Space’s Hardest Problems: Incentives, Information, and Institutions
The major constraints on humanity’s future in space are economic, not technical
On October 13, 2024, a pair of chopsticks caught a falling skyscraper.
SpaceX’s Super Heavy booster, twenty-three stories of steel that had just propelled its Starship vehicle toward space, guided itself back to the launch pad, relit its engines, and settled gently into the launch tower’s mechanical arms. Rocket enthusiasts fortunate enough to witness it whooped like they had seen a magic trick. But of course it wasn’t magic. It was a combination of an audacious vision and first-rate engineering.
Starship’s fifth test flight was the technical achievement of the decade. But when it comes to space, the technical aspects are (comparatively) the easy part. The hard part is us: the people who will someday produce, consume, and live there.
We’re just beginning to explore the institutional challenges of a spacefaring civilization. Who is allowed to own which space resources? When things go wrong, how are disputes settled? And how do we stop ambitious rivals, whether corporations or sovereigns, from destroying value in space faster than they create it? These are questions about social science, not physical science.
The premise of this newsletter is that the major constraints on humanity’s future in space are economic, not technical. Launch costs have plummeted. Space access, once the prerogative of large and powerful nations, will soon be within reach of mid-sized business firms. We can barely imagine how the new commercial space age will revolutionize life on Earth. But already there are a slew of problems. Orbital debris accumulates because nobody bears the cost of cluttering low earth orbit. Prospective asteroid miners worry about the security of their claims. Great power competition between the US and China intensifies, each racing deeper into space to claim the first-mover advantage of setting rules, building platforms, and controlling networks.
If you find those issues as fascinating as I do, welcome. You’re in the right place.
About me
My name is Alexander William Salter. I’m an economics professor at Texas Tech University’s Rawls College of Business, where I hold the Georgie G. Snyder chair, and a research fellow at TTU’s Free Market Institute. I did my Ph.D. at George Mason University, an intellectual home for the traditions I work in: market processes and entrepreneurship, law and economics, public choice, and the study of how institutions (property rights, contracts, constitutions, and even customs) shape human interaction.
For over a decade, I’ve applied those tools to space. I’ve written academic papers on the economics of orbital debris (a high-altitude tragedy of the commons), on whether property rights can exist even though the Outer Space Treaty forbids national sovereignty (spoiler alert: they can), on whether a commercial race to claim celestial resources will dissipate prospective wealth (probably not), and on how space settlements might govern themselves (contractual communities are underrated). My work pushes the logic of property rights, prices, and profits to the limit, while also acknowledging that political forces—especially international rivalries—will play a major role in space settlement and development.
Alongside the academic work, I’ve written on space commerce and strategy for the Wall Street Journal, National Review, SpaceNews, the Washington Post, and elsewhere. My goal with this newsletter is to blend the rigor and depth of research with the pace and accessibility of commentary.
Space economics themes
My writing has a few common threads. You’ll see them in this Substack, too.
Self-enforcing property rights. The 1967 Outer Space Treaty prohibits nations from claiming territory in space. Many people conclude that secure property rights are therefore impossible, and that commerce will stay grounded until diplomats renegotiate the treaty. I think that conclusion is wrong. The history of global trade is on my side. Long before modern nation-states, merchants developed functional commercial law across Europe without sovereign support. International traders today resolve billion-dollar disputes through private arbitration. As on Earth, so in space: don’t confuse “no government” for “no governance.”
The orbital commons. Earth orbit presents a fascinating governance challenge because it is a site of immense economic value, yet it cannot be owned. Hundreds of billions of dollars in satellite services flow through it every year, and it is filling up with junk. Each launcher captures the benefits of a launch while putting the costs, in the form of collision risk, on everyone else. How we handle that problem, from salvage law to liability rules to debris-removal markets, will create an important precedent for governing shared resources in space.
Cooperation, conflict, and the wealth of nations. The United States, China, Russia, and a growing field of smaller states and private companies are maneuvering for position on the Moon. Economics has a lot to say about the consequences of competition. The rules of the game will determine whether space jockeying creates wealth or destroys it.
How people will actually live out there. Settlement is the question that got many of us dreaming about space in the first place. Imagining a Mars mission, colony included, is a thrill. But there are plenty of governance questions we need to answer first. How do we promote cooperation and discourage predation in an environment where the “right of exit” means a nine-month trip back to Earth? I think some promising models come from the long human experience with voluntary, private governance. I’ll make the case here that these are complements to, not substitutes for, national space exploration efforts.
What you’ll get
Some details about what I’ll write about and how often you’ll get it:
Space news through an economic lens. I’ll explain the space headlines using the economic way of thinking. Expect lots of attention on incentives, information, and institutions.
Research made readable. I’ll translate the core ideas from my academic work, and the broader literature on space law, policy, and economics, for people who’d rather not wade through scholarly footnotes.
Policy and strategy commentary. I’ll give my opinions on what the United States and its rivals should (and shouldn’t) do to keep the peace in space. My own priors are clear. I like voluntary cooperation, bottom-up governance, and free enterprise. But there are many instances where markets alone aren’t an option. We need to discover, not assume, the right institutions to promote human flourishing in space.
Launch cadence. Expect two pieces per month: one longer thinkpiece and one shorter op-ed. Any time I land an external piece about space policy, I’ll also flag it here.
About the name
Every economics student knows about the production possibilities frontier: the limits of what an economy can produce with the inputs it has. Everything inside the curve is achievable. Everything outside it is not, unless we get more resources, develop better technology, or build better institutions. For most of history, Earth’s endowments defined that frontier for humankind.
Not anymore. Space opens a new horizon for production, specialization, and trade. The final frontier is itself a production possibilities frontier. Pushing deeper into space and harvesting its bounty can both enrich us and inspire us. But as with everything in economics, we need to pay close attention to the rules we write and the incentives we create. That’s what this newsletter is about.
If that sounds like your kind of thing, subscribe below. It’s zero-price (nothing is free; I’m an economist, remember?) to start. And if you know any fellow space or economics enthusiasts, please send this to them. We’ll have plenty to talk about.