Following up on my previous post, I want to explain as succinctly and cogently as possible why the so-called “effective altruism” movement is the biggest con since the Chicago Black Sox scandal of 1919. Put aside the fact that this movement cult has become the 21st-century equivalent of Rudyard Kipling’s “White Man’s Burden.” Even if we define “effective altruism” in the vaguest and most favorable light as “applying evidence and reason to finding the best ways to improve the world” (see here, for example), the reason why effective altruism is bullshit is because we already know–at least since the publication of The Wealth of Nations in 1776–what are the most effective ways of reducing poverty and improving living standards: the classical liberal principles of property rights and individual liberty, or in the immortal words of Adam Smith: “Little else is required to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.” Change my mind.
I just finished reading David Edmonds’s excellent biography of Derek Parfit (pictured below). My general takeaway from Edmonds is that Parfit’s willingness to embrace “effective altruism” (an intellectually bankrupt movement led by naïve or corrupt do-gooders of which I shall have more to say soon) will end up tarnishing the Oxford philosopher’s legacy. Be that as it may, two of my favorite sentences in the book appear on the bottom of page 328. The first sentence states: “Parfit, helpfully, had a folder on his computer in which he dropped all the files that could be useful for posthumous publications.”
The second sentence, however, reads: “Less helpfully, it is empty.”
Below is an another excerpt from my work-in-progress “Outer Space Auctions“; once again, I have placed my scholarly citations below the fold:
Several nation-states have begun to recognize property rights in outer space via national law, including the USA,[1] Luxembourg,[2] the United Arab Emirates,[3] and Japan.[4] None of these national laws, however, establish property rights in orbits or in launch rights. Here, I will propose a market in space launch licenses and in space orbits.
Under existing U.S. law, if a private firm like SpaceX wants to launch a satellite into orbit from the United States, it must first obtain licenses from at least two government agencies: the Federal Aviation Administration (FAA), and the Federal Communications Commission (FCC). The FAA exercises authority over the launching and re-entry of commercial space vehicles. As a result, any private company that wants to launch a rocket or other kind of spacecraft from the United States into outer space must obtain a launch license from the FAA–specifically, from the FAA’s Office of Commercial Space Transportation.[5] What criteria does the FAA use to grant or deny these launch licenses? To get a launch license, the applicant must prove that it is able to take financial responsibility if the launch goes wrong and that the launch won’t threaten U.S. national security, but this regulatory process is slow, costly, and cumbersome: it can take up to six months to get a launch license from the FAA.[6]
In addition to the FAA’s jurisdiction over rocket launches, the FCC has jurisdiction over the orbits of communication satellites launched from the United States. Although the FCC was originally established by Congress in 1934 to regulate wire and radio communications,[7] today the FCC has become the primary space regulator of the U.S. commercial space industry.[8] This expansion of the FCC’s jurisdiction into outer space is based on the fact that satellites are like flying radio antennas, or in the eloquent words of one observer: “If you’re putting anything in space–be it a communications satellite, a weather satellite, even a human being–you’re going to be communicating with it.”[9] Among other things, the FCC “parcels out orbital altitudes to ensure that constellations of satellites in non-geostationary orbit do not collide or cause interference with each other”[10] The FCC allocates these orbits not only to prevent satellites from bumping into one another, but also to avoid signal interference in outer space.
So, why doesn’t either the FCC or FAA conduct “orbit auctions” or “launch auctions”, i.e. why doesn’t the FCC sell orbits or the FAA sell launch rights or orbit rights to the highest bidder, instead of giving away these licenses for free? A historical precedent for orbit auctions is the Omnibus Budget Reconciliation Act of 1993 (OBRA-93).[11] Among other things, OBRA-93 gave the FCC the legal authority to use auctions to allocate property rights in the electromagnetic spectrum. Subsequently, Congress expanded the FCC’s auction authority when it enacted the Balanced Budget Act of 1997. Based on these legislative precedents, perhaps the current Congress could enact similar legislation authorizing the FCC or FAA, or both, to conduct orbit and launch auctions.
So, how would a “launch auction” or “orbit auction” work? The type of auction that most people are familiar with is the “first-price sealed-bid auction” in which all bidders simultaneously submit secret bids, i.e. no bidder knows how much the other auction participants have bid. The sealed bids are then opened on a certain date, and the person with the highest bid (or second-highest bid in the case of a “second-price auction”) is declared the winner. This is not, however, the method used by the FCC to allocate broadband spectrum licenses. Instead, the FCC uses a method proposed by economists Paul Milgrom and Robert Wilson called the “simultaneous ascending auction” or “simultaneous multiple-round auction.” [For more, see this excellent summary/presentation by Madhumitha Harishankar.]
