Opinion | Elon Musk, Mars and the Modern Economy

Elon Musk clearly has time. He’s trying to get out of a deal to buy Twitter, but he may not be able to avoid paying billions of dollars in damages. Maybe that’s why he’s considering flying to Mars?

Well, I’m not being fair. (Will I receive a poop emoji?) While Musk’s decision to propose a plan to send 1 million colonists to Mars may reflect a desire to change the subject, his plan calls for doing so by 2050 — He’s been talking about the idea for years.

Still, the Mars talk caught my eye, mostly because of the roughly 1,000,000 lines (I couldn’t help but say it in my best Dr. Evil voice).

How do you react to this number? Does it seem ridiculously high? As far as the logistics of actually getting people to Mars go, that might be the case. But my original field of economics was international trade. If you take a look at the realities of trade or industry, you realize that 1 million is actually an absurd minority—too few to support a modern economy.

Instead, let’s consider the SpaceX chief’s Mars fantasy as a teachable moment — an opportunity to talk more broadly about the economics of globalization.

Musk’s comment immediately reminded me of a great article by one of my favorite sci-fi writers, Charlie Stross, which asks exactly this question: “In order to maintain (not necessarily expand) our current technology degree of civilization?”

Stross’s answer is that given the complexity of modern society, you need a a lot of people. In fact, back in 2010, Musk’s Tesla was still a struggling company, surviving the Great Depression thanks to a bailout from the Obama administration — and he explained how Musk’s current plans were well thought out. Too small: “Coloning Mars is probably feasible, but only if we can put 100 million people there first.” I agree — if anything, it’s on the low side. To understand why, you need to think about why countries engage in international trade.

One reason is that countries have different resources and climates: it is difficult to grow pineapples in Norway. But another reason is that in the modern world there are often huge economies of scale in production. These economies of scale make it efficient to supply the entire world market with certain goods from just a few locations (sometimes just one), while international trade delivers those goods to customers in other countries.

For example, the recent shortage of semiconductor chips — which finally appears to be easing — has drawn attention to the role of lithography machines, which use light to etch microscopic circuits on silicon wafers. (Any sufficiently advanced technology is indistinguishable from magic.) It turns out that the world market for these products is dominated by a Dutch company, ASML, which has a complete monopoly on the latest generation of machines that use extreme ultraviolet light to make circuits even more microscopic.

So how many factories does ASML have to assemble these cutting-edge machines? one. (It also has other factories that produce subsystems.)

These economies of scale mean that no country can reasonably produce the full range of goods needed to operate a modern high-tech economy. International trade matters, and the smaller the economy, the more important – that’s why Canada is more import-dependent than the US, Belgium is more import-dependent than Germany, etc.:

Now, with access to world markets, even small countries can fully enjoy the benefits of modern technology; life in Luxembourg is not bad. But unless we actually invent something like Epstein Drive, the reality of transportation costs means Musk’s hypothetical Mars colony must be largely self-sufficient, cut off from the rest of the solar system’s economy. And it doesn’t have enough people to achieve something like a modern standard of living.

As I said, I think Musk on Mars is a teachable moment, an unexpected thought experiment that helps remind us of the positive aspects of international trade. Yes, globalization has its downsides, especially with rapid changes that can disrupt entire communities. But you really don’t want to live in a world without extensive international trade. You really, really don’t want to live on another planet, cut off from the globalization we’ve created on this planet.

To be fair, Musk is doing a lot to reduce the cost of space travel.

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