? The last set of errors on body size, speed, intelligence, etc. seem clearly designed to make this scenario more familiar to readers today. Assuming high innovation and growth rates, and far from full star systems, also accomplish that. The cryptographic bitcoin stuff panders to the usual science fiction demand to make recently cool tech central to a future world. Saying that interest rates are near zero sounds more dramatic than saying that they are zero along a particular speed line. Finally, focusing on debt over equity, and portraying starship ventures as Ponzi schemes, panders to the finance cynicism popular after the recent financial crisis. (Plot developments that I didn’t discuss do more of that.)

Added 19Nov: Using star gravity lenses at both ends can make it very cheap to transmit bits to distant stars. This way, laser bits would be far cheaper than starship bits.

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  • IMASBA

    “Also, this scenario seems to have star systems sending out more starships while they still have lots of room to grow fast locally – the systems we see are not very congested or used up.

    Instead, it seems to me that most starship revenue must come from selling travel.”

    Yes, if there’s no way to send spice/dilithium/unobtanium from fringe worlds to core worlds then the fringe worlds don’t have much to offer except for fresh air and a fresh start so travel would be the only thing they can sell (I assume new stories will stop being interesting after many worlds have been settled), that is if people don’t have a problem with dying and being replaced with a mental clone.

    • ParanoidAltoid

      More worlds = more population, no?

      • IMASBA

        Which has no economic value because they’re stuck at 1% of the speed of light, those worlds might as well not know about each other’s existence and nothing would change in the lives of the 99%. This is incidentally a rebuttal to Robin’s remark about the opportunity cost of not sending the most advanced ship there is or not (perpetually) waiting until a more advanced one is available: when it comes to speed they seem to have hit a wall so newer ships don’t bring much to the table (I doubt they’re still making breakthroughs in creature comforts).

      • Hedonic Treader

        The population itself has economic value as long as someone is willing to pay for its creation. Tribalists and ideologues of all stripes may pay to have more minds of their tribe/ideology in the universe. Utilitarians may pay to have more happy beings in the universe. Egocentric individuals may pay to have more copies of themselves in the universe. “Travel” of digital minds does not require the destruction of the original.

      • VV

        The people with the most motivation to travel would be those who live near the bottom of the social ladder.

        The problem is that these people can’t afford the ticket.

        They can’t finance their travel with debt: since travel costs are so high, there can’t be much trade between star systems, which means there is no efficient way of moving wealth between star systems, thus these people can’t repay their debt.

      • ParanoidAltoid

        >No economic value

        Creating new people has economic value for the people who have been created. Even if potential world-creators don’t care about the people they have the ability to create, presumably some trade could be worked out such that world-creation benefits both parties.

        Basically, a universe with a trillion people is better of than a universe with 7 billion, and assuming efficient markets, the more populated world would come about.

      • Hedonic Treader

        “Even if potential world-creators don’t care about the people they have the ability to create, presumably some trade could be worked out such that world-creation benefits both parties.”

        Well, that was the part in question, due to the transportation constraints. But maybe some types of info goods are realistic, e.g. scientific collaboration that benefits from being spread out in space, or computational tasks that use the extra resources for parallel computing.

        “Basically, a universe with a trillion people is better of than a universe with 7 billion”

        That’s a philosophical value judgment that has little to do with efficient markets. A non-existing entity is not a market participant. Once it is created it no longer needs to consent to its creation since it already exists; before that it can’t consent.

  • TheBrett

    Maybe you could have a trade in prestige goods, like what pre-Columbian native American societies would do in parts of North America. Just having some rare and/or unique treasures from another solar system might be a status symbol, since it means you could mobilize enough resources to actually charter a starship and send it there to get the stuff.

    • Tangurena

      This is a premise in a number of SF stories: Grafenwalder’s Bestiary in Galactic North, and in Altered Carbon.

  • James S

    “And once you got growing out there you’d keep going until fast growth
    opportunities ran out, forcing you to start the cycle over again. As
    long as fast local growth is possible, local investments should easily
    beat starship investments.”

    Shouldn’t it be possible to want to ‘claim’ nearby star systems even if you expect growth to be slower – because you expect that if you don’t claim it now, then someone else will, and they’ll get the entire star system?

  • http://blog.seliger.com jseliger

    the high apparent innovation rate in this civilization conflicts with long starship flights. Innovation is the rate at which you get better outputs for the same inputs. The faster is innovation, the less durable you want your capital equipment to be, since you expect better new designs soon. But starships are very durable capital equipment; the opportunity cost of sending out a starship using old tech would be huge compared to waiting for better tech.

    Maybe the high innovation rate happens in sectors other than starship tech?

    • IMASBA

      Most likely. If they are stuck at 1% of the speed of light then apparently their engines aren’t advancing anymore, and no, they’re not increasing engine (or power plant) efficiency because if they had more efficient engines they would use them to increase the speed.

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