Import Substitution Is a Harsh Mistress

Attention conservation notice: 1400 words on the development economics of space colonization from someone who is neither an economist nor even a rocket scientist. Yet another semi-crank notion, quietly nursed for many years, drafted in this form in 2011, posted a decade later because I can't stand to do any more grading and want to procrastinate of Very Important Reasons I am not at liberty to reveal at this time.

So, what with the end of space shuttle flights and all, my feed-reader has been filled with people bemoaning the state of human space flight. While I share the sheer romantic longing for it (expressed with greater or lesser sophistication), if we want to consider other rationales for sending people into space, it's hard to come up with anything which can't be done better by robots. The only one I can think of is providing, as it were, a distributed back-up system for humanity --- places which could carry on the species should the Earth becomes uninhabitable. If this is the point, it imposes some constraints which are not, I think, sufficiently appreciated.

Colonies which could help in this way have to be at least potentially self-sufficient, without dependence on the Earth --- no spare parts, no processed intermediate inputs, nothing. Since there are no natural environments off Earth in which people can live, they will have to create artificial environments, which means that extra-terrestrial human societies must be industrial civilizations. Self-sufficiency means creating, in miniature, a whole industrial ecology.

Go read Brian Hayes's Infrastructure if you haven't already; I'll wait. We're talking about replicating all of those functions, and more. Now, remember that all the technologies whose complexities Hayes documents so lovingly have been developed to assume, and to make use of: gravity of 9.8 m s^-2, ambient temperatures between ~230 and ~320 K, an unlimited supply of atmosphere which is about 20% oxygen at a pressure of about 10⁵ N m^-2, abundant and cheap liquid water, etc. Moreover, our technologies assume that their environment is big, so they can dump waste products, starting with heat and mechanical vibrations, into the environment. Simply sticking terrestrial machinery inside a small, fragile, carefully-controlled artificial environment is not going to work well. (You want to try running a smelter inside your space habitat?) So duplicating these capacities for a space colony will mean re-designing everything to fit local conditions profoundly different from anything we've faced before.

This will take a lot of design work and trial-and-error, hence it will be expensive: the workers and designers could have been doing other things, the parts and resources would have been put to other uses. How are these development costs to be recovered? The extra-terrestrial market, we will have to assume, will begin and long remain very much smaller than Earth's, so sharing those fixed development costs over a small population implies high average costs. (Colonies in different parts of the solar system will face different local conditions, and need to develop largely different technologies, so we can treat this colony by colony.) What about expanding the market by exporting? Suppose momentarily a complete subsidy for the fixed costs, and so think about marginal cost pricing. For exportable items, their cost at Earth will equal marginal cost of production in space plus marginal cost of interplanetary transport. Unless making comparable items on Earth is (almost literally) astronomically more expensive, there will be no export market for the colonies. And this is assuming, again that investors were willing to write off all development costs.

(At this point, readers may be tempted to invoke comparative advantage, and say that even if Space is less efficient at producing everything than Earth is, both Space and Earth will be better off if Space makes what it is relatively better at. Carefully examined, however, what the classic Ricardian argument proves is that there is an opportunity cost to not using the less-efficient country's factors of production, viz., the stuff which it could have, inefficiently, produced. To minimize the opportunity cost of letting those factors go idle, they should be employed in their least-inefficient use. So even if making widgets costs 1000 times as much in Space as on Earth, if widgets are the least-inefficient of Space's factors of production, it should make widgets, and trade them for other things. But this presumes that Space and its factors would exist without the trade. Since, for us, the whole question is w