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Subject: SPACE Digest V9 #370

SPACE Digest                                      Volume 9 : Issue 370

Today's Topics:
            More Economics (long)
              Re: More Economics (long)
                Mir Evacuation
         Re: Soviet shutdown of manned space program
         Re: Soviet shutdown of manned space program
               Re: USA vs. USSR
----------------------------------------------------------------------

Date: Thu, 13 Apr 89 18:06:06 EDT
From: John Roberts <[e-mail]>
Formerly: National Bureau of Standards
Sub-Organization: National Computer and Telecommunications Laboratory
Disclaimer: Opinions expressed are those of the sender
    and do not reflect NIST policy or agreement.
Subject: More Economics (long)


>From: [e-mail]

>> Rockefeller of Standard Oil used to cut prices in local areas to kill
>> off small competitors, then raise the prices again. The Japanese

>Please verify. According to some authors this is a myth that is
>unsupported by actual hard data from the period. Not having seen the
>data either way, I will not claim which side is right, only point out
>that it is not a proven statement.
I haven't found anything mentioning this specific technique, though it was
presented as fact in school. There are numerous references claiming that
the ruthless anticompetitive techniques in general practiced by the Standard
Oil Trust, and the resultant public outrage, were largely responsible for
the passage of the Sherman Antitrust Act, which forced a reorganization of
Standard Oil. The specific technique described would work best against a
geographically localized startup company. (Legend has it that around the
1960's, gas stations near to one another would conduct "gas wars", cutting
prices in an apparent effort to drive one another out of business.) The
analogous technique in a global market is to cut prices everywhere, then
subsist on reduced revenues or savings until the opponent gives up. This
has been and is being practiced with many specific products.

>> Americans are not anxious to lower American wages to the levels found
>> elsewhere in the world, though the current trade policy leaves things
>Too true. In a truly competitive world economy wages and prices world
>wide would be driven to a median. The overly low would rise to meet the
>overly high. So obviously, those who HAVE will use the government to
>keep it at the expense of those who HAVE NOT.
...
>Can't let those <fill in your favorite slur> get on the first rung...
If I am not anxious for my salary to be equated to that of a Chinese factory
worker, it could be that I am not so much unwilling for the Chinese worker
to get higher pay as to have my pay reduced to a few hundred dollars a year.
As a consumer, I do not have any moral obligation to trade in such a manner
that I am worse off than before I started.

>> unless its prices are competitive. A very common practice in Japan is for
>> a new business to be protected within the country by steep import
>> tariffs,

>And as long as the Japanese are willing to subsidize my purchase of
>goods, fine.
A subsidy for exported goods is not quite the same as a protected domestic
market. The Japanese follow both of these practices, but under different
circumstances.

>Their loss improves my living standard by allowing me to
>purchase more goods and services for the same dollars than I would have
>otherwise. Thus I get my stereo AND some other goods as well. Everyone
>gains except the people who supply the subsidy.
This analysis completely ignores the factor of time, and certain properties
of the money supply. Such a practice can be beneficial to the consumer in
the short run, yet harmful in the long run. A dollar in the domestic money
supply is reused several times a year, so the "effective" money supply is
the actual number of dollars present times a certain multiplier. (I'm not
certain, but I seem to recall the multiplier as being at least 3-5.) When
you spend a dollar overseas which does not return because of a trade
imbalance, the effective domestic money supply is reduced by a similarly
disproportionate amount, reducing opportunities for domestic spending
and investment, and hurting domestic business. Since domestic business is
the source of most of the wealth in the US, the long-term effect is that
American wealth and income decreases. In the meantime, the foreign suppliers
can take the dollars they have retained from the trade imbalance, and use them
to buy up American real estate and productive capacity. When they have a
certain percentage of domestic productive capacity and the overall market,
they can stop holding prices artificially low, and reap the profits to make
up for their initial "sacrifice". Thus an export subsidy, properly handled,
is a long-term investment.

