2 dangers/opportunities  posed by a
space-age economy.

Christopher Werbos, Space Renaissance USA Intern, Economics Student
Approved by Space Renaissance USA

Gravity Well Isolation1Civilian development of space carries with it a plethora of benefits. Space solar power and moon-based resources may make energy, rare earths, and heavy metals extremely abundant within the next few decades. Properly managed, these resources may help to kickstart an economic boom the likes of which the world has never seen before. And all nations with access to these resources and technological advances will be able to benefit. However, several problems within our present economic structure may cause this change to be negative overall for an extremely large amount of people around the world: The huge economic threats of what is referred to as “Dutch Disease” – the overspecialization of a nation’s economy- and that of “Gravity Well Isolation” which excludes the nation’s economy from the benefits and interactions of regions beyond our atmosphere.

In the case of Dutch Disease, when a nation becomes overspecialized, they almost inevitably fall into recession when the good they have specialized in sees a price downturn. Space-sourced resources pose this threat, the threat of Dutch Disease, to a plethora of nations: from the developing world in Africa, to the rich nations of OPEC, to the most worrying example of Russia. Space is unique from other supply shocks that have affected nations with Dutch Disease in the past due to the sheer volume of resources which will soon become accessible. So, instead of making certain industries obsolete, as past shocks have, civilian space development poses the threat of making entire countries obsolete on the global goods market. If this were allowed to proceed unchecked, it would likely result in massive unemployment and the deterioration of world security and worldwide diplomatic relations.

The first and most apparent threat posed by Dutch Disease is, in and of itself, an economic one: the potential for widespread unemployment in industries that will be facing competition from space-based resource extraction. Asteroid mining in particular has the potential to add trillions of dollars’ worth of minerals to the economy.  For example, let us look at Cobalt, which is rapidly becoming one of the most essential minerals for its key role in consumer electronics and car batteries.  Asteroid mining is hardly good news for nations such as the Democratic Republic of the Congo (DRC), which presently provides 60% of the world’s cobalt, and 90% of the economic behemoth of China’s cobalt needs. While the quasi-legal nature of extraction operations within the DRC do not permit us to acquire accurate figures as to the percentage of the Congolese GDP that such operations represent, we would be well-advised to assume it comprises a massive percentage thereof. Extensive space development could easily dethrone the DRC from its role in the world supply chain, and weaken their economy dramatically. Moving further along with this analysis, mining operations in the DRC are well-documented as being labor-intensive endeavors, which adds the possibility of massive unemployment to the DRC’s problems unless they diversify their productive economy in the near future. This threat remains constant across the mining industry in the developing world, for most African countries have experienced what UN research has referred to as “a mining boom” in the production of metals such as Copper, Gold, and the Platinum-group metals. All of these metals have been identified as relatively plentiful within asteroids, and speculation around space mining has involved them heavily. Obtaining massive quantities of space-based substitutes for these materials has the potential to cause massive economic harm to the entirety of Africa’s mineral industry, presently the largest in the world. However, space-based resources extend beyond minerals and rare earths.  The potential of Space Solar Power and moon-sourced Helium-3 is also extremely high, and it may cause similar economic shocks to nations such as those of OPEC and the Russian Federation. Ultimately, many of the resources that space would make abundant are those that critical regions of the world rely on to remain scarce – and expensive. Ignoring the disruptiveness of space in this regard would undoubtedly spell economic disaster for much of the world.

As with nearly every massive economic disruption, this also carries with it the potential for disrupting the world’s security situation and balance of power. Many of the nations that stand the most to lose from the economic development of space are also relatively unstable, and already add an amount of volatility to the security situation around the world. The history of Africa is rife with relevant conflicts, especially in the context of the mineral industry (for example, the DRC is still experiencing echoes of the first and second Congo wars, wherein militia forces use cobalt and other minerals to fund their anti-government wars). Many similar conflicts can be found throughout the continent, and though the conflicts seem to be stabilizing, a significant recession brought on by falling mineral prices could aggravate them. Unemployment and poor economic circumstances have been established as being linked with social unrest and rebellions. Thus, social unrest and rebellions could become another consequence of engaging in space development without sufficient foresight and preparation. However, the security consequences of the aforementioned economic risks extend beyond the developing world and beyond insurgencies in general: for an example of these other risks, one must look no further than the Russian Federation, which has engaged in a series of normally questionable geopolitical moves in response to a prolonged economic downturn. When considering the industries that could be threatened by space development, it would seem that Russia is at further risk of GDP shrinkage and unemployment than we would expect. Allowing these space developments to proceed unchecked allows for a greater chance that the Kremlin may go forward with additional geopolitical gambits that could serve to threaten world peace. A quick analysis points out that stabilizing Russia’s actions and relations with the west is mutually exclusive with the risk of further degradation of their economy, which careless development of space may bring about.

Further examples of security situations at risk of economic downturns due to space-induced supply shocks abound: from radical Islamists in mining-reliant Southeast Asia and the energy-rich Arab world, to South American oil producing nations. In any case, we must recognize the potential for space based industries to disrupt the world’s economy and security, making foresight and economic planning of paramount importance for every nation.

