Billionaires’ Spectacular Stumbles

Many Americans disparage “government” for its stodginess and hail private entrepreneurs for their daring, but the reality often is different, as ex-CIA analyst Paul R. Pillar explains in the wake of a rocket explosion.

By Paul R. Pillar

This past week, a Falcon 9 rocket built by Elon Musk’s SpaceX company exploded on the launch pad during preparations for a static test prior to the scheduled launch of a communications satellite. The explosion and fire were quite spectacular, although in an unwanted sense, of course.

This was SpaceX’s second catastrophic failure in little more than a year. Last year another Falcon 9 disintegrated two minutes after launch, with the loss of a cargo capsule bringing 4,000 pounds of supplies and equipment to the international space station. Such failures have raised, at least for the moment, the question of whether Musk is unwisely trying in his ventures to push the envelope too far and too fast.

A SpaceX rocket exploded on Sept. 1, 2016, at Cape Canaveral in Florida.

A SpaceX Falcon 9 rocket exploded on Sept. 1, 2016, at Cape Canaveral in Florida.

Notwithstanding such incident-stimulated doubts, commentary in recent years about private sector space entrepreneurs such as Musk has been overwhelmingly admiring and laudatory. SpaceX has dazzled people with its feat of bringing expended boosters back to the surface with a soft landing to make them available for reuse.

Just last month a feature story in The Economist gushed about how “new capabilities, new entrepreneurialism and rekindled dreams are making space exciting again.”

Underlying a statement such as that is the ideologically-based belief that nimble and motivated private entrepreneurs inherently can do things better than stodgy government bureaucracies. The same story in The Economist states that Musk “can drive the costs of space travel lower, possibly far lower, than a government bureaucracy can.”

That statement is true only in a broad sense that takes account of the differing goals and demands that are placed on the government bureaucracies involved, in contrast to the objectives from which the private entrepreneurs can pick and choose. If the missions and demands are kept constant, the statement is not true.

Private Insurance vs. Medicare

Look at some task in which both government and the private sector operate, such as health insurance. The government-run program, Medicare, has consistently operated more efficiently than privately-managed health insurance. Bernie Sanders is right that a government-run single-payer program is the way to go if the objectives are not only universal coverage but also the driving down of costs.

Businessman and entrepreneur Elon Musk.

Businessman and entrepreneur Elon Musk.

Some have asked why NASA did not work earlier on the cost-saving method of recovering unmanned rockets, as SpaceX is now. The answer is that NASA was called on to do other things — very difficult and dangerous things — in which the available resources and engineering talent had to be dedicated to tasks other than down-the-line cost-saving.

The demands that Congress, presidents, and the public placed on NASA involved getting fast, spectacular, even one-time results, such as beating the Soviets to the moon; any future cost-saving did not enter into those demands.

The overall picture of the government and private sector roles in space has been that government has pioneered the technology and the private sector has later exploited it commercially. The main breakthroughs in rocket science have come under a government pedigree than runs from NASA back through the space programs of the U.S. military services and to Wernher von Braun’s team in Germany, which invented the V-2.

Most of the technological pioneering had to be government-run because, although national security or national prestige may have been at a stake, any profit opportunities were too far away to provide sufficient commercial incentive to do the pioneering. Although the current privately run activity involves some engineering refinements such as those involved in the recovery of boosters, this is not a matter of major technological breakthroughs.

Competing Billionaires

The private entrepreneur’s freedom to pick and choose objectives has made much current private sector space activity a contest among billionaires, with egos as well as profit motives involved. Failure means one billionaire thumbing his nose at another.

The satellite that was destroyed in this week’s explosion on the launch pad was one that Facebook had planned to use to bring internet service to remote areas in Africa. Soon after the incident, Mark Zuckerberg expressed on his Facebook page disappointment “that SpaceX’s launch failure destroyed our satellite.”

The freedom to choose objectives has meant that the private space industry has chosen some objectives far removed from any public interest. This has especially been true of a line of business aimed at lifting a few paying passengers at a time to the edge of the atmosphere and giving them a few minutes to experience weightlessness and see the blackness of space before returning to earth.

More than one firm is developing this line of business, including Richard Branson’s Virgin Galactic — which suffered its own major failure two years ago when its prototype craft crashed and killed one of the pilots. The service being developed is a joyride for rich people. It is essentially the same kind of service provided by a thrill ride at an amusement park, except that both the altitudes and the ticket prices are much higher.

One of the reasons that private sector space endeavors enjoy, despite the failures, more of a perception of excitement and success is that the failures are not subject to the same after-the-fact recriminations and scrutiny that failure by a government bureaucracy is.

