Joseph Schumpeter showed that business is the only creator of wealth
in an industrial society. This wealth creation gets spent several
ways. These include;

(1) Profit (which is reinvested)
(2) Labor/Management (which contributes to wealth creation)
(3) Taxes (which does not contribute directly to wealth creation)

If the government takes more money than is created by profitable
activities, it has exceeded the limit of business to support it. This
limit, known as the schumpeter limit, changes with improvements in
productivity.

What happens when the government takes more money than business
creates? Business owners disinvest in existing enterprises to pay the
taxes. This leads to stagflation.

According to Schumpeter, profit is good, since it gets reinvested in
productive activity, and this reinvestment has been shown over time to
actually increase productivity of the average worker.

When governments tax below the schumpeter limit profits are earned by
business owners, and these business owners can reinvest a portion of
that profit into their business expanding and improving them. In
short, low taxes lead to underlying economic growth and innovation.

In this context the government serves society best by spending the
least. This doesn't necessarily mean governments must deny their
citizens important public services. It only means that governments
must provide these services at reasonable prices. Unfortunately,
governments are not set up to be economically competitive. How to
naturally create a situation where governments tend to efficiency is
an unsolved problem at present. One that we must resolve if we are to
have better government in the future.

Whre does this leave space travel?

Well, drawing a parallel between the development of space travel today
and the development of air travel in the early parts of the 20th
century, we can see that there is a role for government to play. The
first is performing and coordinating, supporting and dispersing
results related to fundamental research in space transportation
technology. The second, is creating the conditions where market
forces operate in the area of space travel. The third, is encouraging
efficiencies and capital formation in space travel businesses.

The reality is quite different than the ideal described above. The
result is a cessation in real space travel development.

The first step described above is not performed. That's because the
US government, along with all space faring nations, recognize the
clear connection between space travel technology and long-range
missile technology. For this reason all governments treat missile
technology as secret and forbid and in fact take steps to control, the
spread of this technology beyond those people they approve and
control.

The second step described above is also not present. That's because
the US and all other nations have signed a treaty that does not
recognize the right of anyone anywhere for anyreason to own resources
and profit making assets beyond the surface of Earth, or in
international waters. This flies in the face of the requirement that
for an orderly market to exist, property rights must not only be
possible, but strictly enforced. This is not the case in the world
today.

The third step does not take place because all approved government
space programs are rewarded on a cost-plus basis through approved
government programs. So, only those who have been approved to receive
government funds obtain them. There is no competitive marketplace out
there to develop. Further, cost-plus contracts allow contractors to
make more money only if they can defend higher costs of production.
This is just the opposite of market driven programs where lower costs
mean greater profits for the businesses who attain them. While public
concerns require regulation of space launch and space operations the
regulations should not be overly burdensome to smaller entrepreneurial
operations.

So, while the Schumpeter limit says government must do more with less
money, in order to maintain a growth oriented society, common sense
tells us we should manage missile proliferation threats more directly
and openly than making secret 50 year old missile technology. NASAs
proper role is as a catalyst for fundamental research and a
clearinghouse for information related to this research. We must come
to recognize the rights of businesses and individuals to own and make
a profit from resources and assets in space and in the oceans. It is
only in this way that private capital will be attracted to space
investments. We must also establish a tax and regulatory environment
around space investment that favors capital formation in space travel.

By doing these things, provide a reliable source of valid technical
information, provide ownership rights to celestial bodies within the
solar system, provide a regulatory and tax environment favorable to
space investment - we can unleash trillions of dollars of private
investment in space related enterprise.

In this environment, NASA would play the role of NACA in the early
part of the 20th century. And very quickly, we would see the rise of
a space travel industry of unprecedented size and capabilities. If a
small user fee were charged based on profits made in space, to pay for
NASA research services, NASA would in this environment, actually grow
with the growing size and scope of this emerging space industry.