The risk Dutch Disease is something that every nation, and the world community, can mitigate through adequate planning and preventive actions, as we will mention further along in this article.  But what can be done about “Gravity Well Isolation”?   Gravity Well Isolation has great economic impact on those countries that would end up being excluded from the socio-economic and military benefits of space-based technologies and resources. This can be evidenced in the importance countries are giving satellite communications and their ability to control their own nation’s information channels, among other elements.  Low cost orbital access for small satellites is already allowing different communities to launch their own communications, weather and observation satellites, with multiple benefits for all.  And some satellites are being used for researching and testing new technologies, too.

As in all eras, we must realize that the world security situation is inextricably linked with the diplomatic situation. Extensive economic development of space is likely to be led by the United States, Europe, and China. Diplomatic ties between these nations and those most likely to be harmed by space development have been of paramount importance for a considerable period of time, and it seems the west is only capable of holding a tentative peace together in the middle east through the support of its regional partners.  It is easy to conclude that one should dread what a downturn in Russo-US relations may herald in Eastern Europe. These diplomatic ties may well be harmed by economic space development conducted with apathy towards the economies of nations at risk.

Gravity Well Isolation0History tells us that countries respond with hostility towards those that they perceive as causing them economic harm, so if the United States, Europe, and China are to maintain their efforts to create a peaceful and prosperous order in the Middle East and Africa, it would be in the spacefaring nation’s interests to encourage this perception among politicians and governments within the developing world and other nations at risk. Failing to do so, or causing a negative diplomatic perception of spacefaring nations within the developing world has the potential to cause significant detriment to joint peacekeeping operations and diplomacy with the developing world, to say the least. Furthermore, it may cause a negative perception of all spacefaring activities across the developing world – a perception that would be directly at odds with the vast economic potential of space. Ultimately, maintaining solid diplomatic relations with those nations most likely to be negatively affected by space development will, as many other things, rely on our ability to plan expansion into space in such a way as to mitigate the aforementioned negative effects.

Prior writings make it clear that economic changes caused by  space development pose a threat to those nations of the world infected with Dutch Disease. Its history is well-known throughout economic research, and there are many examples of nations negatively affected by it. A less well-known economic risk, however, is that of the inability to utilize resources immediately outside of earth’s orbit (Gravity Well Isolation). In comparison to the economic losses that might be incurred by developing space without a plan to mitigate Dutch disease, the lost potential incurred by gravity well isolation is utterly catastrophic, with tens of trillions in potential world GDP simply written off, much worse than what presently occurs in parts of the world without a technological base to support industrialization.

While similar afflictions have been posited in economic theory, such as Adam Smith’s notion of a nation entirely cut off from trade on the international market, the possibility of economic space development bears a resemblance to the age of European colonization. Within that era, it was clear that colonization was for the benefit of the European colonizing nations, even though their traditional resource providers suffered. Those nations that had commerce with the colonizers found that these had many new assets such as crops, minerals and foreign trade and investment opportunities related to their colonies.

In our modern context, we can assume that a similar process will play out: while many nations risk losses in the short term, the long-term aggregate gains for the whole world will vastly outweigh the apparent harm. Even those countries which stand to lose will see themselves benefitting from new scientific advancements and foreign capital. The dangers of Dutch Disease and Gravity Well Isolation are real, but they can be mitigated by pursuing a policy of making every terrestrial nation a “colonizer” – by giving them all the means to join together in extracting resources and wealth from the solar system. This will require nurturing many new industries within those nations at risk, and breaking down barriers to Intellectual Property proliferation throughout the world. If this is done in a coordinated and collaborative process, it will lead to unprecedented economic development of the world’s most at-risk regions, will generate a new intellectual renaissance, and will open the doors to vastly increased productivity and living standards for those moving into space-relevant industries. Failure to do this will result in losses of wealth and production capacities that far outstrip any of the potential losses from Dutch Disease and other negative consequences of global economic transformation.

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Note from Manny Perez, President of Space Renaissance USA (Aug. 21,2017):

Mr. Werbos has brought to our attention some predictable socioeconomic risks that humanity faces from inappropriate development of a space economy.  History might have many examples of how economic development has destroyed societies and cultures, and it is easy to see risks when change is all around us. We, the people of Space Renaissance wish to set a different example, one of collaborative and coordinated human development and evolution.  Human space development needs to be a new beginning, not the beginning of the end.  We in SRI-US promote US leadership of civilian space development, and see this leadership as one of collaborative principles that support humanity worldwide.  

“Ad Astra: To the Stars!”  Is our sentiment and our mission.
Please join our efforts by signing up in our website and help us achieve this for all of humanity.     
http://us.spacerenaissance.space

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About Manny Perez

President of Space Renaissance USA Co-Chair of the Cryptocurrency Standards Association, CRYPSA, Certified Professional Coach, with Coaching Hispano USA Certified AML and Compliance Specialist. I promote success and empowerment of entrepreneurs and leaders, including those of new technology. devs.
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