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In Defense Of Space Barons

July 22, 2021

Slavery was the root cause of the Civil War. That’s a controversial topic. And the reason it’s controversial is that the United States was in the middle of a transition in the 1860’s. Up until that time Rivers had been the main routes for commerce. And the biggest river was the Mississippi. And it went straight through the heart of the South ending in New Orleans.

By controlling the port, the South controlled much of the commerce for “the West.” (Which today, we’d call the mid-west.) But, something was happening around this time. Railroads were starting to be used more and more. And the development of a transcontinental railroad would cut the South out of the commerce routes. No longer would people in the West have to ship their goods through New Orleans.

July 1, 1862 The Pacific Railroad Act was signed into law by President Abraham Lincoln. This act formed the Transcontinental Railroad. The Union Pacific started building westward from Omaha/Council Bluffs. January 8, 1863 the Central Pacific broke ground in Sacramento and started building East.

The two lines met at Promontory Summit, Utah on May 10, 1869.

The thing is though, the government didn’t build the lines. That was the Railroad barons. People like James Hill, Jay and George Gould, Cornelius Vanderbilt, Edward Harriman and Collins P Huntington.

They were called Railroad barons, but they are typically also included in the list of Robber barons. They used their control of the railroads to become insanely rich. And in the process they laid the foundation for American manufacturing might that would last for more than 100 years.

Even today, railroads remain the cheapest way to ship goods.

  • Rail cost per net ton: $70.27
  • Trucking cost per net ton: $214.96

Were the Railroad barons good for America? I think you’d have to say that today we are better off than if we’d never had the Railroad barons laying all that track. Of course, as good as it was for the country, it was even better for the barons. But, they still had to compete with each other. And that drove innovation.

Today we have another competition going. It’s space instead of trains. And the men involved are already fabulously wealthy. They have to be. They are pretty much funding the space race out of their own pockets. Bezos has spent $5.5 billion dollars on Blue Origin. Richard Branson has spent over $1 billion on his efforts. Elon Musk’s company, SpaceX has already started making money, but still spent hundreds of millions more than expected to build it’s space capsules. (SpaceX has a $2.6 billion contract to take men to the moon.)

These men have spent fortunes. And as much as they think space is “cool,” they all expect to get that money back and more. Whether it’s subcontracting for NASA, or getting minerals, or space tourism, these three space barons have their eyes set on a HUGE payday.

Is it worth it? Would the money be better spent somewhere else?

Yes, it’s worth it. It doesn’t even matter that it’s space. Even if these three had a competition building sand castles in the desert, it would be worth it. The fact that they are actually building something we will use? Makes it even more worth it.

The Space Barons funded their space race with stock. They sold stock and used the money to fund the space race. That space race, that money, went to engineers, and cooks, and programmers, and computer makers, and janitors, and construction workers, and restaurant workers, and housing, and property taxes, and income taxes, and sales taxes, and on and on.

Money invested into an economy has a multiplier effect. The idea that if you get $1, you don’t stick it under your bed. You go spend it. And in turn the person you spent it with spends it again. It’s nearly impossible to calculate the exact multiplier from a specific purchase. But, it’s understood that if you dump $5 billion dollars into the economy, you are going to get more than $5 billion dollars worth of economic activity.

So, if the Space Barons were simply buying stuff and doing nothing else, the financial benefits of their little space race would be billions and billions of dollars in the economy. That money helps everyone. And it gets taxed. Multiple times. That helps the government. Money sitting in a stock portfolio does not get taxed. So, if Bezos, for example had left his money in Amazon stock, there would be zero economic benefit for anyone.

(If your suggestion at this point is to “tax the rich,” trust me that it’s impossible and impractical to tax stocks held in a portfolio. Sure, if it goes up you could try to tax the increase. But, if it goes down are you going to give them a refund?)

But, the Space Barons aren’t building sand castles in the desert. They are laying the railroads to outer space. And we are going to want those railroads. Bezos suggested that we move the worst polluting industries to out space to help combat climate change. That’s impractical today. Today it costs $10,000 to put one pound of payload into Earth orbit. NASA wants to lower that to hundreds of dollars per pound in the next 25 years and tens of dollars per pound in the next 40 years.

To achieve those goals we need space railroads and that means Space Barons. Like their counterparts from two centuries ago, they are going to get fabulously rich. Even richer than they are today. But, it’s worth it.

We have the chance to completely transform our world for the better. And space will help us do that. But, we have to get there first, and these men are going to help us do that.

Stay safe

Rodney M Bliss is an author, columnist and IT Consultant. His blog updates every weekday. He lives in Pleasant Grove, UT with his lovely wife, thirteen children and grandchildren.

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