Sunday, June 03, 2012

Are We Really Surprised When Private Companies Do Great Things?

Published in The Tennessean, Sunday, June 3, 2012 and Forbes with archives.

by Richard J. Grant
When things have been done a particular way for a long time, it is often difficult to imagine them being done any other way. This was evident in the apparent amazement that a private company might be capable of successfully launching a spacecraft capable of docking with the International Space Station.
The private company, Space Exploration Technologies Corporation (SpaceX), has now done just that. This is a great achievement for any organization, even for government agencies, which until now had an apparent monopoly on such missions. Clearly the founder and chief executive of SpaceX, Elon Musk, was able to imagine that things could be different. He also had the wherewithal and the will to succeed.
The United States government, now burdened by other political priorities and the debt that it has used to finance them, seems to have lost that will. By outsourcing its launch and delivery capability to SpaceX, NASA has found a way to cut costs and continue its missions while reducing its dependence on foreign systems.
Mr. Musk has compared these first steps toward commercialization of space travel to a similar transition of the Internet from its development in a US defense research agency (DARPA) to its now commercial ubiquity. Others, with big-government political agendas, have pointed to the beginnings of the Internet as if it proves that government investment is essential for such innovations.
Often the implication is that without government there might not be an Internet. But why stop there? The internet did not spring from nothing. Suppose there had been no Alexander Graham Bell. Although Bell exhibited creative genius, he was not the only one. Others had similar ideas and motivations, as well as the freedom to act.
The lives of Bell and Musk have parallels. Both came to North America via Canada. Musk made his fortune in the creation of Internet-based businesses and then moved into electric cars and space travel. Bell made his name in, and gave it to, the first telephone company. He later turned his attention to the invention of the photo-phone (which transmitted sound through a light beam rather than wires), experimented with metal detection and composting toilets, attempted to develop magnetic storage media, and speculated on the possibility of solar panels. Bell also worked directly in hydrofoil design and aircraft development, both of which attracted serious military interest.
Those of us who grew up with the Mercury and Gemini programs were able to recite the names of the private contractors that built and helped design the spacecraft. With the addition of SpaceX to that list, we come closer to the realization of what was always possible.
It is also worth noting in which country this occurred. Such innovations and development occur in countries where the people have not only the imagination and drive, but also the decency and self-restraint to allow their fellow citizens the freedom to live and let live.
Provision for the common defense led to the creation of both DARPA and the ostensibly civilian NASA. Concentration of resources in these agencies and regulatory restrictions on private-sector alternatives increased the probability that these would be the home of future inventions such as the Internet. Beyond that, randomness might be all we have to explain the specific inventions of DARPA and NASA. But it was not mere randomness that determined in which country these agencies could realize those achievements.
It was the land where people are the least surprised when private companies do great things.

Richard J. Grant is a Professor of Finance and Economics at Lipscomb University and a Senior Fellow at the Beacon Center of Tennessee. His column appears on Sundays.

E-mail messages received at:

Follow on Twitter: @RichardJGrant1

Copyright © Richard J Grant 2012