Last updateMon, 25 May 2015 2pm

LOS ANGELES Monday, May 25th 2015 4:31


  • WHO WE ARE-Nearly half of Los Angeles just gave itself a raise. Following a wave of state and local minimum-wage bills and initiatives, Los Angeles became one of the largest cities to dramatically raise its hourly base pay and join Seattle to hit the magic $15-an-hour demand pushed by labor and community groups nationwide. The City Council…
  • ​City Snookered by Westfield Billionaires

    Jack Humphreville
    LA WATCHDOG-In March of 2014, the Herb Wesson led City Council and Mayor Eric Garcetti approved a 25 year, $48 million giveaway to help the $28.5 billion Westfield Corporation finance its $250 million development, The Village at Westfield Topanga. (Photo) But this subsidy championed by Councilman Bob Blumenfield was hardly necessary as The Village…
  • Slick With Denial: ‘Self-Regulation’ and the Latest Oil Spill

    Judith Lewis Mernit
    HISTORY LESSONS IGNORED-On Wednesday, May 20, the day after a Santa Barbara County fire inspector discovered a stream of contaminated crude oil flowing onto a pristine segment of the Southern California coast, a group of researchers published a study linking the 2010 Deepwater Horizon oil spill to a mass die-off of bottlenose dolphins. The 46…
  • Scaremongering about the Patriot Act Sunset

    Jameel Jaffer
    FALSE CLAIMS EXPOSED-In a last-ditch effort to scare lawmakers into preserving unpopular and much-abused surveillance authorities, the Senate Republican leadership and some intelligence officials are warning that allowing Section 215 of the Patriot Act to sunset would compromise national security. (One particularly crass example from Senator…
  • Still the Land of the Free, and the Home of the Brave

    Ken Alpern
    ALPERN AT LARGE-It's been another year and another successful Flag Placement at the West Los Angeles National Cemetery. Crawling out of bed in the morning on a holiday weekend to show up bright and early for a show of American patriotism and respect to our veterans and fallen heroes, the region and nation saw yet again how the Boy Scouts, Girl…
  • Retaliation: VA Police Target Veterans

    Robert L. Rosebrock
    LOS ANGELES – Recently, I was interviewed by John Ismay, an Iraqi War Veteran who is the “Veterans and Military Issues Reporter” for Southern California Public Radio. We met at the Los Angeles VA to discuss the never-ending misappropriation of land at this largest VA in the nation, within our nation’s capital for homeless Veterans. We were…
  • City Controller’s Grandstanding DWP Audit is the Real Waste of Ratepayer Dollars

    Dennis Zine
    JUST THE FACTS-City Controller Ron Galperin’s Grandstanding DWP Audit results were finally released. Unfortunately, the conclusion and political spin that came afterwards from the controller was misleading. Here are the FACTS: The DWP’s Joint Training Institute and Joint Safety Institute are administered by DWP managers and representatives of the…
  • A Place Where ‘Special Interest’ is NOT a Dirty Word

    Denyse Selesnick
    MY TURN-We need to have a new word to differentiate the villainous “Special Interest” that everyone is always complaining about and the “Special Interest” that almost all of politicians and civic and social activists have adopted as a cause. It is impossible to have passion about multiple issues. I know I have mentioned this before, but it seems…
  • Alert! America’s Small Businesses are Being Screwed by Big Business

    Robert Reich
    THE ECONOMY-Can it be that America’s small businesses are finally waking up to the fact they’re being screwed by big businesses? For years, small-business groups such as the National Federation of Independent Businesses have lined up behind big businesses lobbies. (Photo: small businesses in Studio City) They’ve contributed to the same Republican…


  • Can Strawberries Help Fight Cancer?

    Christian Cristiano
    WELLNESS-There have been a number of studies over the years that could show evidence of strawberries fighting off cancer. Tong Chen lead a study…
  • Study: The Best Way to Quit Smoking … Bet On It

    Francie Diep
    WELLNESS-Oftentimes, money speaks louder than words. Apparently, that aphorism applies to cigarettes too. A new study finds that money incentives…
  • Exercise Can Help Anxiety … Here’s How

    Christian Cristiano
    WELLNESS-Statistics show that over 3 million American adults suffer from anxiety and there is no evidence that number will be declining any time…

ICYMI-Amy Schumer shows Dave her vagina

Remembering Ann Meara: 1929-2015

The Star Spangled Banner … like you’ve never heard it before









“Privatizing” Space: Companies Shoot for the Stars, but Uncle Sam Still Pays the Bills

VOICES FROM THE SQUARE - Later this week, a Falcon 9 rocket built by SpaceX, a young company founded by Elon Musk, is scheduled to launch from Cape Canaveral in Florida. The rocket will carry a Dragon capsule, also built by SpaceX, to the International Space Station.
This is being hailed as a conspicuously important achievement because SpaceX, which Musk founded in 2002 with money from his share of PayPal, is a private company.

The temptation to celebrate the privatization of space exploration—the unleashing of all those entrepreneurial billionaires to take us where we haven’t been before—is understandable. But it’s also misguided.

Uncle Sam is still the indispensable player in this venture. The U.S. government, via NASA, has paid SpaceX about $350 million over the past five years, which is about half of the company’s budget.

(The rest has come from Musk’s fortune and other contracts.) The company’s launches—from Omelek Island in the Pacific, from Vandenberg Air Force Base in California, and from Cape Canaveral—depend on government infrastructure.

SpaceX is an enormously exciting company. But their rockets are deliberately not novel—they’re based on proven designs to make them as reliable as possible. All three of the company’s rockets (the smaller Falcon 1 and larger Falcon Heavy) will use the same engine, in various clusters, called the Merlin.

