Prize awards have high leverage on private investment. Moreover, prize awards aren't spent only for the desired returns -- thereby relegating risk management to the private sector where it belongs.

Oh, I forgot, NASA's money comes largely from political considerations about which districts get how much government pork.

Never mind.

Java has stuck around for the same reason Cobol stuck around for so long: It's corporate.

Does that mean Java isn't cool? No. But are we going to say Cobol is cool because it stuck around for so long?

Its good to see Apple recognizes America's history of victimizing Indians requires remediation by affirmative action favoring the hiring of Indians.

Anon writes: "Your tax scheme will destroy every company that thinks long-term enough to be able to survive a hiccup."

Argument by assertion.

"I'll just transfer all of my capital assets to the city of Detroit"

It doesn't matter to whom you transfer the assets for lease-back. They'll be assessed on the market value of the assets and you'll be assessed on the market value of the lease. Any attempt to void the requirement of liquidation through, say, an asset that self-destructs if it isn't biometrically linked to your "shrewd" butt will be seen for what it is: Interference in the liquidation of the asset, which will result in criminal and civil damages exactly equivalent to doing damages, with criminal intent, to any public good.

, whos politicians I own, and lease it back with a poisoned contract. Poof, now I'm paying no taxes, and I've got the city by the nuts, because this also means that they've screwed if they piss me off.

I'm taking Musk at his word that he wants to see fair and open competition as his self-interest is based on a belief in his own superiority in a "may the best man win" spirit. I see no indication from Musk, as yet, that he is engaged in public sector rent seeking, so I tend to take him at his word here.

As a person credited with launch service privatizing legislation by Congressman (Ron Packard, R-Ca), in his introduction of my congressional testimony on private space development, the Congressman who sponsored that legislation, let me weigh in:

If your own money is at stake, you approach risk management in a very different way than when someone else's money is at stake.

Public funds for development results in a very different sort of risk management than private funds for risk management.

The typical argument for public funding of development is that the risk management under private funding is to, basically, not bother taking the risk at all -- and that therefore the public must.

Well... this has as its unspoken assumption that the downstream benefit is so great that it is clearly justifiable to take the risk. OK, let's go with that assumption and then let us further ask: Why is it that the capital markets are failing in their primary reason for existence: To manage investment risk?

The folks arguing for public funding of development need to provide answers for that question taking the form either of, a renunciation of the primary principle of capitalism -- since the public becomes more competent at investment the less risk there is -- or, proposals to correct the statutory regime under which investment is made so that the capital markets function properly.

In my role promoting private over public investment in launch services development, I was aware that there was, indeed, a capital market failure that needed to be fixed through statutory changes in the tax system. Yet I proceeded to promote private over public investment. Why? Because in the foregoing discussion of trade offs between private vs public risk management there goes unspoken the risk that a positive feedback system can easily develop where political action is funded by tax dollars, however indirect. This positive feedback system results in a body politic that excludes from political influence those who are not receiving tax dollars -- such as inventors in the garages who are trying to bring even incremental improvements to the market. Moreover, this lack of political influence is compounded by the fact that such inventors are seen as business risks by those whose political action is predicated on the technical ignorance of politicians -- hence government funds not only fund political action, but actively suppress improvement.

There is simply no way out of this mess but to, first, turn off the funding sources if at all possible, so that it is possible to then address the real underlying capital market failure that results in lack of investment in viable technologies of great value.

The role guys like Musk should be taking on here is to point out the capital market failure and recommend appropriate fixes in the statutory environment so that there is no place for the public sector rent-seeking of government funded political agencies, posing as technology companies, to hide.

One year after I gave my testimony before Congress, I did make a proposal for just such a reform in the tax and regulatory code in the form of a white paper which I sent to various think-tanks in the beltway. The problem is those think-tanks are, themselves, now funded by the same positive feedback loop that actively supports existing cash flows and their expansion -- which includes avoiding any reforms that would correct the capital market failures to which technosocialist political agencies point to justify their receipt of taxpayer money.

Here's what Musk needs to promote:

Replace all taxes on economic activity with a single tax on net liquidation value of assets. This is rational in that those assets enjoy government protection in a manner similar to the protection provided by property insurance corporations. In other words, taxes become a service fee equivalent to the insurance premium paid to a mutual insurance company in which all citizens are stockholders, in exchange for the lawful protection of the assessed property rights. Economic activity -- as a form of humanity in action -- is not taxed, nor is human capital arising from, say, investment in education (ie: no slavery direct or indirect).

