Bill,
I hadn't heard that Blue biz-dev type's 40-year schtick. Fair enough.
(Though I expect that if/when they get to the point of actively seeking
other people's money, that'll quickly get more realistic.) Doesn't mean
it applies to any of the other low-cost launch ventures also under
discussion.
I seem to have unintentionally irritated you. Lectures on the existence
of time not actually needed, but thanks. Nor on the time value of money
- yes, a given bit of income is worth less the farther off in the future
it is, and yes, there's a widely accepted accounting formula for
calculating it. No argument there.
BUT, that formula requires as an input an assumed discount rate, roughly
speaking the rate at which future payments lose their current value over
time. This rate is not a law of nature nor carved in stone. "The
choice of the appropriate rate is critical to the exercise, and the use
of an incorrect discount rate will make the results meaningless."
Coming up with a specific rate of current-value return over a given time
also requires an assumption about the nominal future return. Hence,
your assertion of 2% return over Blue's 40-year horizon without stating
your assumptions fails to persuade.
Beyond that, you seem to have taken my assertion that the established
industry has in large part been pulled by the established bureaucracy
into an extremely high-cost operating mode personally. To the point
where you're attributing things to me I didn't come close to saying, EG
"..as you observe, vacations in earth orbit for billionaires has so far
not won out against alternative USG investments."
No. I observe that USG's ridiculously high development costs tend to
discourage them investing in reusable launch, due to the erroneous (and
now I believe conclusively disproved) assumption that such costs are
inevitable, rather than a feature of the currently entrenched
bureaucratic-industrial complex.
As for trashing people for behaving rationally when caught up within a
bad system, I don't think I've done that here - you're taking this more
personally than it was meant. I've been fighting that bad system for
thirty years, and long ago concluded that except in extreme cases -
people who look me in the eye and assert nonsense persuasively enough
that they actually succeed in wasting significant amounts of my time
(you've never done that to me) - there's no point in taking it
personally. Life is too short and there are too many better uses for
the energy involved.
Regardless, I think we're past peak productive discussion here and well
into boring detail-sniping - not a good place to be when we were only
marginally on-topic when we started.
happy and peaceful holidays to you
Henry
On 12/28/2015 9:49 AM, William Claybaugh wrote:
Henry:
I imagine that you are aware that time is a dimension of the structure
of the universe, something without which the universe itself cannot
exist. Likewise, it is simply a fact that money in the future is worth
less than money today; this not a convenience--it is arguably damned
inconvenient--it is a fact that ultimately derives from the existence of
time and thus from the physical structure of the universe. We can
dismiss it or ignore it but we can not make it go away.
The Business Development person at Blue has--publicly and on multiple
occasions--stated that the company's funding has a "40 years" time
horizon; my use of that framing was not accidental.
Any investor--public or private--who accepts a 40 year return on
investments is accepting an about 2% annual return; it is just math.
The reason governments traditional fund these investments is that the
government's cost of money is much lower than that of private capital;
currently OMB specifies an about 2% hurdle rate for USG investments, for
example. But the government also has many competing opportunities and
as you observe, vacations in earth orbit for billionaires has so far not
won out against alternative USG investments. That does not mean that it
has not been discussed and ultimately rejected for the very good reason
that it has so far been politically unjustifiable.
That there are now private individuals willing to make this investment
does not mean that the government is populated by idiots or that the
industry is hind-bound: it means that people are acting within the
constraints of the systems in which they work, nothing more. Do note
that as of last quarter Amazon began booking profits in direct response
to investor pressure; presumably the managers of the company would have
preferred to invest those funds back into the company, but like the
aerospace industry, Amazon is ultimately limited by investor pressure
for profits. That does not mean that Amazon's managers are conventional
thinking fools, neither are the managers operating within the constrains
of the aerospace industry. Trashing people for behaving rationally
under the constrains of their employment is at least unfair,
Henry...some might find it offensive.
Blue and--to a lesser extent--SpaceX have the freedom to accept below
market returns in order to accomplish a public good. Good for them and
good for Messrs. Bezos and Musk for being willing to "waste" a little
bit of their (and in SpaceX's case, others') wealth accomplishing a
historic good. Both the US economy and the world will be better off if
they succeed--and the US government will have higher (eventually much
higher) tax revenues as the economy expands into LEO. But none of that
ijustifies trashing the "traditional" aerospace industry for behaving
rationally in the face of the fact of the time value of money.
Bill
On Sun, Dec 27, 2015 at 10:17 PM, Henry Vanderbilt
<hvanderbilt@xxxxxxxxxxxxxx <mailto:hvanderbilt@xxxxxxxxxxxxxx>> wrote:
On 12/25/2015 10:30 PM, Henry Spencer wrote:
Falcon 9 is certainly *ahead*, but otherwise, it's perfectly
reasonable
to compare the two -- it's just a bit difficult. If your goal
is cheap
orbit, then whether it's better to go suborbital first and then
progress
to orbital, or to go expendable first and then progress to
reusable, is
a perfectly reasonable question, although not simple to answer.
Fortunately, we have talented funded organizations pursuing both
approaches, so we'll see. With luck, it will turn out both are
viable paths. But yeah, the current "SpaceX is better! No, Blue is
better!" wrangling is way premature - it's far too soon to say.
Remember that SpaceX doesn't *have* an operational reusable
rocket yet
-- just an initial proof of principle, achieved with some
difficulty.
Many would say that Elon is doing things the hard way, losing
much of
the benefit of reusability by treating it as a later add-on.
On the other hand, I'm really impressed with how (apparently) little
SpaceX has spent, both in hardware development and in booster
performance margin, to add on the now-demonstrated capability to
recover till-now expendable boosters intact. (I'd guesstimate the
total cost in the high tens to low hundreds of millions - can you
imagine how many billions a similar demo would have cost at MSFC?)
The current capability may end up being a long way still from a
profitably reusable booster stage. But they didn't break the bank
getting this far; chances are good that (absent some show-stopper in
the inspection data, or a market crash) they can afford to continue
developing the capability.
Henry