News and Commentary on Space
A free society will not function or maintain itself unless its members regard it as right that each individual occupy the position that results from his action and accept it as due to his own action. Though it can offer to the individual only chances and though the outcome of his efforts will depend on innumerable accidents, it forcefully directs his attention to those circumstances that he can control as if they were the only ones that mattered.
– Friedrich Hayek
One of the nice things of having few other temptations over the holidays (and spending a lot of time in airports and airplanes) was that there was time to read a few more chapters of Hayek’s Constitution of Freedom, a project I’ve been working on in fits and starts since March 2003.
This passage on monopolies in Chapter 15, “Economic Policy and the Rule of Law”, struck me as applicable to NASA’s track record in spoiling earlier attempts to develop a private manned space industry:
In general, a free society demands not only that the government have the monopoly of coercion but that it have the monopoly only of coercion and that in all other respects it operate on the same terms as everybody else.
…All these activities of government [ie: surveying, standardizing weights and measures, and other activities of government compatible with the "generality" attribute of the rule of law] are part of its effort to provide a favorable framework for individual decisions; they supply means which individuals can use for their own purposes. Many other services of a more material kind fall into the same category. Though government must not use its power of coercion to reserve for itself activities which have nothing to do with the enforcement of the general rules of law, there is no violation of principle in its engaging in all sorts of activities on the same terms as the citizens. If in the majority of fields there is no good reason why it should do so, there are fields in which the desirability of government action can hardly be questioned.
To this latter group belong all those services which are clearly desirable but which will not be provided by competetive enterprise because it would be either impossible or difficult to charge the individual beneficiary for them… And there are many other kinds of activity in which the government may legitimately wish to engage, in order perhaps to maintain secrecy in military preparations or to encourage the advancement of knowledge in certain fields. But though government may at any moment be best qualified to take the lead in such fields, this provides no justification for assuming that this will always be so and therefore for giving it exclusive responsibility. In most instances, moreover, it is by no means necessary that government engage in the actual management of such activities; the services in question can generally be provided, and more effectively provided, by the government’s assuming some or all of the financial responsibility but leaving the conduct of the affairs to independent and in some measure competitive agencies. [emphasis added]
There is considerable justification for the distrust with which business looks on all state enterprise. There is great difficulty in ensuring that such enterprise will be conducted on the same terms as private enterprise; and it is only if this condition is satisfied that it is not objectionable in principle. So long as government uses any of its coercive powers, and particularly its power of taxation, in order to assist its enterprises, it can always turn their position into one of actual monopoly. To prevent this, it would be necessary that any special advantages, including subsidies, which government gives to its own enterprises in any field, should also be made available to competing private agencies. There is no need to emphasize that it would be exceedingly difficult for government to satisfy these conditions and that the general presumption against state enterprise is thereby considerably strengthened.
In application to NASA, this suggests that its role (particularly as NACA) in developing basic knowledge for the general benefit, without a particular end use or user in mind, is a legitimate undertaking. While private companies or privately-funded institutes could develop wing profiles or new materials, for example, Hayek’s view here would find nothing wrong with NACA/NASA doing it, so long as they did not use their privileged position as a government agency to limit or prevent other players from providing the same services.
What is particularly interesting, though, is the treatment of the ongoing appropriateness of the government providing a service. Where initially the government may be the only entity willing or able to provide a particular service, this can’t be assumed to always be the case…technology changes over time, making it possible for private entities to profitably provide a particular service, and the earlier actions of the government entity itself can “bootstrap” a new (private) industry into being.
The question is, how does one persuade the government agency, when the time comes, to give up the monopoly role it has enjoyed to-date and share a particular undertaking with a nascent private industry? Especially (in the case of NASA’s manned space program) when the identity and prestige of the agency is so intertwined with the undertaking in question.
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