Frontiers: Last, Lost, and Found
Regulation Thwarts Innovation by Making Creativity a Crime
MARCH 01, 1999 by ERIC NOLTE
Eric Nolte is an airline pilot, a writer, and a classically trained pianist and composer of contemporary concert music.
Technological innovation is the most powerful force for improving our safety and health, but such creativity withers under government control. It flourishes in the rich soil of freedom.
Government intervention subsidizes businesses that are mediocre, obsolescent, and inept. Such firms survive not because they have won consumer dollars through the logic of superior products and voluntary trade with consumers, but because they have succeeded in lobbying for legislative advantages that hobble their betters in the marketplace and stifle the creativity behind innovation. Aviation presents many examples of this.
At one time a small factory-built light airplane could be purchased for the price of a nice automobile. No more. Those who want a little Cessna now need to raise enough money for a home mortgage, not a car loan.
While aviation electronics have seen big advances, that is largely a result of the boom in computers and consumer electronics that has proceeded mostly without government interference. But the structures, materials, and power plants used in the construction of light airplanes have not improved much for half a century. Between the huge costs of government regulation and the way tort law has been interpreted for decades, manufacturers of small airplanes have either gone bankrupt or focused on producing more expensive aircraft for business.
In 1996, Cessna announced the production of its homely model 172 for the first time in nearly two decades, thanks to the recent changes that Congress authorized to protect manufacturers from completely open-ended liability claims. This is virtually the same airplane that Cessna had produced since the late 1940s till 1978. The price? Around $200,000, three times its cost in its last year of production.
The Will to Create
The human yearning to create and improve things is like a flower that wriggles out to sun and air from under rocks. While regulation and the tort system have destroyed much innovation in small, commercially produced airplanes, a loophole in federal legislation allows average people to build airplanes at home. They buy plans and parts for simple airplanes, and network with others under the auspices of the Experimental Aircraft Association. While the name suggests an organization devoted to cutting-edge matters, their primary function is to help ordinary citizens get into the air with simple machines.
One part of the EAA’s membership is devoted to advancing aviation. It produces kits that make good use of new composite materials, new power plants, and structures to produce machines that in their performance and convenience put to shame anything offered by today’s makers of little planes. For example, the Beechcraft Bonanza, which first rolled off the Wichita production line in 1945, is still among the hottest factory-produced private airplanes in general aviation. In efficiency, speed, and comfort, it is a dinosaur compared to what home-builders can offer today.
Much attention has focused on the benefits of airline deregulation to the flying public. Airline traffic is twice what it was in 1978, encouraged by fares that are so much lower that airline travel has become the primary mode of traveling long distances.
Little known is that airlines remain among the most highly regulated industries in the country. The highly touted deregulation of 1978 merely allowed airlines the power to set rates and choose which cities to serve.
One result of regulation is that airliners today neither look nor perform much better than those introduced 40 years ago. What would airliners look like absent government regulation? And how might this contribute to advancing aviation safety?
Compare the huge leap in safety that occurred when the old piston-engine airliners were replaced by the jets that started coming online around 1960. Suddenly, instead of getting their feathers knocked off as they slogged through nasty weather systems down in the lower reaches of the troposphere, jets had the speed and range to top or circumnavigate much of the bad weather. The improvement in comfort and safety was a quantum leap over those of the old propeller-driven transports.
The technology has existed for decades that would allow a similarly dramatic improvement over the current generation of jets. But trying to use much of this technology is as hopeless as trying to compete with the post office. It’s forbidden by law.
Those who are familiar with particular fields, as I am with my profession of aviation, are in a position to have some idea of what might be. Abundant technology is on hand today that would astonish you.
Air Orient Express
In my professional opinion, if it weren’t for regulation, we would already have in operation, at the very least, a true Orient Express: a second generation of big, long-range, supersonic jet transports (SST) that would be quieter, environmentally cleaner, and more fuel efficient than the Concordes and similar products that were on the drawing boards at Boeing, Lockheed, and Douglas in the 1960s. But the government—in thrall to the politically connected lobbyists, Luddites, and human-haters of the time—passed legislation that killed all such efforts before the first American SST appeared even in prototype.
It is also my belief that we would have—or would shortly have—viable, reusable, single-stage-to-orbit rockets, plying the skies in low-earth orbit between Europe, the Americas, and Asia, carrying mail, people, and high-priority freight with greater safety, speed, and value than anything we have today.
The whole history of technology validates this point. And these are not the most impressive innovations that G. Harry Stine outlines in his book Halfway to Anywhere: Achieving America’s Destiny in Space. Stine presents a sample business plan produced by experienced venture capitalists that marshals scientific and economic savvy. The plan shows how big profits are available to those who get into low-earth orbit, from where, as science fiction author Robert Heinlein put it, one has already expended the energy to be “halfway to anywhere in the solar system.” Big floating space stations would serve as hotels for gawkers and well-to-do honeymooners. Factories in space (as Stine pointed out in his 1979 book, The Third Industrial Revolution) could exploit the unique characteristics of a zero-gravity environment that would allow the production of certain drugs and the use of some industrial processes that are simply impossible outside that environment. Earth-orbiting industries could serve as hubs for mining precious resources from the asteroid belt. Getting into space would allow human beings to transform the earth into a new garden of Eden, at a pace set by the rewards that market forces offer us for moving off the planet. (Getting into space ultimately promises an answer even to the threat that will otherwise doom human beings when our sun begins to burn out.)
More immediately, getting into space promises a renewal of the psychological benefits long said to have ended with the closing of the American frontier a century ago. It might restore the idea of progress, the death of which has been proclaimed by the crabbed, depressed, minimalist, dyspeptic human haters and anti-technology zealots who tell us that we are merely a cancerous blight on the earth. (Some of these folks, like the misanthropic Norwegian philosopher and founder of deep ecology, Arne Naess, yearn for a new virus to wipe out the horrible curse of man.)
