Dear General Dickman,
I just read your Letter to the Editor in today’s Tribune & Georgian.
As always, I like to deal with facts, so please accept this letter in the spirit of a search for the truth. To make sure that we are both on the same page, I’ll post your statement, then provide my rebuttal.
****About “sunk costs,” you wrote:
“Whether the investment in
Spaceport Camden over the
past years was spent wisely
is not relevant to whether
the spaceport should goforward. As any business investor
knows, the decision
to proceed with a project
should depend on the potential
return on investment
going forward. Sunk cost
are “sunk.” If the Spaceport
were canceled now, the return
on investment would be
zero. Going forward brings
potential benefits to our
business and industrial base,
employment, tourism and tax
revenue. Will all the gains be
realized? Probably not. But
some will, and that’s better
than walking away and getting
nothing.”
Your “sunk cost” comments reflect the typical fallacy that has caused Spaceport America, Pacific Spaceport Complex, Oklahoma Spaceport, and even Wallops’ Mid-Atlantic Regional Spaceport to keep spending after they’ve accumulated more than 60 years of economic failure. None are economically self-sufficient. None have produced the jobs or economic diversity promised by spaceport hucksters.
Let’s first address the “Sunk Cost” fallacy. The Cambridge Dictionary defines it as “the idea that a company or organization is more likely to continue with a project if they have already invested a lot of money, time, or effort in it, even when continuing is not the best thing to do.”
Behavioral Economics explains sunk cost fallacy “is related to loss aversion and status quo bias, can also be viewed as bias resulting from an ongoing commitment. […] If the costs outweigh the benefits, the extra costs incurred (inconvenience, time or even money) are held in a different mental account (Thaler, 1999), and […], “Research suggests that rats, mice and humans are all sensitive to sunk costs after they have made the decision to pursue a reward (Sweis et al., 2018).”
In simple language, it’s called GAMBLING.
Public Spend Forum explains, “In the public sector, it [sunk cost] is probably even more of an issue than in private business, because other issues do come into play, in particular, prestige and political implications. In particular, we still see it as an admission of failure if a politician cancels a project – particularly if it is “their” project. So if they have invested their reputation in it, that becomes an even more difficult project to stop.”
In simple language, politicians are often careless when they are SPENDING OTHER PEOPLE’S MONEY.
You wrote,
“... any business investor knows,
the decision to proceed with a
project should depend on the
potential return on investment
going forward.”
However, that’s just part of an investor’s business equation. StrategicCFO.com explains, “Humans have the inherent tendency to deny failure. We fear facing defeat. However, by not facing those failures head on, we run the risk of making the same mistakes in the future. Those who say to disregard sunk costs ignore that sunk costs are a critical aspect of improving your business. Once you learn what NOT to waste resources on and when to walk away, then you can spend resources on profitable and rewarding things.” Numerous space companies you’ve known, including Vector and XCOR closed when investors CUT THEIR LOSSES. Moon Express got bumped from a Canaveral launch pad lease because their investors had experienced enough “sunk costs.”
Camden County wasted five years and millions of tax dollars on its SpaceX-size Spaceport. You tell us now to ignore those costs because of ephemeral benefits that neither you nor any other Spaceport Camden promoter has been able to quantify. We’ve never seen an acquisition budget, development budget, or operating budget. The annual lease income from space companies at Spaceport America doesn’t cover even a month’s administrative salaries. Spaceport Camden’s promoters tell us that the “future” is in small rockets with no proven economic model. That is especially true for Camden’s fictional tiny rocket that no manufacturer has seen fit to build.
Those “sunk cost” millions could have improved flood drainage, paved dirt roads, finished the gun range, or simply reduced our tax bills. Those millions could have been spent to lure real businesses here that ended up elsewhere in South Georgia.
In simple language, those are called “LOST OPPORTUNITY COSTS.”
Spaceport America is the premier example of sunk cost syndrome. New Mexico’s “investment” in Spaceport America of more than $250 million has produced a tiny fraction of the promised jobs (5,000 promised in 2005 is fewer than 400 in 2020) and peripheral space industries (no satellite factories and no spacecraft factories) in the home county of the spaceport. Dona Ana County, located about an hour from Spaceport America, is now suing New Mexico to get back the tax money misappropriated by the now-fired spaceport CEO. The two sub-orbital companies that have launched from Spaceport America are located in Texas and Colorado. C6 Rocket Systems, a startup planning Spaceport America launches in 2021 of their OPO (on-paper-only) rocket, is based in Ontario, Canada.
More than $100 million has been “invested” by Alaskans and U.S. taxpayers in the Pacific Spaceport Complex, yet over its 20-year history, the spaceport has never launched a successful commercial orbital rocket. Like all commercial spaceports, it was proposed as an economic diversification development. Since 1998, they have attempted 26 launches, of which five have been acknowledged failures, three of which resulted in explosions over the spaceport.”