The Merlin is based on a design first used in the Apollo program on the lunar module’s landing engine. What is novel about SpaceX is not its technology; it’s that it is a well-run company hustling to compete for business.

Such competition existed during the space program’s heyday, in the Apollo years. But it has eroded in the intervening decades, leaving one company, the United Launch Alliance, with a near-monopoly.

Musk is far from the first visionary to found an aerospace company, and the government was an equally important partner to all his predecessors. In what became a recurring pattern, the Wright brothers’ first contract (after years of self-funded struggles) was with the US military. They signed a contract with the Army Signal Corps in early 1908.

In 1912, aviation pioneer Glenn Martin founded a company in Santa Ana, California, building trainers for the Army Signal Corps. Two brothers, Allan and Malcolm Loughead, founded the Alco Hydro-Plane Company in San Francisco. Martin flew stunts to make money in the early days; Allan was a racecar driver.

In 1916, Martin and the Wright brothers merged their companies, and William Boeing created the Pacific Aero Products Company in Seattle. Boeing was already rich, having made a fortune in timber (after starting out with a generous inheritance). Donald Douglas started a company in Long Beach in 1921. James McDonnell started an aviation firm in Milwaukee in 1926 (this company would go bust, and McDonnell would try again in 1939 in St. Louis, with greater success).

Now let’s take a ride on the merger express. Following the 1916 merger of Wright and Martin, a super-merger of 12 companies in 1929 created the Curtiss-Wright Corporation. Alco Hydro-Plane would go out of business after a few years, but the Loughead brothers, who pronounced their names “Lockheed,” would try again with the Lockheed Aircraft Corporation.

In 1961, Martin, who had left the joint venture with the Wright brothers to found another company, would merge that second company with the American-Marietta Corporation, becoming Martin Marietta. McDonnell and Douglas merged in 1967. In 1995, Lockheed and Martin became Lockheed Martin. A couple years later, in 1997, Boeing and McDonnell Douglas would merge. This left two companies: Boeing, and Lockheed Martin.

During these decades, the aviation companies became aerospace companies, building rockets for the US government even as they continued to make airplanes. The mergers of the late ’90s left Lockheed Martin building the Titan and Atlas rockets; Boeing had the Delta. (Lockheed Martin built the external tank for the Space Shuttle, while a company that was later acquired by Boeing built the orbiter).

In 2006, Boeing and Lockheed Martin decided that they were better off not competing with each other and got the feds to approve a joint venture: the United Launch Alliance (ULA), half of which is owned by each company.

Though ULA has had an effective monopoly in the U.S., it has foreign competitors: the Europeans, the Russians, the Chinese. But the major customer for space launch, the US government, must use an American company.

For years, that has meant ULA. As ULA vice president George Sowers told Congress last fall, “Every GPS satellite, every missile warning satellite, nearly every intelligence collection satellite, weather satellite, and military communications satellite and nearly every major NASA science mission has been launched—successfully—on a ULA or ULA heritage product.” The launches were indeed successful, but at what cost?

As a GAO report from last year narrates, the Federal Trade Commission originally opposed the Lockheed Martin-Boeing partial merger that created ULA but was overruled by the Defense Department, which cited vague “benefits to national security.” After the merger went through, the GAO report says, costs for the EELV program (the government’s main program to create next-generation rockets) began to rise steeply.

ULA, like SpaceX, is a corporation (albeit one with a more complicated corporate governance structure). The question isn’t whether a program is “run by government bureaucrats” or by “private industry” but, rather, whether the industry is competitive. That’s why the approach recommended by the House appropriations committee in late April is dangerously counterproductive.

The house bill calls for “an immediate downselect to a single competitor,” saying that this will allow NASA to save money. But by saving a little bit in the short run while undermining competition, this would drive up long-term costs, as has happened to NASA in the past three decades.

In an August report, NASA estimated that it would have cost almost $4 billion for NASA to develop the Falcon 9 using a traditional approach, while it could be done with $1.7 billion using a more “commercial” approach. SpaceX has spent, says Musk, $300 million to develop the Falcon 9.

This is remarkable, and praiseworthy. But it has nothing to do with whether a launch is notionally under the control of NASA or of a private contractor and everything to do with bloat at old-line companies like ULA. The August report cited “organizational complexity,” too large a workforce, and too many “management layers” as reasons the old approach was so expensive.

SpaceX is fun: it was, after all, the first to send into orbit and return a top-secret wheel of cheese (in 2010). But both the Dragon and the Falcon 9 are two years behind schedule. It may be that a promised market in space tourism will boom in the next decade, leading to greater private demand.

But even in the rosiest of scenarios, the market for space launch will remain highly regulated, and costs will depend on regulatory decisions. SpaceX is, like its rival ULA, dependent on the government for its livelihood. The Alco-Hydroplane company was once small and nimble; so was the Glenn L Martin aircraft company and Pacific Aero Products. Douglas Aviation’s DC-3 revolutionized air travel.

In March, 2011, ULA announced a partnership with XCOR, one of SpaceX’s smaller rivals. For now, SpaceX has stayed clear of such entangling alliances, even when Musk was broke in 2010. If it can remain independent and reintroduce competition in an industry that has seen a half-century of corporate consolidation, access to space may finally get cheaper.

The profusion of politically connected government contractors seeking monopolistic deals has done more to make getting to space so expensive than anything inherent in the cost of rocket nozzles.

(Konstantin Kakaes, a former Economist correspondent in Mexico, is a Schwartz Fellow at The New America Foundation in Washington, DC. Zocalo Public Square … where this article was first posted … connects people to ideas and each other. A must visit.) Photo credit: JimNtexas.

Tags: Space travel, privatizing space, Konstantin Kakaes, economy, Wright Brothers, California aircraft industry, business, economy

Vol 10 Issue 40
Pub: May 18, 2012