Could Space Be The Next Frontier For Super-Wealthy Investors?
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Arguably, the most famous astrophysicist in the world, Neil DeGrasse Tyson, has posited that the first private trillionaires in the world will make their money by exploiting the endless resources of space. These comments came during an interview with CNBC regarding his TV show called “Star Talk.”
Arguably, the most famous astrophysicist in the world, Neil DeGrasse Tyson, has posited that the first private trillionaires in the world will make their money by exploiting the endless resources of space. These comments came during an interview with CNBC regarding his TV show called “Star Talk.”
Tyson argued that world governments (particularly the United States government) need to sink more funding into space exploration, not less. In recent years, billions of dollars have slashed funding for the American space effort. While many Americans believe the space effort an expensive and unnecessary endeavor, few truly take the time to analyze the cost/benefit ratio of the space program. At its height in 1966, during the height of the space race, the budget for NASA (when adjusted for inflation) was approximately $43.6 Billion (4.41% of that year’s national budget). As of 2010, when President Obama announced plans to begin cutting space exploration spending in favor of privatization, NASA’s budget had already shrunk to a mere $20.4 Billion (just 0.52% of the annual budget). As of 2014, NASA made due with a budget of just $17.6 Billion (0.5% of the annual budget).
Other government programs dwarf NASA’s budget, even when compared to the 1960’s NASA budget.
- Social Security $845 Billion (24% of budget)
- Health Care $831 Billion (24% of budget)
- Defense Department $596 Billion (17% of budget)
- Interest on the National Debt $229 Billion (6% of budget)
On the other hand, numerous studies have found the total return on investment – including commercial sales of spin-off products originally developed for use in space – has been several magnitudes larger than the initial expenditures on the NASA budget. Nevertheless, public perception continues to disfavor spending government spending on the space program.
While Tyson argued that the government should blaze the trail, he believes that the private sector will ultimately benefit from this investment. He pointed out that Columbus discovered the New World thanks to funding by the Spanish Government, but private sector companies like the Dutch East India Trading Company ultimately benefited from this government sponsored exploration. Should governments of the world blaze the trail into space, the possibilities for industries such as asteroid mining, tourism, and even real estate boggle the mind. Because of the virtually endless resources available in the vast reaches of space, Tyson argues, many issues of resource scarcity on Earth could become outdated. Moreover, the first investors to back efforts to successfully reach those resources could become some of the Earth’s first trillionaires, he suggests.
Of course, the amounts required to make those dreams a reality remain astronomical (pardon the pun). Coupled with the extremely high risk of investing in these infant space exploration companies, such investments will likely remain primarily the province of the super-wealthy, such as Elon Musk and Sir Richard Branson – at least for now.
