Wednesday, September 28, 2016

Sunshine is money

This post is dedicated to Jerry Pournelle, who got it right almost 50 years ago, and all those that continue to get it wrong today.

Reagan once famously said, “the trouble with our liberal friends is not that they are ignorant, but that they know so much that isn’t so.” This truth isn't limited to liberals. The intellectually insecure and lazy are often unwilling to test their assumptions. The assumption that I will prove isn't so, using just basic math, is that mars requires exports to be economically viable. It doesn't. That is not to say mars will have no exports because information, in forms from research to entertainment, will certainly be a mars export. But this only enhances mars economic viability. It is in no way required.

Let's start with a given... economic viability requires that income be greater than expense. Can we agree on that? Expense includes everything required to live. If some part of income above expense is retained this eventually leads to wealth. What are the details?

What Pournelle got right is that viability starts with having enough energy. Energy is the primary critical requirement. The useful energy must not only be enough for life support but also enough to manufacture a means to acquire more excess useful energy over time. Industry requires it.

Sunlight, converted into useful energy, is one very important income source. Just like on earth, this commodity can be traded among martian colonists for other assets. It is money. How much is produced by each colonist and how much is purchased by each is an economic choice like any other. That energy isn't just that which is converted to electricity. It is also the energy stored in plant growth. Plants are also money. The options of what to grow and trade makes for a very robust market. Do I have to continue in saying that minerals are also money. To be viable they simply have to be worth more to other colonists than the cost of extraction.

Where does the money to buy things come from? You missed it, didn't you? Read that last paragraph again, except with some insight.

Any martian that can produce anything another might want has produced wealth. Pieces of paper are not money. They are a convenience. Barter is an inconvenience that money cures. That's mainly all it is. So let's get even more basic...

Mars is economically viable if the life of each martian is viable. So let's take a closer look at that. You will note that no export to earth other than possibly data will be mentioned.

A martian starts out on earth buying a ticket to the surface of mars. That money comes from each ticket purchasers savings. No mystery involved. Elon Musk says to make this work the trip will send a lot of people at a time on a quick 3 month trip every 26 months. That ticket will include provisions consumed during the trip and personal property once they arrive (including a space suit.)

There will be a bootstrap period for the first colonists where abundant presupply will have to be sent first, but we are going to focus on the colonist that arrives later on mars with a spacesuit and just a few hundred kgs. of personal property. They have just enough consumable provisions to meet up with colonists that have been on mars for at least 26 months.

Some things can be made on mars and for some time other things will not be. Life support comes in a variety of forms. The lander will have life support as will a spacesuit (although of a shorter duration.) These are both subject to damage that may be difficult to repair. So the first order of business for our new colonist is to trade for a habitat that uses locally repairable life support components. That habitat is a trade good those on mars for the last 26 months or more can produce with just local labor and materials. That habitat could be paid for immediately with some items from earth or over time as part of a labor or some other agreement. The early colonists will have an advantage over later because there will be so many unique things they can import from earth (just in plant varieties alone) that they may be able to hold onto monopolies for some time. Unique skills will also be a valuable import.

Those habitats may or may not be completely self contained. Either works. If not, then the person living there must have tradable skills to make up for any deficiencies. That will not be difficult especially early in the life of the colony. Even basic labor alone will be in great demand. Beyond that, a colonist may have skills in short supply that raises their value even more. Is this really so difficult to imagine and note it involves zero export to earth?

Now for the simple math I promised. So simple it doesn't even require numbers!

Each colonist will have the ability to produce. How much and what is totally up to them but the invisible hand will be hard at work. Their market will be every other colonist. Known as a one to many relationship that applies to each and every person.

Can a colonist produce all of their own needs? It doesn't matter. What does matter is, can they produce some things in excess of their own needs. Of course they can. Each colonist willing to put in the effort can therefore produce wealth. If each colonist can produce wealth, so does the colony.

It's not that complicated. Put away your economics books and equations and just think.

Over time, industry will be built. Earth can participate in this wealth creation the same way we do in any other foreign stock market with zero export required.

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