Liquidation value is chosen for a very specific reason: Assessment can be objectively accomplished through bids held in escrow. The monetary base can then be viewed as the "mark to market" or liquidation value of assets in the economy, with the money supply defined by the bids in escrow. An owner can accept an escrowed bid at any time, thereby liquidating his property right and transferring ownership to the high bidder. Tax liability can be deferred as long as the total liability accrued does not exceed the liquidation value. Once it exceeds the liquidation value, the transfer of ownership is executed and the liability is paid. The high bid in escrow for a given property right is _not_ assessed as a taxable asset, but other, lower, bids, are taxed.

This isn't the only statutory reform needed but it is the most important to get the capital markets moving and remove taxation of income and capital gains resulting from high payoff risk taking.

*RING* *RING*

Callee: Hello?

Caller: Hello, Dr. X, this is Dr. Y from [insert watchdog group name]. How are you today?

Callee: Uh, ok.

Caller: We're doing a survey. Your paper "[insert name of paper]" is cited in a NYT Best Seller that justifies taking babies of some races and putting them into blenders for smoothies. Do you oppose taking babies of some races and putting them into blenders for smoothies or not?

Callee: (Thinking to himself: "This guy is obviously nuts but then half of academia is nuts and they can cut off mine as well as all my future government grants for looking at them crosseyeed.") Why, NO! I absolutely oppose the use of my work to in any way shape or form to justify taking babies of some races and putting them into blenders for smoothies! Where is the bastard that so abused my inherently anti-racist work so I can consider suing him!?!?"

Caller: Thank you Dr. X. That will be all.

So what? Everyone knows that race is a social construct so there can't be any genetic correlations with race of social significance independent of racism's social construction.

Therefore, the racial disparities that appear in society are the result of the White Man keepin' us down! The Heterosexual White Man that is.

Open the borders!

Absolutely. I have to work all the time and I fear for my children becoming less than fully indoctrinated as any deviation in thought may result in a loss of employability and social acceptance.

Not ultimately, but proximately, it is. For instance, the guys at the Hackers Conference ceased bringing their fragmentary Usenet archives because DejaNews had everything online and then -- poof -- only for Google to pick it up again and then go, "Duh!" We'll see how long it takes for complete archive to be fully indexed. I'm sure it will happen eventually. Meanwhile...

Google has already mastered the art of Orwell's "memory hole". Just look at how Google manages to forget everything they know about search engines when it comes to their Usenet archives. Selectively applied, this is far more effective than anything so brute as Orwell's memory hole.

Oh I should add that once you are in this regime, the term "hire" may be somewhat different than it is in other circumstances. I mean a more straight-forward means of dealing with cheating is to punish cheating with a degree of severity that matches the potential harm inflicted by having cheaters with their fingers on The Big Red Button -- so the circumstances of the "employment" may involve such any aspects of such punishment as are practically applicable. Military justice isn't burdened with your usual Civil Libertarian constraints.,

If you have people that are even remotely tempted to cheat that have their fingers on The Big Red Button, you have a serious threat to civilization.

Having an incentive to cheat is a great way to elicit this potential. The proper national security response is not to remove the incentive to cheat but to increase the detection sensitivity and then hire the guys who cheated to compete with others who cheated to design test regimes that are more likely to elicit cheating while also being more sensitive to detecting cheating.

Necessity and Incentives Opening the Space Frontier
Testimony before the House Subcommittee on Space
by James Bowery, Chairman
Coalition for Science and Commerce
July 31, 1991

Mr. Chairman and Distinguished Members of the Subcommittee:

I am James Bowery, Chairman of the Coalition for Science and Commerce. We greatly appreciate the opportunity to address the subcommittee on the critical and historic topic of commercial incentives to open the space frontier.