Failures by NASA have triggered the whole politically satisfying suite of congressional hearings and commission investigations. By contrast, Musk and Branson probably don’t even have to worry much about flak from their own boards of directors. This week’s explosion of the Falcon 9 is not likely to be the subject of congressional inquiry, and that is not just because it involved an unmanned rocket and no human lives were lost.

Future Risks

SpaceX and some other companies do aspire to get directly into manned orbital space flight, and this is where some of their bottom-line-improving techniques may start to bump up against public emotions when human life is endangered. One of the techniques SpaceX has used with the Falcon 9 is additional chilling of the fuel to make it denser and effectively increasing the amount of fuel on board. This means an ability to put heavier loads into orbit (and thus to charge more for the service) and to have enough fuel left over for those cost-saving recoveries of the booster.

An electric-powered Tesla sedan.

An electric-powered Tesla sedan.

Keeping the fuel extremely chilled, however, requires the hazardous procedure of fueling the rocket to take place as little as 30 minutes before launch. In a manned flight the crew already would be on board by then — a more dangerous situation than the usual procedure of completing fueling while the astronauts aren’t anywhere near the launch pad. But so far the brunt of anguish and recrimination when human life has been lost in American space exploration has fallen on a government agency, NASA, rather than on any entrepreneurs.

As for that question of whether Musk is pushing things too far and too fast, for his own good let alone for any larger good, additional evidence comes from Musk’s other major enterprise, Tesla Motors.

Four months ago in Florida a Tesla car in “autopilot” mode was involved in a fatal crash when neither the car’s system nor the driver noticed a truck crossing their path. The incident underscores the question of whether the driving public (or that segment of it that can afford a Tesla) is ready for this kind of semiautomatic operation, and whether such a not-yet-fully-an-autopilot arrangement, in which the natural tendency is to rely more than one should on the car doing its own thing, ought ever to be sold. Certainly sounds like an instance of going too fast in pushing a product out the door.

Meanwhile, it falls to government employees, including local police as well as traffic engineers in state departments of transportation, to try to keep the public safe with machines like that on the road.

Paul R. Pillar, in his 28 years at the Central Intelligence Agency, rose to be one of the agency’s top analysts. He is author most recently of Why America Misunderstands the World. (This article first appeared as a blog post at The National Interest’s Web site. Reprinted with author’s permission.)

16 comments for “Billionaires’ Spectacular Stumbles

  1. FZappa
    September 12, 2016 at 12:20

    Is recovering boosters cheaper or is it another gimmick to impress?

    The space shuttle was a gimmick. It cost twice as much per unit of weight to lift payload into space compared to the Saturn V. It reminded me of a middle aged man buying a Corvette to impress others. I felt no more than one should have been built just as a proof of concept.

    SpaceX is another joke. Obama devastated Brevard County ending the shuttle program. I didn’t mind seeing the program ended but I would have preferred all working on it to remain in Florida and work on making derivatives of the Saturn V the most efficient and reliable launch vehicle available in the world.

    Where did most of the refugees from Brevard County go? They went to work at SpaceX. So Musk was able to hire a crew trained by NASA and most of them likely educated at state colleges. Things would be much rougher for him if he had to foot the bill for educating and training his employees. It’s another good example of the rich leeching off the public.

    And for any in the thrall of private enterprise, please give me any example of a public utility being privatized that improved services and lowered prices for customers? I’ve never read of a single one but I’ve read of many examples where privatization brought crappier service at a higher price.

  2. Realist
    September 6, 2016 at 09:59

    Well, at least this article didn’t rehash the hypothesis that the rocket payload included an Israeli space weapon and that it was destroyed on the launchpad either by a fast-moving drone or a UFO. If you asked Obama, he’d say Putin was responsible and will be made to pay.

  3. WalterG
    September 6, 2016 at 09:24

    So far we know that one person was killed in an automobile driving in “autopilot” mode. Some folks seem alarmed. But accidents involving vehicles under traditional human control continue to cause about 40,000 deaths each year.

  4. jfl
    September 6, 2016 at 07:43

    Funny how comments critical of The Company’s line get deleted post haste … Don’t look at him … don’t look at me … look over there, behind the tree!

    Such failures have raised, at least for the moment, the question of whether Musk is unwisely trying in his ventures to push the envelope too far and too fast.

    The CIA-Consortium News drags a red-herring over the trail its columnists’ ‘former’ employer once again …

    I’m sure the CIA was thrilled to have their US contractor launching an Israeli spy satellite constellation for the Chinese. It’s just business, get over it.

