Space tourism industry has a chance to show benefits of less regulation

If space truly is the final frontier, then it won’t be long until the first pioneers are making the journey, as several companies race to take paying passengers out of the Earth’s atmosphere and beyond. And true to form, right on its heels will be the regulators, red tape lassos in hand.

But like any brand new industry, the slight head start of the businesses will give them the opportunity to show the high standards that can be accomplished absent government control — and with any luck, they can do it in a way compelling enough to cast doubt on the “necessity” of regulation.

A March 20 article in Quartz about space tourism details the thus-far minimal regulatory burden on the burgeoning industry and questions how passengers will be protected without the “benefit” of tight regulations.

The first spaceflight participants will be guinea pigs in an experiment that asks: Just what does it mean to be safe in space when the government isn’t in charge?

The obvious answer, to those who believe in the power of market-driven incentives, is that space tourism will likely be safer with minimal government intervention than it would be with tight regulations and oversight, since the companies will police themselves, as Blue Origin Executive Erika Wagner says in the article.

Wagner recently told an audience at the Massachusetts Institute of Technology, ‘ . . . in terms of us having a safe place in the market, we take that seriously, we want to put our own families on board, we take that very seriously. So we are holding ourselves to internal standards.’

The case for strict government regulation is built on some faulty beliefs about humanity and behavior. It assumes that people in business are at their core unconcerned about other people and are motivated solely by profit. It assumes in contrast, that those people in government are the complete opposite, motivated only by altruism and never by self-interest. On this questionable foundation is built the assertion that the people in government must regulate the people in business so that the interests of customers and the public at large are protected.

It is easy enough to strike down these arguments. First, this stark divide between the values of businessmen and politicians does not exist. Good or bad personality traits can be found within any group, and I would argue that you’ll actually find disproportionately more politicians on the self-interested end of the spectrum than in other career paths, because politics either attracts or creates those kinds of people.

In any event, there is not a neutral ruling elite that can sit above the fray, benevolently handing down edicts to keep the otherwise-evil businesses in check. Politicians and regulatory agencies have a dog in the fight too, be it money, connections, political pressure, or desire for power.

But for argument’s sake, let’s assume the worst of businesses and the best of government. Even in this case, the goal for both parties is the same: safe space travel. At their most altruistic, regulators want it because they don’t want people to die. At their worst, space travel businesses want it because death and injury is bad for business.

Any company, whether they are building and flying rockets or simply selling sandwiches, needs to have customers to stay in business. Blue Origin, SpaceX, Boeing and Virgin Galactic — all companies planning to fly people out into space — won’t be able to keep customers if people aren’t flying back to Earth intact.

And unlike the mistakes of a sandwich shop, which might never make the front page news, in a pioneering industry like commercial space flight, you can bet every potential customer on earth would hear about the company’s missteps. As safety risks increase, customers will decrease, and if that balance gets out of whack, the company will fail.

Not all customers desire the same level of safety. And that’s OK. When regulations are minimal, companies can cater to whatever customer base they want. Riskier or more expensive products or services will  have a smaller customer base than those that are safer or cheaper.

Perhaps each space tourism company will use this formula to choose a different niche; companies could advertise that they tested their spacecraft the most, or offer the least expensive weightlessness experience, or orbit the earth the fastest.  In this way, less regulation gives the consumer more choices, while regulation would restrict some of these options, eliminating the preferences of some customers while simultaneously crippling those niche businesses.

“Minimal” Regulation

What does “minimal” regulation look like in the space tourism industry? Right now, it’s governed by the Commercial Space Act, which establishes the Secretary of Transportation as the governing authority. The Secretary has the power to grant launch licenses to rockets, which can include requirements on crew training and medical standards.

The license holder must inform crew and passengers in writing about the risks involved in space travel, and let them know that the United States Government has not certified the launch vehicle as safe for carrying crew or space flight participants. The Secretary can also restrict rocket design features or operating practices that have resulted in serious or fatal injury or a high risk thereof.

By many standards, that amount of regulation is already too much. It’s not that these rules are especially onerous or illogical; it’s just that they are unnecessary. Crew members and paying customers are voluntarily participating in space flight — a non-essential service, moreover — through the company. Therefore, customers and employees should work directly with the company to ensure a satisfactory experience. The company can then meet those demands or lose those customers and workers. They can cut out the middleman of regulation because there is no one to protect; all parties are already satisfied, and customers are signing up in droves. According to the article, Virgin Galactic has accrued 700 paid passengers since 2005.

The article cites Uber as a close example of how the space travel industry could expect to pave its own way:

Because the slate is still blank for how the federal government will treat the space business, the earliest companies will be in a position to set the tone, much as Uber’s regulatory battles laid the groundwork for the still tetchy relationship between cities and ride-hailing apps.

This is a fitting analogy, but frustrating if space tourism goes the way of ride-hailing apps. Because Uber and others like it are another example of a business in which regulators tried to fix problems that didn’t exist. Everyone involved was already happy. And yet because of pressure from the highly-regulated taxi companies, politicians implemented regulations to handcuff ride-sharing companies as well, under the guise of consumer protection.

In my home state of Massachusetts, for example, a bill regulating ride-sharing companies required Uber drivers to complete a two-part background check, carry insurance coverage of at least $1 million, and have their vehicles get a second safety inspection in addition to the annual inspection required of all registered cars. And—perhaps the biggest affront— the law required the companies to pay 20 cents per ride to the state, which will fund public transportation, including the taxi industry. The bill was signed into law last August, adding Massachusetts to the long list of states that punish and restrict the ride-sharing app companies while buoying their competitors.

Yet Uber and other ride-sharing app companies have largely survived the onslaught of regulations because the service they offer is so attractive, not only from a practical standpoint, but also a symbolic one. It gives both customers and drivers freedom and self-determination, the ability to set their own hours, choose their own route.

And that’s just ground transportation. It’s hard to imagine a more freeing experience than blasting off in a rocket to outer space, quite literally extricating oneself from earthly cares. So while we will likely see a shorter leash on space tourism companies as the industry matures and regulators catch up, these pioneering companies have a chance to demonstrate that they can be self policing. They can prove that private industry can safely, astonishingly, and beautifully launch people into the final frontier — and bring them home again.

A new age is dawning. Will governments be left in the dust?