>And if it is indeed a
>case where the particular business gets a foothold and kills off it's
>competition, then I suggest that you buy stock in the winner and invest
>your profits in space business. You CAN buy from the Tokyo Exchange,
>although not a lot of individuals do so.
Can a US citizen buy *voting* shares in a Japanese company (in Japan), and
can a US company buy controlling interest? I had the impression that this
is not permitted except under certain unusual circumstances. The US is
comparatively very lenient in allowing Japanese and European companies to
buy US productive capacity.

>Yes, certain
>PARTICULAR subsidies may be less that elsewhere, but when you toss in
>the sneaky ones, our government ain't no better than the Japanese. If
>not worse.
I don't think they're even in the same class. Almost every aspect of the
Japanese economy is highly distorted by government intervention and
government-encouraged business collaboration, to an extent that astonishes
residents of the US.

>Speaking of monopolies. I'm gleefully visualizing the collapse of all
>the public power utilities if this fusion technique pans out. "Natural"
>monopolies are a figment of the imagination.
This will happen in the short-to-medium term only if you can take advantage
of economies of scale in manufacturing, and if there is no significant
economy of scale in power production. I'm not convinced from what we've seen
so far that this will be the case. A plausible scenario is that if everyone
buys home fusion plants, they can have power for only twice the utility
price for fusion power, while if only a few people buy fusion plants, the
power will cost five to ten times the utility rate.

This is drifting considerably from the initial topic, which was the
economics of launch services, and the relation between new and established
foreign launch services for US payloads, and startup private US launch
services. To summarize:
 - The US government has decided for a variety of reasons that it would be
   a good idea to encourage the development of many new private launch
   services.
 - Not everyone in the government or in NASA agrees with this idea, so progress
   has been slower than might be wished, but some progress is being made.
 - Many of those on the net have also stated that they favor the formation
   of such services, and feel that in the long run they could be of benefit
   to both the US and the global space programs.
 - One of the chief factors that would tend to encourage the formation of
   new private launch services is the current shortage in supply of domestic
   launches.
 - The new private launch services are likely to be expensive by world
   standards in the short run, but as they gain in sales volume and experience,
   prices are expected to drop. The only new domestic launch prices I have
   heard so far are higher per pound than even shuttle launch costs.
 - Many of the new launch companies have limited resources and can not afford
   to operate a long time at a loss.
 - Given the experience and the vitality of some of the foreign launch
   services, few if any of the domestic startup launch services are likely
   to survive, unless there is some overt form of protection or promotion.
 - There are a number of options available for such protection or promotion,
   all of which have been heartily condemned, even though they have been
   used at some point by all of the successful foreign launch services.
                                    John Roberts
                                    [e-mail]

------------------------------

Date: 14 Apr 89 03:23:50 GMT
From: [e-mail]  (RAMontante)
Subject: Re: More Economics (long)

[e-mail] (John Roberts) <[e-mail]> :
-
-    [ ... ]            . (Legend has it that around the
-1960's, gas stations near to one another would conduct "gas wars", cutting
-prices in an apparent effort to drive one another out of business.)


Oh my...  I remember gas wars in Toledo in the late 60's.  A couple of
stations in particular went at it repeatedly -- every so often the prices
would drop from around 37 cents/gal to 17 cents or thereabouts, stay for a
couple of weeks, then go back up.  (I might be off a bit on the exact
prices.  I think it got down to a dime/gal once, though.) Occasionally
one of them would change management, but it was a choice corner, and
somebody always bought in.

It was easy to recognize a gas war; stations frequently put sandwich
boards out with suggestive messages like

    "GAS WAR!  LOWEST PRICE!"

Not exactly a big secret.

------------------------------

Date: 13 Apr 89 17:09:27 GMT
From: aero!venera.isi.edu![e-mail]  (Craig Milo Rogers)
Subject: Mir Evacuation

from The Los Angeles Times, Thu 13 Apr 89, part I page 2:

    The Soviet space station Mir will stay in mothballs for three
months because of delays in preparing equipment that cosmonauts need
to perform experiments aboard the spacecraft, Soviet news reports
said.  ...  "The facility will be left unmanned ... due to delays with
the preparation of two research modules" that will be attached to the
main craft, Deputy Flight Director Viktor Blagov told the Tass news
agency.  This was the first explanation of why the project was being
suspended.