    … Israel and their US comprador have moved too far and too fast, developing ties to the Plutocrats Republic instead. Wonder if SpaceX was another one of those companies the CIA contributed to seed money too. Insult to injury. The CIA were always spendthrifts, wasn’t their money. It was ours.

    Mene, mene, tekel, upharsin .., the Israelis can read the handwriting on the wall, they know who is on the way up, and who is on the way down. The indispensable nation is indispensable to the CIA … but not to Israel. Milk ’em for all they’re worth and then roll ’em. So the CIA whacked their ‘experiment’ in the USA … too far and too fast. They’ll use a Russian launch vehicle next time?

  5. Erik
    September 6, 2016 at 06:47

    Very often the failure of a new company’s systems, or their ultimately higher costs, are due to poor engineering standards. The new company hires junior engineers and project managers sure that they can skip standard design and test processes because those “old” methods must be for old folks and they must be more agile or nimble because they are young. This seems to work for a while until a disaster teaches the reasons that those processes were invented.

    Usually the junior manager and his engineers blame circumstances, decide to be a bit more careful next time, and go on learn the next hard lesson. This works only because the young engineering manager keeps taking credit for “fast results” and maintaining a high morale by failing to burden the process with ordinary design and test processes.

    It happens even in large companies with established standards of design process and test, even with separate departments doing the testing. The young project manager.simply ignores the standards, or claims to be following newer “agile” processes when in fact following none. They promote each other out of the disaster and blame it on contractors or others no longer present.

    All of that is less likely where there are consequences for individuals due to responsibility for long term results in project cost, reliability, maintainability, and re-usability of the product. Government control can work better where standards must be set and multiple contracting companies hold each other responsible for results.

  6. Joe Tedesky
    September 5, 2016 at 22:39

    The privatization of the U.S. Military should concern us all. It is said that two thirds of America’s defense budget is spent on private contractors. Is it any wonder how 6.5 trillion dollars goes missing, when there are so many checks to be mailed out to the private contracting companies. Americans are paying a hefty price to be the world’s only superpower, and for what, so everybody can hate us. Establishing a new world order isn’t easy, and it isn’t cheap.

    I would suggest that before private enterprise is allowed to venture into space for profit, that someone please clean up all that space junk that’s polluting earths orbit. Maybe it’s just me again, worried over nothing, but somehow I feel that this junk that is left floating around in our spaces orbit will be another job left for our grandchildren to worry about…I think we have left our future citizens enough of garbage to haul, let alone this mess as well.

  7. Alfonzo Jackson
    September 5, 2016 at 21:20

    Weak meme dude. Study economics

    • Erik
      September 6, 2016 at 07:36

      Economics does not show that unregulated private industry is more efficient in all things. The subject is often taught by propagandists against regulation of private enterprise, because they must have a devil to justify its ills. But efficiency requires using proper organization and process for the job. The competition of private industry reduces costs, causes cheating on quality, and allows poor standards of engineering in smaller companies. It works well by itself only where the customer can understand the features, durability, maintainability, and safety upon purchase, which is seldom true nowadays. Private enterprise must be held to higher standards by government in order to achieve that which it does best.

  8. Bill Bodden
    September 5, 2016 at 21:14

    “Dilbert is an American comic strip written and illustrated by Scott Adams, first published on April 16, 1989.[1] The strip is known for its satirical office humor about a white-collar, micromanaged office featuring engineer Dilbert as the title character.” –

    It was in a private commercial office that Scott Adams found his inspiration for the Dilbert comic strip that directed ridicule at management – not in some government bureaucracy. This is not to say that similar satire would not be justified targeting government bureaucrats, but Dilbert suggests private commercial enterprises are not necessarily the solution to problems with government that some charlatans claim and the gullible believe.

    • Erik
      September 6, 2016 at 07:08

      Dilbert has fine examples of the absurdities often seen in engineering, which usually are applicable to other organizations. More often the problems are avoided where management is competent. Please see my comment below.

      Small companies of innovators are often the source of innovation but seldom succeed in reducing the cost or improving the efficiency of a large product with high costs, a long useful life, and successive versions. The problem is that they need experienced management to do that, and they are usually staffed by inexperienced engineers and managers, whose enjoyment is linked to a feeling of freedom from the burdens of engineering design and test processes. Only experience proves those processes to be necessary to avoid disasters, cost overruns, and undocumented products that are too costly to maintain, because they have complex faults and no one wrote down how they work, so it takes too long to fix the many unforeseen problems as they arise.

