Further & More

NASA's New Pricing Policy Shuttles Between Bad and Good

As promised, the Reagan administration has established a new policy for the price that nongovernment customers must pay for using the Space Shuttle to carry satellites and other cargo into space. The new policy will go into effect in October 1988.

Private space-transportation companies and entrepreneurs trying to get into the space-transportation business had been waiting with bated breath for the move. The degree to which the government subsidizes Shuttle prices is an important factor in the prospects for a private earth-to-space industry (see "Space Entrepreneurs," Jan. 1985).

Under the new pricing policy, NASA will auction surplus cargo space on the Shuttle—that is, room left over after the government's needs have been taken care of, with a minimum bid of $74 million per full bayload (in 1982 dollars). Economist Phil Salin has calculated that if NASA were to recover the full cost of Shuttle launches, it would have to charge $200–$250 million (in current dollars) per mission. So the minimum bid of $74 million is way below NASA's actual costs.

How will the new Shuttle pricing affect the private space-transportation industry? Jim Bennett, a vice-president at the newly formed American Rocket Company in Palo Alto, California, says that the new policy is "a middling decision" for the industry. American Rocket is one of a number of private firms working to develop space transportation services.

On the one hand, Bennett told REASON, the price is still significantly subsidized and therefore makes it harder for private firms to compete. But, he noted, the decision to auction the service is good in that it is a policy shift away from the notion that NASA, with its Shuttle, should be the country's one and only national space-transportation company. Instead, the new policy implicitly concedes what NASA has long denied—that the Shuttle is "a government-procured vehicle for government launch needs."

That's not the end of the story, though, for congressional intervention in the Shuttle-pricing issue looms on the horizon. Some federal legislators—most prominently Rep. Bill Nelson, a Democrat who represents Florida's Cape Canaveral district—have criticized the administration's new policy and are calling for Congress to set a flat (and highly subsidized) Shuttle price.

Whatever the final outcome of the price debate, both Bennett and Salin agree that Shuttle-pricing is a subsidiary issue for space entrepreneurs. Their crucial public-policy problem is, as Salin puts it, "the federal government's failure to establish a coherent policy to promote and foster a private space-transportation industry in this country."

High on Liberty

Recognition of the futility of the government's efforts to suppress recreational drug use is growing across the political spectrum. As REASON has reported ("Put This in Your Pipe and Smoke It," June-July), conservative guru William F. Buckley, Jr., has called for legalizing drugs, including cocaine and heroin. The current system is "encouraging criminal behavior on a vast scale," he wrote in his syndicated column some months ago.

Not long after Buckley announced his about-face on drug policy, his ideological colleague Ernest van den Haag followed suit. In a Wall Street Journal op-ed piece, the Fordham University law professor wrote: "Although I am a strong political conservative, I now believe that the costs of our fruitless struggle against illegal drugs are not worth the modest benefits likely to be achieved." Marijuana, cocaine, and heroin, he declared, "must be made as legal as alcohol is."

Even some police officials seem open to the idea of drug legalization. Hubert Williams, the director of the Newark Police Department, said in a Harper's symposium on crime, "Frankly, I think we should consider the idea very seriously. It is clear that the money being made in drugs has corrupted our system, our judges, our police officers."

An editorial in the liberal journal New Republic recently pointed out that the Reagan administration's massive antidrug crusades are in fact doomed. "As long as the demand for drugs remains constant," it noted, "drug traffic will defy all attempts at enforcement. The reason is that the drug trade is a perfect example of unadulterated, free-market capitalism." When the government seizes drugs, it drives up the price of drugs and hence makes the drug trade all the more profitable.

In going on to make the case for legalizing marijuana and possibly cocaine, the editorial observed that the demand for drugs exists. So "to effectively curtail drug consumption, the state would have to consistently invade the privacy of people's homes, where most drug use takes place"—an obviously unacceptable strategy.

The administration's drug-enforcement efforts have spawned other reprehensible tactics, such as a campaign to seize attorneys' fees in drug cases. Money to pay the lawyers of convicted drug felons, the feds argue, is an ill-gotten gain and therefore the property of the state, not of the attorneys to whom the fees are paid. Though one federal court has ruled against this tactic as unconstitutional, federal prosecutors continue to try to use it. Their intention: to discourage attorneys from defending those accused of violating drug laws, whether guilty or not.

Such degeneration of the justice system is in itself a strong signal that the government's drug policy is seriously flawed. As van den Haag pointed out in the Wall Street Journal, the disastrous alcohol prohibition of the '20s and '30s "ended by significantly debasing the political life of the nation." This, it appears, is no less true of the drug prohibition of the '80s.