In brief, two of the main differences between the traditional auction format and the FCC format is that the sealed-bid auction usually involves just one round of bidding. In the simultaneous ascending auction, by contrast, there are multiple rounds of bidding, and all bidders are allowed to revise their bids after each round. (Bidders are even allowed to withdraw from the auction after each round.) The highest bids are announced to all the bidders after each round of bidding, and these rounds will continue to occur until no new bids take place. At that point (no new bids), the licenses are sold to the highest bidders. The simple simultaneous ascending auction format described here has many desirable properties.[12] So, why doesn’t the FCC or FAA, or both, use some variation of the simultaneous ascending auction to allocate orbit or launch licenses, especially for the new generation of mega-constellation satellites?
Below is an another extended excerpt from my work-in-progress “Outer Space Auctions“; I have placed my scholarly citations below the fold:
The main sources of law that govern human activities in outer space include the 1967 Outer Space Treaty,[1] the 1972 Liability Convention,[2] and the 1979 Moon Treaty.[3] These treaties were originally drafted during the height of the Cold War and the space race between Russia and the United States. Among other things, Article II of the Outer Space Treaty prohibits “the national appropriation of outer space by claim of sovereignty, by means of use or occupation, or by any other means.”[4] As a result of this legal framework, outer space is governed as an open-access commons or res communis under international law.[5]
What does it mean to declare that outer space is not subject to national appropriation by any means?[6] Although the precise meaning of this provision has been discussed for decades,[7] it can be read as requiring outer space, including Low Earth Orbit, to be treated as an open-access commons. Broadly speaking, a “commons” refers to a public resource that is owned or used collectively by a group of individuals or firms. Traditional examples include public parks, fisheries, and grazing lands, but a commons can include any shared resource, including a public road, Wikipedia, or outer space (e.g. Low Earth orbit or LEO). Roman law, for example, distinguishes between res communis, property that cannot be used by all but cannot appropriated by anyone, such as the air and bodies of water, and res nullius, “property of no one” that can be appropriated through capture or use.[8] Likewise, international law recognizes two categories of open-access areas: terra nullius and res communis omnium.[9] Resources classified as terra nullius may be acquired by first possession.[10] By contrast, resources classified as res communis omnium, such as the high seas,[11] the deep seabed, and outer space,[12] are open for access and use to all.[13]
Given this legal framework, the increase in space congestion in Low Earth Orbit should come as no surprise, for in the absence of effective methods of shared governance open-access commons are often overused and overexploitated.
The “tragedy of the commons” refers to a situation where private individuals and firms over-exploit or overuse a shared resource.[14] Perhaps the most well-known example of a tragedy of the commons is overfishing.[15] If every fisherman in a community is free to catch as many fish as they want, they will likely continue to fish until the fish population is depleted, even if it means that they will no longer be able to fish in the future. Each fisherman only considers his own short-term gain, rather than the long-term sustainability of the fishery as a whole. As a result, the fishery may collapse, leading to a loss of income for fishermen and an ecological disaster.
In an open-access commons, each individual user obtains all the benefits from their own use of the shared resource but does not bear the full cost of the damage caused to the resource. Without some ground rules to limit the use of the resource, open-access commons can produce perverse overuse incentives, leading to its eventual destruction. As it happens, this same logic also applies to outer space today. Access to and use of Low Earth Orbit is not subject to strict regulation or coordination. Private companies and governments are launching more and more satellites for commercial, military, and scientific purposes, without necessarily considering the impact on others or the sustainability of the Low Earth Orbit region. There is also a lack of effective mechanisms for removing space debris from orbit, which further exacerbates the problem.[16]
The tragedy of the commons in outer space poses a significant threat to our increasingly interconnected world, as satellite systems are crucial for communication, navigation, weather forecasting, and other applications. To avoid this tragedy, experts are calling for greater international cooperation, better regulations, and the development of new technologies to remove debris from orbit. None of these proposed solutions, however, are likely to produce positive results in the short term. Greater international cooperation appears to be a non-starter given the increasing hostility among the world’s leading powers: China, Russia, and the United States. “Better regulations” at the national level are likely to work in the absence of greater international cooperation. And last but not least, a technological solution to the space congestion/space debris problem does not yet appear to be feasible.[17]
The traditional solution to negative externalities involves either command-and-control or Pigovian taxes. Adilov et al. (2013), for example, model the problem of space debris as a negative externality. In summary, their model predicts that, relative to the social optimum, firms will launch too many satellites and will under-invest in debris mitigation technologies. In addition, they identify some remediation policies and calculate a socially optimal Pigovian tax. The main problem with the Pigovian approach is that the government must have sufficient knowledge of the externality problem it is trying to solve to set the Pigovian tax at the optimal amount.[18] This crucial information, however, is usually lacking.[19]
So, what is to be done? Because Low Earth Orbit must be treated as an open-access commons under the Outer Space Treaty of 1967, is there any viable solution to the tragedy of the outer space commons short of amending the treaty or replacing it with a new one? More to the point, what is the most cost-effective way of responding to the problem of space congestion and space debris without jeopardizing the benefits of innovation, new technologies, and space exploration?
