Libertarian Economics And Lunar Ice Scarcity

by | Aug 22, 2018

This will sound weird, but it has been almost completely confirmed that there is a lot of water ice on the Moon.  So what?

Consider the biggest infrastructure elements of an economic system: energy and transportation (followed by the overhead of managing transactions).  Space has unlimited, easy energy in the form of solar power.  What about transportation?

A difficulty NASA had in developing a space transportation infrastructure was that any fuel needed to traverse great distances had to be carried with you from Earth.  No, seriously, space travel and habitation isn’t that difficult – in a sense there are economic advantages to space.  Chiefly, there’s “space” (zero real estate costs), and free energy.  Zero-gravity can help make some manufacturing and large construction processes more efficient – once the hurdles of learning basic operation are overcome.

Anyway, fuel – a common rocket fuel consists of hydrogen and oxygen being mixed and burned.  Oxygen is heavy.  Water ice contains oxygen.  Also, human habitation of space would require water, which is heavy.  Ice on the moon means the removal of some significant cost constraints on the whole scheme of space development.

Problem: for years scientists weren’t sure if there was much water on the moon at all.  Colonization plans incorporated the costs of a Lunar ‘desert’.  Now, however, we know that there’s actually a lot of ice up there.  This is a big deal.

My concern is waste and sustainability.  That water up there is civilization’s one ‘chance’ to develop economically and technologically to the point where it’s no longer needed.  It took perhaps billions of years to accumulate.  What if world militaries gobbled it up fighting each other?

And I don’t trust the government one minute to efficiently reinvest those resources.  They’d reliably build a one time big dumb thing that goes over budget and fails.

Still, a free market – if advanced – needs a mechanism to incorporate the future costs of resource scarcity.

Imagine: we know that space development will grow along a curve – some model that predicts it.  Then, we take this curve and run it against water ice estimates on the moon (better yet, reserves).  Thus, we can predict relative future costs of water in years to come.

Now, financial institutions can sit on lunar mining rights and leverage them against the future.  Big Earth money would flow to match the future value of the water.  These holding companies would then use their water shares as the backbone of a space financial system.

People would have the incentive to use water very sparingly because the shares as capital are worth so darn much.  But you still need to use a little water – and that’s part of the game, really.

As for technologies that subvert the pricing model?  Imagine a new rocket is built on Earth that cheaply and easily sends Earth water to space, undercutting the lunar ice shares.

Great!  The high value of the lunar ice shares – in Earth money – absolutely incentivizes the development of substitutes.

Guess what – these substitutes are exactly the phenomenon which defeats scarcity anyway.

Presumably, the lunar ice speculators would price in predictions on technological developments of substitutes.  Wow, imagine the money a speculator would pay a lab to build the substitute technology!

That’s a “libertarian” solution to an economic scarcity problem.

In the case of the Moon, the scenario is astonishingly straightforward.  Water’s importance is well understood, and as a homogenous resource its future scarcity can be predicted.

I’m sure, however, if a speculators’ market emerged, the government would simply regulate it.

Oh by the way, that’s why we’re not living on the Moon by now, and instead killing children in the Middle East.

About Zack Sorenson

Zachary Sorenson was a captain in the United States Air Force before quitting because of a principled opposition to war. He received a MBA from Waseda University in Tokyo, Japan as class valedictorian. He also has a BA in Economics and a BS in Computer Science.

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