      This is solved by running entrepreneurial teams until the result sort of works sometimes (“proof of concept” stage), and then having more experienced teams make the real product, which is actually Required to work, a horrifying thought to the innovator, as are the methodical steps needed.

  9. jfl
    September 5, 2016 at 19:53

    Sorry, bad link above … use this one.

  10. jfl
    September 5, 2016 at 19:51

    Don’t look at him, don’t look at me … look over there … behind the tree!

    ‘Such failures have raised, at least for the moment, the question of whether Musk is unwisely trying in his ventures to push the envelope too far and too fast.’

    Which envelope would that be?

    I’m sure the CIA was thrilled to have their US contractor launching an Israeli spy satellite constellation for the Chinese. It’s just business, get over it.

    Here at CIA-Consortium News we overlook the involvement of the columnists’ ‘former’ employer at all costs.

  11. M.
    September 5, 2016 at 16:58

    Loved it! Some things should never be privatized. Bring back the commons, the global commons.

  12. evelync
    September 5, 2016 at 14:39

    Very interesting analysis!

    I have long hated the presumption that “private” innovation, research, work is superior to “publicly” funded efforts. For example, the team that produced the seedlings of the Internet at DARPA must have been pretty spectacular.
    And the people who work for Medicare and the Postal Service, based on my experience are dedicated, hard working, competent and helpful.

    I really hate the “Cold War” ideology that tries to demean publicly funded work. I would like to think that the quality, skill, dedication of the team in place doing work is not defined by whether or not there’s a profit motive.

    That said, Elon Musk, as one of the billionaire entrepreneurs, seems to me like the Edison if our time. And we are fortunate, I think, that he has created a business plan that he fits within a grand scheme to try to cope with the reality of climate change and a move beyond fossil fuels:

    Musk’s “Master Plan” offers a moral dimension that our present day Citizens United seriously corrupted government lacks. Our government is owned lock stock and barrel by the worst actors of our commercial life. The result is wars for oil, looming climate catastrophe, huuuuge, unsustainable divisions of wealth.

    We are fortunate that some of the billionaire entrepreneurs seem to have a moral compass. If Musk was a powerful evil genius operating outside the constraints and peer review within a properly functioning publicly funded “government”, things could get quite dicey.

    Paul Pillar mentions the shocking fatal Tesla crash in Florida which was not followed by the public scrutiny that a government run program might have drawn. FWIW, Musk addressed that recently saying that the auto pilot Tesla automobile is not even at a level that he would call Beta yet.

    But I am reminded of the tragedy of the Challenger. The brilliant physicist Richard Feynman, a member of the commission that investigated the Challenger demonstrated the “O RING” failure to the public with a glass of ice water and a small o ring.

    However, this wiki article fails to mention the little blurb in the back pages of the NYT shortly after the disaster that on the day of the launch, President Reagan was to hold a press conference and hoped to trumpet a successful Challenger launch. When he learned of the possibility of delay that morning, the Times piece quoted Reagan as saying “get that thing up”. So political opportunism trumped the better judgement of the engineers who courageously were trying to warn of the o ring dangers. And their superiors at NASA, apparently, overrode their concerns.

    As Bernie has pointed out, our current government is dominated by ultra concentrated pockets of private wealth.

    Diffusion of the control of energy would go a long way to loosening the grip that the energy oligopolies have over government policies that affect war and peace, climate change, economic and social justice.

    To the extent that Elon Musk’s Master Plan gives individuals control over their access to energy and helps to break peoples’ reliance on massive polluting fossil fuel power plants, wars for oil and massive nuclear energy plants with their toxic nuclear waste storage menace, I think he is doing what should have been the governments’ work.

    Of course his Master Plan includes leasing the solar panels and wall batteries and in that sense his company could become another oligopoly. But at least he seems to care about trying to solve the big problems at a time that government seems hamstrung.

    Had Bernie won, I think we would have seen a shift towards sustainability. Hopefully the young people he energized and the democratic benefits of the Internet wrt communication hold out some hope.

  13. September 5, 2016 at 13:20

    correct – public funded.
    BUT, Musk’s Space X paid an acceptable sum of money to the US Gov. for the use of the launch site. In the event the public feels the amount of money was not sufficient then it should say so. But as usual with the American public they can’t be bothered when, “It Will Last My Time” syndrome appears on the scene. A good example is the circus of the one party two wings political outdated system making the rounds for the past year. And what a circus it is but the Americans let it happen.

  14. September 5, 2016 at 10:35

    Humanity should not allow rich people to piggy back on publicly funded research on publicly funded launch sites.

    How many law watt bulbs will it take to cancel out this piggy polluter’s pyre?

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