Below is an excerpt from my work-in-progress “Outer Space Auctions“; I have lightly edited this extended excerpt for clarity and have placed the footnotes and scholarly citations below the fold:
It is tempting to see space congestion as a form of market failure or as what economists call an “externality”. In reality, however, the tragedy of the outer space commons–the increase in space congestion and the risks posed by orbital debris–is the result of legal failure: the longstanding treatment of outer space as a commons and the resulting lack of well-defined property rights in outer space. Broadly speaking, there are three types of legal failure or regulatory impediments to trade: (i) uncertainty about the legality of a transaction or activity, (ii) the prohibition of a purely voluntary transactions or activities, and (iii) lack of property rights. Why do I label these three types of legal barriers to trade as “legal failures”? Simply put, because these legal impediments prevent mutually beneficial and voluntary agreements from taking place.[1] Below is a brief survey of each type of legal failure:
First off is legal uncertainty: when the law itself is either uncertain or unclear about what transactions or activities are legal.[2] A textbook example of this type of legal failure (i.e. legal uncertainty) is the longstanding uncertainty regarding the legality of the purchase and sale of blood.[3] From a purely economic perspective, legal uncertainty is suboptimal because it makes the outcomes of legal cases difficult to predict and prevents would-be buyers and sellers from planning their transactions in the shadow of the law or settling their disputes peacefully out of court.
Next is prohibition: when the law criminalizes, prohibits, or otherwise impedes trade altogether in a given good or service. Textbook examples of this type of legal failure (i.e. prohibition) include draconian drug laws that make it illegal to buy or sell certain drugs and laws prohibiting adult prostitution.[4]
The last type of legal failure is the lack of well-defined property rights: when the law fails to define or enforce property rights in a contested resource. Textbook examples of this type of legal failure (i.e. lack of property rights) include common-pool resources such as ocean fisheries, public roads, and waterways.[5] Many economists, however, often confuse this legal failure with so-called “market failures,” or situations where markets on their own are unable to produce efficient outcomes.[6] Air pollution, traffic congestion, and now orbital debris are often listed as textbook examples of market failures. But in reality these bad outcomes are often the result of the law’s failure to define property rights in resources such as air, roads, or orbits. By failing to define such rights, a market for clean air or for uncongested roads or for safe space orbits is unable to exist in the first place. Simply put, without property rights, mutually beneficial and voluntary agreements won’t be able to occur in the first instance.
This third type of legal failure is the one most relevant to the subject matter of this paper: the increase in space congestion and orbital space debris. Simply put, because international space law defines outer space as a commons, the tragedy of the outer space commons we are now witnessing should come as no surprise.
That is the title of my latest work-in-progress, which I posted to SSRN over the weekend (see here). Below is the Introduction to my paper (footnotes omitted):
“Are there too many or too few satellites and spacecraft in outer space? What is the optimal number of spacecraft in Low Earth Orbit, for example? Currently, the number of satellites in orbit is 9,000. This number is likely to increase to more than 60,000 by 2030. This increase in space congestion is a cause for concern for three reasons: (i) greater space congestion can interfere with ground-based observations, (ii) space congestion can also generates greater amounts of orbital debris, and last but not least, (ii) an increase in orbital debris can increase the risk of a catastrophic collision in outer space. Some estimates show that there are already more than 100 trillion untracked pieces of old satellites circling the planet, so space congestion is a real problem.
“Space congestion thus threatens the sustainability of the commercial space industry in Low Earth Orbit, but in the absence of an effective method of shared governance, what is to prevent this domain from becoming another “tragedy of the commons,” to borrow Garrett Hardin’s haunting phrase? This paper contributes to the literature on outer space governance by presenting a Coasian solution to the problem of space congestion: orbit auctions. The remainder of this paper is thus organized as follows: Parts I and II will provide some relevant background information: Part I contains a taxonomy of spacecraft in orbit today, while Part II surveys the nature of the outer space problem: space congestion. Next, Part III compares and contrasts legal failure and market failure and identifies the main cause of the space congestion problem: the fact that outer space is an open-access commons under existing international law. Last, Part IV concludes by presenting a simple Coasian solution: space launch auctions or property rights in space orbits.”
I will be travelling to Santiago de Chile next week to meet some of my fellow Adam Smith scholars from South America and attend some workshops; in the meantime, I will have more to say about my proposed outer space auctions in the days ahead.
Ian Hacking was an intellectual giant in the philosophy of science and in other fields. Among other things, Professor Hacking wrote an influential work on the history of probability (see here). Here is his Wikipedia page, and here is a memorial notice from the University of Toronto, where Hacking was professor emeritus.
Happy Mother’s Day! I am including two versions of this beautiful ballad by Luis Enrique: an acoustic guitar version from 2017 and the original 1989 version from the album Mi Mundo:
prior probability 