The Pacific Spaceport Wikipedia page says, “Two private companies, Rocket Lab (1) and Vector Space Systems, (2) are considering using the spaceport for commercial launches as early as 2019. Another private company, Eclipse Orbital (3), is working with the Alaska Aerospace Corporation to prepare for flight operations of their “Corona” (4) launch vehicle in 2020. Indian private space company Agnikul Cosmos (5) signed a memorandum of agreement with Alaska Aerospace Corporation to test launch their Agnibaan rocket (6) from the Pacific Spaceport Complex … from 2022 onwards. (7)” Astra, who has five launch attempts at the spaceport, builds its rocket in California and then sends it with six technicians to Alaska. Alaska benefits from motel rooms for the six.
Notes:
(1) Rocket Lab has its own private spaceport licensed to launch 120 rockets a year to every orbit reachable from any U.S. spaceport. They have never launched from Alaska.
(2) Vector Space System’s amateur rocket launch from Camden County in 2017 was the last rocket launch for that company before they declared bankruptcy.
(3) Eclipse Orbital claims their rocket will launch from ocean-based mobile launch site on water “eliminating many problems that all other launch sites face on land.”
(4) Eclipse’s still-fictional “Corona” rocket has been renamed the “Totalitas”, so that it is not associated with “Corona” virus.
(5) Agnikul Cosmos Private Limited is a startup incubated at the Indian Institute of Technology.
(6) The Agnibaan rocket exists entirely OPO (on-paper-only). It will built in India.
(7) The “future” is always in the future.
Camden government’s secret to leveraging “sunk cost” into more spending by taxpayers is to promise things in the future, even if, as you aptly wrote:
“Will all the gains be realized?
Probably not. But some will,
and that’s better than walking
away and getting nothing.”
Taxpayers demand proof that Spaceport Camden promoters are not wasting our money.
About lawsuits, you wrote:
“The naysayers have promised
that when the FAA license
for Spaceport Camden
is approved, they will shift
their focus to lawsuits blocking
the individual launch-operators.”
No matter how ill-thought-out a project is or how detrimental the impacts on the environment are, there may only be only a few valid legal claims to oppose the project. Similar but the opposite of your sunk costs, we’ve invested in stopping the risk and waste and lawsuits that will come with a spaceport license. Spaceport Camden opponents have several substantive grounds for lawsuits, so there will be several plaintiffs. But the way the law works, the FAA has to make a decision. Then challenges to that decision begin in the courts. So if the FAA approves an illegal launch site operator license, the FAA will be sued on several fronts. One cause will under the Administrative Procedures Act, which serves as a sort of “constitution” for U.S. administrative law. The FAA has repeatedly violated federal procedure laws. They have to obey the law, too.
The FAA also failed to follow their own internal Order 1050.1(F) that details the standards they must apply to meet NEPA regulations. Camden County’s lawyers will be involved as they explain their claims and actions. Taxpayers will foot the bills that we hoped to avoid by insisting Camden and the FAA obey the law. But both are currently defending Open Records lawsuits that they will ultimately lose. The once-secret emails, applications, and environmental documents that we’ve seen have been exposed because the FAA was forced to reveal them. All we’ve ever asked for is the information that has been submitted that is supposed to be truthful. There’s no doubt there has been deception. The FAA also failed to provide the requisite oversight and supervision of the Draft EIS. That is why we got entire sections dependent on “Authorized Persons” even though there is no such term in the FAA vocabulary. And they failed to study the impacts of rocket crashes or fire on Cumberland Island, which is a significant defect in their responsibility to expose all risks.
Any lawsuits will result from Camden’s and the FAA’s mistakes and failures to follow the law. Ignoring our warnings for five years is entirely on them.
***About SAFETY, you wrote:
“The most conservative launch
safety organization in the world, our FAA,
determined that there is insignificant
risk to anyone from the launch of a
small rocket from Spaceport Camden
— not Little Cumberland, not
Cumberland Island, not Kings Bay Naval
Submarine Base — no one. The FAA
would never say an accident can’t happen,
but the chance of someone getting
hurt is on the order of one in 10 million.”
The FAA has never publicly released your claims.
However, a few of us have gained insider information through Freedom of Information Act requests to the FAA. Simply put, the “most conservative safety organization in the world” did not come to the same conclusion as Camden. Last December, just two days before they would receive the official notice of denial, and after 1474 days and millions in “sunk cost,” Spaceport Camden dropped back and punted to a tiny, OPO (on-paper-only) rocket. You certainly know that the FAA has never issued a Launch License for a fictional rocket. However, through some weird interpretation of the regulations, they might issue a spaceport license that can only launch an OPO rocket. You say the chance of “someone getting hurt is on the order of one in 10 million.” But the FAA requirement that Camden has spent five years trying to clear is one in ten thousand! That’s 1,000 times lower!