------------------------------

Date: 13 Apr 89 17:44:00 GMT
From: [e-mail]  (Matthew T. DeLuca)
Subject: Re: Soviet shutdown of manned space program

In article <Added.gYF=[e-mail]>, [e-mail] writes:
>
>   I just heard that the CCCP is not putting up manned missions for a while
> (anyone heard how long?).
> My theory is that they are conserving resources for upcoming grandiose
missions... [possible Soviet plans here]

Could be, but I think it far more likely that Gorbachev has realized that with
the straits the economy is in, the Soviet Union will fall further and further
behind the West in economic power and technological capability unless the
government devotes more resources to projects that benefit the consumer.  The
military and space programs (these two are linked fairly closely, as in any
space program) take up a very large percentage of the GNP, something in the
range of 20 to 30 percent.  The U.S. total is something like 6 percent.  No
country can devote that large of a fraction of it's productivity to something
that is an effective drain.  This is why we *are* seeing cutbacks in the
Soviet military, such as the withdrawl from Afghanistan and the (proposed)
500,000 man cutback in Eastern Europe.  For these same reason, I don't think
we'll see a Soviet Mars mission for a *long* time.  Any trip to Mars is going
to be pretty expensive, and to maintain a presence will be several times more
so.  I don't think the Soviets are going to repeat the mistake we made with
Apollo, that is, if they go somewhere, they're going to go to stay.  A more
likely scenario, in my opinion, is a Soviet lunar mission, to gain the
experience with manned planetary exploration needed for Mars, at a much
closer locale. Besides, it would cost less.

Matthew DeLuca                      :
Georgia Institute of Technology     : Certainty is the lot of those who
ARPA: [e-mail]        :           do not question.
--------------------------------------------------------------------------------

------------------------------

Date: 13 Apr 89 19:45:33 GMT
From: spdcc!ftp![e-mail]  (James Van Bokkelen)
Subject: Re: Soviet shutdown of manned space program

In article <[e-mail]>, [e-mail] (Matthew T. DeLuca) writes:
> In article <Added.gYF=[e-mail]>, [e-mail] writes:
> >
> >   I just heard that the CCCP is not putting up manned missions for a while
> > (anyone heard how long?).
> > My theory is that they are conserving resources for upcoming grandiose
> missions... [possible Soviet plans here]
> .... I think it far more likely that Gorbachev has realized that with
> the straits the economy is in, the Soviet Union will fall further and further
> behind the West in economic power and technological capability unless the
> government devotes more resources to projects that benefit the consumer...

They may also be re-thinking many engineering issues in light of cold fusion.
After all, a (low) powered orbit to Mars with a fusion-electric ion drive
would be greatly preferable to a mostly-coasting trip with RTG electrical
power.  Faster, less consumables to haul, more power to use maintaining the
environment inside.  Son-of-Mir might also be affected.

(with rose-tinted glasses in place...)

--
James B. VanBokkelen        26 Princess St., Wakefield, MA  01880
FTP Software Inc.        voice: [phone]  fax: [phone]

------------------------------

Date: 13 Apr 89 17:26:45 GMT
From: [e-mail]  (Matthew T. DeLuca)
Subject: Re: USA vs. USSR

In article <[e-mail]> [e-mail] (Andy Edeburn) writes:
>
> Hey!  Isn't it kind of ridiculous to sit and attempt to compare the US
>space program along with the Soviet program?

Not really.  All I wanted was a comparison of the amount of money each nation
devoted to their respective programs.  Besides, while they are ahead, they're
not so far ahead that the programs are incomparable, and they're not so far
ahead that we can't catch them, if we show enough political will.

Matthew DeLuca                      :
Georgia Institute of Technology     : Certainty is the lot of those who
ARPA: [e-mail]        :           do not question.
--------------------------------------------------------------------------------

------------------------------

End of SPACE Digest V9 #370
*******************