The Coalition for Science and Commerce is a grassroots network of citizen activists supporting greater public funding for diversified scientific research and greater private funding for proprietary technology and services. We believe these are mutually reinforcing policies which have been violated to the detriment of civilization. We believe in the constitutional provision of patents of invention and that the principles of free enterprise pertain to intellectual property. We therefore see technology development as a private sector responsibility. We also recognize that scientific knowledge is our common heritage and is therefore a proper function of government. We oppose government programs that remove procurement authority from scientists, supposedly in service of them. Rather we support the inclusion, on a per-grant basis, of all funding needed to purchase the use of needed goods and services, thereby creating a scientist-driven market for commercial high technology and services. We also oppose government subsidy of technology development. Rather we support legislation and policies that motivate the intelligent investment of private risk capital in the creation of commercially viable intellectual property.

In 1990, after a 3 year effort with Congressman Ron Packard (CA) and a bipartisan team of Congressional leaders, we succeeded in passing the Launch Services Purchase Act of 1990, a law which requires NASA to procure launch services in a commercially reasonable manner from the private sector. The lobbying effort for this legislation came totally from taxpaying citizens acting in their home districts without a direct financial stake -- the kind of political intended by our country's founders, but now rarely seen in America.

We ask citizens who work with us for the most valuable thing they can contribute: The voluntary and targeted investment of time, energy and resources in specific issues and positions which they support as taxpaying citizens of the United States. There is no collective action, no slush-fund and no bureaucracy within the Coalition: Only citizens encouraging each other to make the necessary sacrifices to participate in the political process, which is their birthright and duty as Americans. We are working to give interested taxpayers a voice that can be heard above the din of lobbyists who seek ever increasing government funding for their clients.

Introduction

Americans need a frontier, not a program.

Incentives open frontiers, not plans.

If this Subcommittee hears no other message through the barrage of studies, projections and policy recommendations, it must hear this message. A reformed space policy focused on opening the space frontier through commercial incentives will make all the difference to our future as a world, a nation and as individuals.

Americans Need a Frontier

When Neil Armstrong stepped foot on the moon, we won the "space race" against the Soviets and entered two decades of diminished expectations.

The Apollo program elicited something deep within Americans. Something almost primal. Apollo was President Kennedy's "New Frontier." But when Americans found it was terminated as nothing more than a Cold War contest, we felt betrayed in ways we are still unable to articulate -- betrayed right down to our pioneering souls. The result is that Americans will never again truly believe in government space programs and plans.

Without a frontier, for the past two decades, Americans have operated under the inevitable conclusion that land, raw materials and wealth itself are fundamentally limited and therefore to be hoarded and controlled -- rather than created. Out of this post-Apollo mentality, a deeply rooted cynicism has led young people into careers as lawyers and financial manipulators rather than farmers, inventors and engineers. It has led to an environmental movement which loathes humanity's natural capacity to transform hostile environments with technology. It has led to cartels, wars over energy and a devastatingly expensive arms race. It has led businesses and investors to remain averse to high risk technology development even as they issue billions in high risk debt vehicles for corporate take-overs. It has led to a preference for real estate speculation over job creating investments, making it nearly impossible for most of those born in the mid-to-late baby boom of the 1950s to establish stable careers, homesteads and equity for retirement, even with two incomes.

In short, the lack of a frontier is leading us away from the progressive values of the Age of Enlightenment, upon which our country was founded, and back to the stagnant feudalistic values of the middle ages. We look to the Japanese for cultural leadership. We forget the rule of law and submit to the rule of bureaucracy, both corporate and governmental; for in a world without frontiers, the future belongs to the bureaucrat, not the pioneer.

No where is this failure of vision more apparent than in our space program where the laws of human nature and politics have overcome the laws of nature and the space frontier as in "Take off your engineering hat and put on your management hat."

First Apollo failed us. Then the shuttle raised and dashed our hopes by failing to provide easy access to space. We now look forward to the proposed space station as the last vestige of a dying dream written of by Werner Von Braun in Collier's magazine during the 1950's, even as its costs skyrocket and its capabilities dwindle into a symbolic gesture of lost greatness.

The pioneering of frontiers is antithetical to bureaucracy and politics. The greatest incentive for opening frontiers is to escape from calcifying institutions. We betray our deepest values when we give ownership of our only frontier to such institutions.

Therefore, these hearings on incentives to open the space frontier are among the most hopeful events in recent history. Those responsible for holding these hearings and acting to create pioneering incentives to finally open the space frontier, are to be commended for their insight, courage and leadership. They are earning for themselves and our entire civilization a place of honor in history.