Although I can’t put the words into your Letter, I think what you've implied is that it took Camden 5+ years to downsize a rocket to be small enough to fit the space. OF course, any real orbital rocket is too big to legally launch from Spaceport Camden.
You wrote:
“...the majority of potential
environmental impacts were
removed with the medium-
large launch vehicles.”
Since neither Camden nor the FAA studied the environmental impacts of any rocket crash, NEPA requirements were never fulfilled, and the public should have had a chance to see and comment on their new analysis. But low and behold, the still non-publicly released October 2020 Draft Final Environmental Impact Statement still omits an analysis for even Camden’s OPO rocket.
However, the medium-large rockets’ facilities remain mostly intact in the revised Application and Draft Final EIS. For instance, except for a name change, the landing pad remains almost exactly as it was originally specified.
In simple language, that’s called “BAIT AND SWITCH.”
For five+ years, Camden County and their spaceport experts claimed that a rocket with SpaceX Falon-9 specifications could be safely launched from Spaceport Camden. But internal emails between the FAA and Camden County reveal that Camden was unable, despite many efforts, to convince the FAA that such a large rocket was safe to launch here.
After 5-years, the original plans costing more than $5 million have been discarded and are part of your so-called “sunk costs.”
Of course, as an insider, you have seen 2020 Camden’s Spaceport Launch Site Operator’s License Application specifying a rocket smaller than any existing U.S. orbital rocket. Even Astra’s smallest-in-class rocket, which failed to reach orbit this week in its 5th launch attempt, is 1.6 times more potent than the rocket in Camden’s FAA license application.
Since I cannot find a rocket meeting the specifications Camden now proposes, will you please point me to it?
Do you believe that taxpayers should invest more “sunk costs” in a spaceport for an OPO (on-paper-only) rocket?
****About the Spaceport Site, you wrote,
“The site is too good to ignore.”
Yet, SpaceX and Blue Origin, each of which could have purchased the property for the equivalent of pocket-change, passed on the site.
Maybe it is because they saw that Camden’s description of the site was somewhat inaccurate. Spaceport Camden’s website still claims, “Launches over the Atlantic Ocean (1) and a large, undeveloped buffer zone (2) mitigate any danger to major population centers and provide a nearly unrestricted launch range (3) to a wide range of orbits. (4)”
NOTES:
(1) A quick look at a map shows that the spaceport is 10 miles inland from the Atlantic Ocean. That’s far more than a tiny obstacle.
(2) The “large, undeveloped buffer zone” is, as you say, “a polluted mess” that no one but a County Commissioner could love. Real CEOs wouldn’t risk their companies’ economic future upon discovering a hidden hazardous bury pit or unexploded ordnance.
(3) Spaceport Camden has applied for a tiny OPO rocket on a keyhole trajectory that provides the fewest environmental and safety impacts. An ‘unrestricted launch range’ has no restrictions. Real rocket companies could see that launching over private property, residences, and a unit of the National Park system would be problematic. They could quickly run the numbers to see that Spaceport Camden would have the highest insurance costs of all U.S. spaceports even if the risk formulas permitted a launch.
(4) The “wide range of orbits” will require rocket technology that does not exist plus further Environmental and safety approvals by the FAA.
You wrote:
"The area today is a polluted mess.”
Are you aware that the entire Union Carbide property is under an Environmental Covenant with the Georgia Environmental Protection Division (EPD) working on behalf of the US EPA? Are you aware that neither Union Carbide nor Camden County had even discussed amending the Environmental Covenant with the EPD more than four years into the spaceport project? Do you have any idea of the financial risk to Camden taxpayers from owning what you blithely call “a polluted mess?” Can you identify a single instance in Georgia where a County has purchased a property contaminated with hazardous chemicals in Solid Waste Management Units (SWMU) and Munitions and Explosives of Concern (MEC) areas for speculative development?
Right now, Dow Chemical, whose 2018 net income was three times greater than the total value of all the property in Camden County, is responsible for the “polluted mess.” Spaceport promoters owe taxpayers 100% honesty instead of secrecy.
You wrote:
“We will have the final
Environmental assessment early
next year. By any measure,
the impact of small rocket
launches, on an average of
once a month, will be far
less than the effects of what
happens now on our nearby
roads, skies and waterways.”
Since the FAA failed to study the impact of any rocket crash in Camden County, I’m unsure how you can make such a claim.
Camden County’s and the FAA’s approach to the Environmental Impact Statement (it is not an ‘Environmental assessment’ which would be a less strenuous review) directly violates the long-standing National Environmental Policy Act and Council for Environmental Quality regulations and procedures. That includes the 2020 revisions. Spaceport opponents will file lawsuits based on explicit violations of the laws protecting the human environment and human safety.
Thank you for taking the time to read the facts that Spaceport Camden promoters conveniently forget, misunderstand, or have ignored.
Respectfully,
Steve