Private Sector Space Exploration?!

Last night a space rocket landed back on earth upright. That in itself is hugely impressive (although apparently it isn’t the first rocket to do that), but what’s perhaps most interesting is that this was done by a private sector company, SpaceX. Our instinct when it comes to space exploration is to think about public sector bodies like NASA, or the European Space Agency, yet this is a private company founded by Elon Musk, described on his Wikipedia page as “South African-born Canadian-American business magnate, engineer, inventor and investor”. Musk is also the man behind PayPal, and Tesla, the electronic car manufacturer.

Is there any reason why space exploration needs to be public sector? This is one of the challenging questions as economists we should ask. Why do we think the private sector could not deliver in this area? Why do we also instinctively think that trains should be publicly owned? Why a National Health Service but not a National Food Service? Surely the food we eat is just as important to our health as any actions the NHS takes (maybe after we’ve eaten some bad food)?

We won’t touch on such issues in Intro Macro (EC114) next term, but you’ll have covered many of the building blocks for such an analysis in Intro Micro (EC113) this term – an analysis of markets and market failure. Under what conditions do we expect markets to succeed, and in what ones do we expect markets to fail? Some of the answers relate to information (do buyers and sellers have equal information?), some to power (do buyers or sellers have greater power?), and others still to the cost of mistaken choice (how costly is it?). You’ll get plenty of opportunities to think more deeply about what the state should and shouldn’t do as you go through your three years with us. Challenge yourself on why you think things should be done particular ways whilst you’re with us…