Intelligent Life in Washington
by Dale M. Gray
Frontiers are the figurative and often literal borderlands where society begins to interact with the potentials of wilderness. Advance into the wilderness is driven by cycles of speculative investment. This applies to both physical and technological frontiers. While frontiers are economic in nature, they exist in an environment of available technology, an atmosphere of public motivations and opinion (charisma), and an infrastructure of legislation. Changes in any of these three areas can advance or hinder a developing frontier. While there can no longer be any doubt that the commercial space sector has become an active frontier, the speed with which it develops is in part a function of the current state of technology, charisma and legislation.
While frontiers have a tendency to develop in an exponential manner, governments at their best tend to react to them in a much more linear fashion. For example, in the American west a series of Homestead Laws were enacted to provide families with free or nearly free plots of land on which they could become self-sufficient and contribute to society. Legislators with the best intentions simply could not keep up with the frontier's expansion onto increasingly arid western lands. Laws that provided sufficient holdings in the fertile eastern woodlands spelled doom for western homesteaders who slowly starved on hundreds of acres of dry land that could not support them. It was a classic case of the rapid development of frontier outpacing society's ability to provide a supportive legal infrastructure. Alternately, legislative acts geared at encouraging and supporting irrigation did much to correct the harm of earlier homestead laws and to create in the west irrigated Edens where families could flourish.
Laws that are enforced on frontiers tend to be either "common law" or locally enacted rules that directly support the speculative economic climate of the individual frontier. While governments remote from the action try to support frontiers -- especially frontiers that provide direct tax revenue -- the efforts tend to be slightly off the mark or lag behind frontier realities. But the slow legislative response to the needs of specific frontier is not necessarily a bad thing. When 90 percent of new frontiers boom and then bust, it is far more efficient for governments to wait until the frontier is out of its dangerous infant stage and appears to be incorporating itself into society.
Legislators tend to be respected persons who have developed their power base and elective majority from activities in the main stream of society. While frontiersmen such as Andrew Jackson, Steven Austin, and Thomas Hart Benton were elected to some of the highest offices in the land, at the time of their election the frontiers from which they emerged were well on the way to assimilation into society. For most elected officials, the problems of largely self-sufficient frontiers do not compete with the pressing needs of their home district or the nation at large. Historically, American legislators tend to be benevolent on frontier issues, but it must be understood that for most legislators frontier issues must take a back seat to national issues, especially national security. The Strom Thurmond National Defense Authorization Act of 1999, discussed in a previous Space Policy editorial is an example where national security was placed above the interests of frontier. This year Senate Majority Leader Trent Lott (R-Miss) has proposed additional measures. Under Lott's new proposed legislation, the Pentagon would be given additional capability to monitor foreign launches and the CIA would be given a role in reviewing satellite export licenses.
The problem with last year's Defense Authorization Act is not its intent. Keeping rocket technology out of the hands of aggressive or hostile governments is not a bad idea. However, the Act is focused on national security, not providing for the needs of frontier. Senator Michael Enzi (R-Wyo.) is working on a new draft of the Export Administration Act that would help ameliorate the effects of the Defense Act on America's friends and allies. This export law would ease dual-use technology sales to US friends and allies, but would further tighten restrictions on exports to China and other nations of concern. Enzi has also asked the Senate Appropriations committee to allocate an additional $10 million for the State Department's office of defense trade controls to help speed export licensing of commercial satellites.
However, the US Congress has not been entirely oblivious to the needs of the current space-based frontier. Last year Congress passed the Commercial Space Act which was signed into law by President Clinton on the eve of John Glenn's return to space. The Act provided for a number of adjustments to national policy to support the space frontier. Among its provisions the legislation created a legal permitting system for the reentry of commercial reusable space vehicles, provided funds for the study of space generated solar power and positioned the government to help fund breakthrough technologies (X-vehicle programs).
This year Congress is again working to support the space industry (outside the national security issues). Senator John Breaux (D-La.) introduced a plan to fund the building of space launch vehicles. The plan is based upon a model last used to create maritime ship-building loan incentives. Ironically, space activists groups such as Pro-Space opposed Breaux's bill as written because it promoted government determined "winners". Pro-Space in its lobbying efforts in Congress pointed out that market-forces, not bureaucrats, should make such an important determination. The bill would damage the smaller start-up launch companies abilities to attract investors.
Alternately, Representative Dana Rohrabacher (R-Ca.) is introducing the Commercial Space Transportation Investment Incentives Act of 1999. The bill proposes a 20% credit on taxes for stock purchased in qualified space transportation vehicle providers. The legitimacy of such stock would be overseen by the Department of Transportation which would form a temporary office to administer the Commercial Space Transportation Vehicle Industry Certification program. Unlike the Breaux bill, the Rohrabacher bill would encourage private investment in launch vehicle providers. Further, market place decision processes would determine which space transportation provider companies would benefit most from the tax investment credit program.
Perhaps the proper role of government is to provide just enough enabling elbow room for the private speculative investor to get through to the frontier. Towards this goal, the Rohrabacher bill Section 2.8-11 states most eloquently:
(8) Opening the space frontier to the American people must be a high priority of the United States government as we begin the 21st century.
(9) The key to opening this frontier and to maintaining United States leadership in the world market is not another massive government program, but rather provision of just enough government support on an incremental and timely basis to enable the more cost effective U.S. private sector to build lower-cost space transportation vehicles.
(10) Private sector companies across the United States are already attempting to develop a variety of lower-cost space transportation vehicles, but lack of sufficient private financing, particularly in the early stages of development, has proven to be a major obstacle, an obstacle our trading partners have removed by providing direct access to government funding.
(11) Given the strengths and creativity of private industry in the United States, a more effective alternative to the approach of our trading partners is for the U.S. government to provide limited incentives, industry wide to help qualifying U.S. private sector companies obtain otherwise unavailable private equity financing for the critical development stages of the project, while at the same time keeping government involvement at a minimum.
The commercial space frontier is not a gift to be given on a platter at the taxpayers expense. Rather it is an arena of opportunity where the speculative investor can help create a new society where once there was wilderness. In a historical sense, investment tax credits fulfill the government's proper function in the frontier -- enabling hard working taxpayers to go out and create new wealth for themselves, their companies and not so incidentally for their country.
It is easy to be cynical and expect only incomprehensible and inappropriate legislation out of Washington, but the reality is that our elected officials are working hard at providing the legislative underpinnings necessary for the commercial space frontier to advance. While I personally do not necessarily agree with the details of all of the space oriented legislation, as a historian I recognize that Congress is beginning to deal with the commercial space frontier at the highest levels and is examining a variety of supportive legislation. This may be due to the maturation of the frontier, effectiveness of lobbying groups or because this is a particularly understanding Congress. However, the result is clear, space as a commercial frontier has emerged out of obscure shadows and is moving onto the lights of center stage. Congress has chosen to support it now rather than having to deal with the chaos of unlegislated growth later. For the growth and health of a viable frontier, this decision is of greater import than any details of resulting legislation.
Next month "How the Chinese helped Idaho become a world power".