Investigation Into SpaceX Shows Need for Market Economy

On February 11, the Department of Defense Office of Inspector General launched an investigation into the certification process that allowed SpaceX to conduct launches for the U.S. government. The investigation might not necessarily force the company into financial difficulties, but it could very well question the procedure by which it became one of the most significant government contractors.

The reason for the investigation facing SpaceX could very well be related to a history of failures that the company has been through.

In 2015, a Falcon 9 cargo mission to the International Space Station (ISS) exploded shortly after launch. Total cost: $110 million.

In 2016, an Israeli commercial satellite also exploded on the ground when supposedly routine fueling procedures went wrong. An Israeli lawmaker said last year that the failure destroyed Israel’s satellite industry.

In 2017, the company's updated Merlin rocket engine was destroyed at a testing facility in Texas.

That same year, the Department of Defense found that SpaceX, among other aerospace companies, failed to meet quality assurance standards for the Evolved Expendable Launch Vehicle Program.

There are also ongoing security concerns that could have sparked NASA’s doubts about Musk’s company. For instance, SpaceX insists on a “load and go” system for fueling rockets. It uses "densified" fuel to increase the energy of Falcon 9, which can only be added right before launch, meaning the astronauts have already boarded. This has raised questions regarding security, fueled (pun intended) by the 2016 launch pad explosion.

Will the investigation by the Pentagon be a threat to the missions of SpaceX in the long run? Maybe, maybe not. But conservatives should be asking questions about the standards our government has for its contractors.

This isn’t merely a city council water pipe, but a regular billion dollar commitment to space exploration that shouldn’t be taken lightly. A company that receives most of its funding from government contracts easily becomes inefficient through the lack of competition that would exist in a free market. If SpaceX is to succeed, it should do so absent government assistance.

How fair is the dominance of the company anyway? SpaceX's main customers are NASA and the U.S. Air Force. The American system puts Europeans, as well as other American manufacturers, at a disadvantage in the satellite market; it allows Elon Musk to offer lower prices to commercial companies, thanks to the margins SpaceX earns on government orders. And while the company isn’t alone in its reliance on lucrative government contracts, SpaceX nevertheless has a unique flexibility in the aerospace world with an almost unlimited budget, all funded by taxpayer dollars.

Another strong point of the company: the rockets are made from A to Z in the same place by the company. SpaceX benefits from a considerable vertical integration and saves time in the design and implementation of its various projects. SpaceX has established itself by lowering launch market prices. As any free-marketeer will know, government-created market dominance is unhealthy and bad for both industry and consumers alike.

It’s time to re-establish the market economy in space.

Bill Wirtz is a political commentator currently based in Belgium. His articles have been published by Newsweek, The American Conservative, the Washington Examiner, Le Monde, and Le Figaro. He is a Young Voices Advocate, a regular contributor for the Foundation for Economic Education, and works as a Policy Analyst for the Consumer Choice Center. To read more of his reports — Click Here Now.