The following op-ed ran in the Roswell Daily Record on October 4.
One of the cruelest manifestations of illogical thinking is the sunk-cost fallacy.
The irrational belief that a bad investment will, one day, pay off, if we just hold on a little longer, has led to plenty of sorrow in the private sector. In the public sector, though, it’s taxpayers who are victimized when bureaucrats and elected officials refuse to walk away from failed projects once hailed as “economic development.”
“Spaceport America” is probably New Mexico’s worst example of the sunk-cost fallacy. The facility broke ground in June 2009, and “opened” in October 2011. Its “anchor tenant” is Virgin Galactic. Owned by U.K. mega-mogul Richard Branson (net worth, according to Forbes: $5.1 billion), the company aims to send tourists on brief, suborbital trips into space.
Virgin Galactic once hoped to launch their first customers as soon as 2008. Almost a decade later, no tourists have soared into the wild black yonder from New Mexico. And despite regular promises that other firms will soon make use the spaceport, activity there remains essentially nil.
The facility’s dismal performance is a bitter pill for the Land of Enchantment’s taxpayers. It was built with hundreds of millions of dollars in borrowing, made possible by the state’s severance tax and a special gross receipts tax imposed on Doña Ana and Sierra Counties. Of nearly $12 million in expenses in the 2016 fiscal year, less than 19 percent was covered by rent and user fees. That left taxpayers to pick up the tab for the rest of the costs — including some extremely generous salaries and benefits for “managers” who have very little to do.
So are the spaceport’s officials ready to acknowledge their failure, and unload the state’s terminally ill white elephant? Hardly — they’re looking to double down. During a recent televised forum hosted by KRWG in Las Cruces, Dan Hicks, the new CEO of the facility, averred that the “future of Spaceport America is so bright.” He’s seeking more funding, for a freight-rail connection, another runway, and a payload-processing facility.
Hicks wants his employer “to be able to compete on a national level.” To that end, it’s worth noting that Spaceport America’s competitors spend far less, and ask taxpayers to bear much smaller burdens. The “Oklahoma Air & Space Port,” located in Burns Flat, was licensed by the FAA in 2006. It’s received more than $7 million in state appropriations, and handed $18 million in tax breaks to a now-bankrupt launch company. So its paltry results have been similar to New Mexico’s — at a fraction of the cost.
Spaceport America claims that SpaceX, Elon Musk’s amazingly successful start-up, is one of its tenants. But the company is “partnering” with the State of Texas and the City of Brownsville, who have ponied up $20 million worth of incentives, to build a launch facility along the Gulf Coast. While the subsidies aren’t needed and shouldn’t be appropriated, SpaceX has committed to spending far more than what taxpayers are being asked to contribute: $85 million.
Other budding spaceports are located in California, Florida, Alabama, Georgia, Canada, and New Zealand. While plans for the facilities are fluid, it does not appear that many, if any, are as deeply committed to spending public dollars as Spaceport America. With more natural advantages — coastal locations, capable workforces, marketing to firms with less-risky launch technologies — they don’t have to.
Former Governor Bill Richardson once claimed that Spaceport America would make Southern New Mexico “a pioneer in the private space industry.” That hasn’t happened, and there’s no evidence that it will happen anytime soon. The costs to build and “operate” the spaceport so far have been sunk. Unfortunately, they’re not likely to resurface. If the spaceport’s officials, and the politicians who fund them, can’t make the facility self-sustaining, it is time for the state to auction it off, and reclaim whatever dollars it can for an investment gone horribly wrong.
D. Dowd Muska is research director for the Rio Grande Foundation, an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.
Here’s a letter I wrote to the editor of the Bulletin back in early September; it was never published.
Nick Kaczmarek of Virgin Galactic (anchor client for our Spaceport America) is upbeat about suborbital space flights (July 23rd’s Bulletin, p. 22). A separate, outside view, less sanguine, is published in the scientific journal, Physics Today, June 2017 issue. Michael Neufeld of the Smithsonian National Air and Space Museum reviewed a new book, How to Make a Spaceship: A Band of Renegades, an Epic Race, and the Birth of Private Space Flight, by Julian Guthrie. There, Neufeld mused why suborbital space tourism has been so slow to develop. I quote in full, for accuracy. Neufeld cited the problems with Virgin Galactic’s design in SpaceShip Two: “Spaceflight was supposed to become routine, but [Bert] Rutan’s winged design, with its unique mechanism to tilting the tail boom up during reentry, requires expert piloting. Piles of money are needed to build a spacecraft safe for tourists, and several suborbital ventures have already failed for lack of capital. SpaceShip Two continues because of the deep pockets of Virgin Galactic founder Richard Branson, who bought the rights to Rutan’s technology for his company Virgin Galactic and who wrote the foreword for How to Make a Spaceship. However, Virgin Galactic only recently resumed test flights and soon be surpassed by its rival Blue Origin, owned by Amazon billionaire Jeff Bezos. Blue Origin’s automated vertically launched New Shepard rocket includes a booster that can be recovered and reused and a crew capsule for parachute landing. It has already flown without passengers; Blue Origin plans to launch employees this year and tourists next year. Bezos and Elon Musk of SpaceX, who appear briefly in How to Make a Spaceship, have recently displaced Guthrie’s main actors to become the new faces of New Space.”
Apologies for some silly, dark and random thoughts about rocket rides. First thought: When you seek high-function thieves, look for the guys in the most expensive trousers. Betcha.
As your list of other similar rocket-base projects in-various-stages of progress indicates, the scam is already working, word-wide, sucking money from all over the world, and Branson, the salesman, who ‘did’ us here in our country, has, like an oddly-growing mosquito, extended his parasitical money-sucking ways world-wide. Where there’s a budget, he’s THERE with the Plan. What a gig. He obviously has a department which monitors and tells him of levels of budgets worldwide. Where there is open land and money, and decision-makers are naive because of poor education, ie recently rural….he shows up in those demographics. Our demographics! There are paid ‘finders’ and ‘guides’ who qualify marks and handlers who guide the marks to the Grand Master. Maybe that’s Trump or maybe it’s Branson, or their most expert associates. Presentations are made. Budgets are authorized. The ‘scam’ seems to be a fad, in various psychological areas, same methods, different different target markets. Trump has been doing this for years, he’s been selling his name as a commercial guarantee of gain for many years and he just recently broadened his market targeting. Branson simply operates in a different, more specialized market, and has not yet gone into selling his influence to electorates for political power. It is a slightly different scheme. When it comes to shaping the ‘offer’, he has his own crew of clever attorneys and persuaders. Branson fooled me, not
Trump. I’m not mad much about anything. I just want productive industry here in this state, and yeah, I got desirous of a rocket ride.
So now hope of watching a rocket ride is like a carnival hustle, or a televangelist , selling you hope of heaven or wealth, or both. I bought it totally.
Yeah, I got suckered on this scam. I tell this in the interests of personal practice of honesty, which I need from time to time. Point: Looks like we Citizens are paying too much for OUR spectator tickets.