People need to get into space for a multitude of reasons. But we will never get there without free markets to implement the technology we already have and bring to fruition the equipment to satisfy this widespread human desire. Regulation thwarts innovation by making creativity a crime, and by punishing businesses that would otherwise be successful enough to attract the necessary venture capital.
The NASA Bureaucracy
Harry Stine offers an insider’s lucid discussion of the scandalous way in which the federal government and NASA have throttled a rich vein of creativity through the bureaucratic “empire-building” of regulation, subterfuge, political back-stabbing, lying, and logrolling.
According to Stine, a group of Douglas engineers noticed that NASA’s way of handling the problem of lofting payloads into space was fixed at the mentality of 1940s-style rocket artillery: the multistage booster and payload capsule. Imagine how far commercial aviation would have come, thought these few engineers at Douglas, if an airliner required a Cecil B. De Mille cast of thousands to prepare six months in advance for every trip from New York to Paris. Passengers would have to be trained for the ride weeks in advance, garbed in special, expensive tailor-made suits. When the day of the trip arrived, the vehicle would launch and proceed to jettison 95 percent of its parts, dropping these hideously expensive components into the ocean, never to be used again. And finally, arriving in Paris, the return flight would require another six months to replace the missing components, perform a major overhaul of the remains, and to engage in the same extravagant process of preparation with the same cast of thousands.
This small group of Douglas engineers embarked on an unofficial program, funded with shoestring capital that they raised almost entirely by their own efforts. By the late 1980s, they had produced and flown the first proof-of-concept prototype that would ultimately be a fully reusable single-stage-to-orbit (SSTO) vehicle able to deliver satellites and other payloads to low earth orbit (LEO) with the reliability and ease of airliners plying the sky between New York and Paris.
Despite smaller budgets than in the glory days of the moon program, in the late 1980s the space agency was still a bureaucratic, empire-building institution, quick to lunge at any threat to its health. To some of NASA’s bureaucrats, the Douglas DC-X project appeared to threaten its turf. At the very least, its success was an embarrassment to NASA owing to the contrast between its tiny budget and the bloated financing of the space agency’s projects. By offering Douglas money to fund the project, NASA succeeded in the time-tested ruse of hijacking it for itself. The agency turned it into another massive government program by divvying up the carcass among its many aerospace contractors (including, not incidentally, the corporate remains of McDonnell Douglas itself, now that this company had been taken over by rival Boeing).
NASA has a new, improved version of the SSTO vehicle and, a decade after the first (and to date, last) flights of the DC-X, has spent years running studies of all the various matters involved. It estimates a first flight of its spacecraft far in the future, following still more years of studies and tests.
Another Blow to State Dogma
One frequently hears that the development of aerospace vehicles is a textbook example of the kind of capital-intensive venture at which private industry could never exhibit either the foresight or wherewithal to succeed. It is said that only the wise, all-knowing government can selflessly surmount the tawdry motive of short-term profit to focus on expensive, long-term, noble projects.
This perennial claim by freedom’s enemies recently received another blow. A recent article in Flight International magazine reports that the Rotary Rocket Company has raised $17 million from investors and hired Barclays Capital to help it raise another $20 million in private funds in order to offer by the year 2000 commercial launches of satellites or other payloads weighing 3,200 kilograms to low earth orbit for a cost of $7 million, or $2,200 per kilogram. This is much less than today’s going rate. To put this in perspective, compare the cost of launching John Glenn back into orbit, a recent publicity stunt by the attention-starved space agency: something on the order of $500 million—for a single mission.
Rotary’s goal is “to herald the arrival of a new space age—the age of routine, commercial space transportation” by operating a fleet of aerospace craft called “Roton,” which will be the world’s first successful reusable commercial SSTO vehicle. The two-pilot Roton booster will be 20 meters high and 6.7 meters in diameter. The name of the Redwood Shores, California, company refers to the rotary pumping action of the Roton’s Rocketjet engine and its free-spinning helicopter-style blades that deploy during the last phase of descent, enabling precise control for landing.
Scaled Composites is producing sections of the Roton’s fuel tank. This company was founded by Burt Rutan, the designer of many highly creative aircraft, including the very popular home-builts Vari-Ese and Vari-Viggin, and the prototype of the twin-turboprop Beechcraft Starship, which may be the most advanced turboprop corporate airplane in production today. All of these aircraft use composite materials and an unusual tail-first “canard” configuration. Rutan also designed the privately created Voyager aircraft that was the first airplane to fly around the world without refueling.
Gary Hudson, Rotary’s chief executive, says that Roton will begin deployments and retrievals of LEO telecommunications satellites and other cargo during the first half of 2000.
Other missions for the Roton include solar power satellites and space manufacturing of new materials. Because it is piloted, a Roton will be able to conduct a final check of satellites before their release, a service never offered before. While other commercial launchers charge clients a non-refundable advanced payment, Rotary Rocket’s bill will be due only on successful delivery of the payload into orbit; any problems would result in returning the payload and launching it again with no further charge.
Rotons will also repair or retrieve damaged or “dead” satellites, which should lower insurance costs.
The Roton may well be the first profitable spacecraft. It is the product of imagination and funding that are entirely private and cost a tiny fraction of the time and money spent by its government-led competition.
Who says only the government can succeed with big, time-consuming, capital intensive projects?
Freedom is the great engine that draws out the breathtaking creativity of our human potential, because only freedom unleashes every person’s desire to achieve happiness. In a free market, such achievement is advanced when we offer goods or services that please our customers, wherever they may be found on—or off—the planet.