Why NASA Hired a Chief Economist

What It Covers

Alex McDonald, NASA's first chief economist, explains how economic analysis shapes space exploration decisions — from evaluating SpaceX contracts in 2008 to assessing commercial space station viability, orbital data centers, and the public-versus-private funding divide as NASA pursues lunar return under the Artemis program.

Key Questions Answered

• •NASA Budget Reality: NASA's budget peaked at roughly 4.5% of total federal spending during the Apollo era mid-1960s, then declined sharply and has remained inflation-flat ever since. Because ambitions have not stayed flat, NASA systematically offloads operational responsibilities to commercial partners to stretch each dollar further across its $25 billion annual budget.
• •Semiconductor Precedent for Spinoffs: For approximately three years during the Apollo program, rockets consumed 75% of all global semiconductor demand. This forced manufacturing scale-up that consumer markets alone could not have driven. Evaluating any major space program's economic value requires examining foundational technology spillovers, not surface-level products like Tang.
• •Commercial Handoff Framework: Determine whether a space activity has a plausible private market before assigning it to government. Launch vehicles and satellite internet passed that test — the US went from near-zero global launch market share in 2007 to above 75% by 2026. Activities without foreseeable revenue, like a lunar base, require sustained public funding and management.
• •Lunar Property Rights: The 1967 Outer Space Treaty prohibits territorial claims on the moon, but the US Space Act of 2015 established that extracted resources belong to whoever mines them. Any physical infrastructure placed on the lunar surface remains the property of the entity that built it, making resource extraction and construction legally viable today.
• •Orbital Data Center Viability: Profitability of orbital data centers depends on three variables: assumed launch cost per kilogram, GPU failure rate in orbit, and radiator efficiency for heat dissipation. No large-scale orbital data center exists yet, so projections remain speculative. A practical near-term advantage is bypassing terrestrial permitting requirements entirely, which represents a real operational cost reduction.