Incentives Open Frontiers

Over the past few years the Coalition has worked with Congressman Ron Packard and a broad spectrum of other Congressional leaders to introduce and pass a bill providing the most significant incentive for opening the space frontier to date: The Launch Services Purchase Act of 1990. Similar to the Kelly Act of 1925, which created incentives for pioneering aviation, the LSPA seeks to synthesize a commercially reasonable market from existing government demand for launch services. Lowering the cost of access to space through incentives for commercial competition is the most important goal in our space policy because launch costs dominate all others.

Although extensively amended from its original language, the LSPA remains a symbol of pioneering spirit, democracy in action and American values in the one place it counts the most: The Space Frontier.

Congressman Bob Walker's Omnibus Space Commercialization Act of 1991 contains two important provisions which will expand and empower the incentives of the LSPA. The first provision is the return of language in the LSPA to cover the Department of Defense as well as NASA, and to cover all space transportation, not just orbital launch. The second is the substantial funding authorization for launch and payload integration service vouchers under the Department of Transportation. The independence of the Department of Transportation's Office of Commercial Space Transportation creates exactly the kind of checks needed to avoid conflicts of interest. Private investors can trust their capital with such carefully constructed incentives.

Another important provision of the Omnibus Space Commercialization Act is the encouragement of many Federal agencies to participate in space activities. Such variety of funding sources further inhibits the politicization of space by replacing political competition for centralized programmatic control with incentives for performance in technical and commercial competition.

These incentives are helping to open the space frontier because they discriminate on the basis of actual achievement rather than political savvy and psychological appeal. By acting as a market instead of a monopsony or as a source of capital, government funding ceases to control or compete with the initiatives of our citizenry. Instead government rewards viable citizen initiatives with the profits needed to further capitalize space services, while punishing failed management and technology with bankruptcy; conditions virtually impossible to replicate within the space paradigm of the past.

Profit and bankruptcy are as essential to technical progress as mutation and selection are to biological evolution. They are the "invisible hand" that guide private investors to create viable solutions to our needs. Just as mutation and selection led life from water onto dry land, so profit and bankruptcy will remove the earthly limits on life and open to life the limitless ecological range of space.

Distribution of funding in peer-reviewed grants to scientists which patronize commercially competitive companies not only utilizes market forces to optimize infrastructure design and operations, but it also spreads space dollars out to all Congressional districts without multi-year authorizations, technical prejudice or political gamesmanship. This apolitical cashflow creates commercial incentives and it builds solid justifications for the use of our space dollars with a hard-core nation-wide constituency.

But robust justifications and hard-core political constituency pale in significance when compared the explosive energy of Americans challenged by the incentives and freedoms of a frontier.

Americans can best be challenged by the following policy measures:

* Distribute space funding to multiple independent agencies for the funding of unsolicited scientific proposals.

* Require that the experiments be designed to fly on existing commercial services.

* Expose the proposals to review by a patent examiner to ensure the work is genuine science, as defined under intellectual property laws, and therefore not in competition with private sector technology development.

* Require that the principle investigator make the primary procurement decisions free from Federal Acquisition Regulations.

* Minimize abuses and avoid multiyear authorization by keeping grants relatively small.

* As commercial companies establish space operations, support their property rights.

Comprehensive legislative language drafted for discussion by Dr. Andrew Cutler details many of the Coalition's ideas on procurement, property rights and transitional policies. This legislative language is available on request.

Stated simply:

Fly lots of scientific missions using commercial services. Base them on fresh ideas. Let unfashionable ideas find funding. Decentralize procurement decisions. Avoid competition with the private sector by focusing on research rather than development. Enforce new property rights in space as they are defined.

Give Americans a challenge and trust them to react with the resourcefulness and courage of our ancestors who risked everything to cross the oceans to settle a hostile continent. We won't disappoint you.

Conclusion

The space frontier is a hostile environment with unlimited potential that demands our best. We can meet such a challenge only with the strength of our traditional American values -- values uniquely adapted to opening frontiers.

This Subcommittee is in a position of great privilege. The next millennium could witness the restoration of Earth's environment and the transformation of space into an new kind of ecological range, virtually limitless in its extent and diversity. Those creating the incentives that open the space frontier now will be responsible for the fulfillment of this vision which appears to be the ultimate destiny of Western Civilization's progressive tradition.

No libertarians believe that tort law protects people from negative externalities. Don't waste your energy going after weak arguments that your opponent isn't making.