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At the fifth symposium of the Tennessee Valley Interstellar Workshop in Huntsville, AL last October, which had the theme “Step by Step to the Stars,” one of our working tracks was tasked with the goal of evaluating the industrial infrastructure that would be needed to eventually enable true interstellar exploration, then to backtrack from those needs to the precursor needs of that infrastructure, stepping back successively until reaching our current capabilities, to see just what infrastructure needs to be developed next in the step-by-step movement to interstellar exploration capability.
In the course of discussing these next step needs and how to encourage and enable them, one of our participants with a broad knowledge of current and near-future developments pointed out to us that all of the needs we had identified were already underway by one or another organization. As we thought about what elements might be missing in our vision for the future, we realized that the physical needs were being addressed, but that interstellar exploration would be (no matter the eventual physical means used) a very expensive proposition and that there were no efforts to ensure the availability of the funds needed at the time they will be needed.
After the symposium ended, a group of interested individuals continued to discuss this concept. It included people from the venture capital world, science fiction authors, scientists, financial advisors, legal advisors, and others.
In thinking about the various financial instruments that could fill this need, we came upon the idea of a dynasty trust. Since we aren’t a family (TVIW is a 501c3 non-profit) and the beneficiaries wouldn’t necessarily be descendants of the originators of the trust, we thought it would need to be created in a somewhat different form than the usual dynasty trust.
Reviewing history we found that the closest example to what we would like to do was the Benjamin Franklin trusts, which can be found here in the codicil to his last will and testament.
We thought that something similar to this, to mature in 75 and 150 years might be an appropriate financial instrument. We understand that different states have widely varying laws concerning such trusts, and that governments of other countries may also have differing laws in this area. We could use advice on the best jurisdiction under which to establish this trust, and the best way to do so.
We are also quite open on how to generate the initial funds for such an instrument. Our first thought was some variation on crowdfunding, with the clear knowledge given to the potential contributors that this is not an investment for personal return, but an investment in the future of the species. But we realize that expecting much from such a method may be unrealistic, too idealistic and aspirational to have much success.
Armen Papazian, one of the financial advisors in the group, explained the current methods of value creation to us with this information:
“We have a monetary architecture built on debt/scarcity, which chains us to time, which is why we will only really explore space when we understand timeless money – as a species, but also as nation-states, as someone will be first at some point. Timeless money is space money, with a unique risk profile, and distant returns – current finance cannot handle space; because it is built in Risktime.
“In order to address the real frontier, we need to reinvent value theory, there is no other way to fix this in my opinion. One instrument, raising 10bn for 150 years is still in the same framework, and ultimately is short of what is needed. To transform value theory, is to transform financial practice because students and professionals are being taught to think those models, and thus make choices. Investors are building portfolios based on principles taught in those models. On the macro side, we also need to transform money creation methodology on an urgent basis, along with value theory, so that we can invent money via non-debt instruments so that we can truly build our footprint in space. The frontier of mankind’s galactic evolution is in finance textbooks, in my humble opinion.”
Dr. Papazian said, the current debt-based method of money creation and our risk and time focused value models are inherently ill-suited for projects with immeasurable risks and very distant returns. He advises the use of Public Capitalization Notes as an alternative method of money creation. There was one assumption that some asked about: “States are responsible for money creation. Indeed, the creation of money happens through an exchange between two arms of the state, the government and the central bank.” That has traditionally been the case, but with the rise of various digital currencies in the past decade states may no longer have a monopoly on money creation.
We asked, would Private Capitalization Notes, using a digital currency created specifically for the purposes Dr. Papazian recommends, be a viable possibility for generating the capital needed for the long-term project of interstellar exploration (or for any other long-term project, actually)? If so, what characteristics would be required in the digital currency to make it a successful means of generating, retaining, and expanding the value available for the ultimate project goal? An ancillary question is how would the value of the digital currency be extracted to use in the shared economic system of general society when the time to use it rolls around?
We kept investigating, looking for other forms of financial organization that might be useful in this endeavor. We came across Flexible/Social Purpose corporations, and Benefit corporations. These are very interesting as possible alternatives to our initial thoughts about a trust as an instrument to hold the assets for the long term. In doing a bit of research into these variations on corporation types, it wasn’t clear to everyone in the group what the differences are between the two types (Flexible/Social Purpose vs. Benefit). We did find that Benefit corporations are defined in more jurisdictions than Flexible/Social Purpose corporations, and that in both types a 2/3 vote (a minimum status vote) is required to change the purpose of the corporation, but that in a few US states the vote needed for Benefit corporations is slightly higher. Given the long-term intended in our thinking, we thought that if using such a corporate form is advisable we should find the jurisdiction with the highest vote percentage needed to change the purpose of the corporation to incorporate in.
We wondered if it would be possible and advisable to set up such a corporation with the purpose of creating and expanding a digital currency for the specific purpose of securing value for the long term, dedicated to the furtherance of interstellar exploration.
Nick Nielsen pointed out some likely difficulties with the digital currency idea:
“One of the reasons states have been intimately involved with money creation is that they are stable financial entities on a trans-generational time scale, and when a state acts responsibly in the management of its money supply (part of providing a stable macroeconomic environment) individuals can save (creating a pool of money for investment) and economic entities can invest with some confidence that they will be able to enjoy the rewards of their savings or investments. In an unstable macroeconomic environment the confidence is lower or absent, hence there is little or no savings or investment.
“Now it is true that states often mismanage their money supply, and sometimes states even engage in what is sometimes called ‘repressionomics’ in which the value of savings is purposefully inflated away so that the government can vacate its own debt on the cheap. This is why most investment seeks some balance between returns and macroeconomic stability, only risking instability if there is the promise of a very good payoff in the end, and this only as part of an investment portfolio that includes other more stable investments not subject to high risks.
“It is entirely conceivable in the coming hundreds of years that we may see non-state entities that can prove their trans-generational stability, but there isn’t yet any sign of this. The high rate of disruption militates against any sector of the technology industry being able to retain its financial mojo over transgenerational scales of time. Huge corporations like Facebook, LinkedIn, Apple, and Google (The ‘FLAG’ companies) already are economic giants larger than many small nation-states, but it is questionable as to whether they will be able to retain this status over the next thirty years (one generation). I am confident that Ecuador will still exist as a nation-state in a hundred years, but I am not confident that Google (or Alphabet) will still exist as a corporation in a hundred years. If one of these companies were to spend its pile of cash on a piece of real estate and construct its own nation-state, with a government and a military to defend it, it might endure on trans-generational scales, but only at the cost of ceasing to be a company and transforming itself into a nation-state.
“If a contemporary nation-state with a reputation for disciplined management of its money supply and a stable macroeconomic investment climate were to ally with or produce its own cryptocurrency, I can see this currency being a stable investment and savings vehicle, otherwise not. Crytpocurrencies without any institutional affiliation will probably be financial bubbles that eventually burst, and thus the equivalent of a Ponzi scheme. So my answer to the question, ‘…what characteristics would be required in the digital currency to make it a successful means of generating, retaining, and expanding the value available for the ultimate project goal?’ is this: alliance with or alignment with a trans-generational institution known to be stable by a sufficient number of persons that they would trust this institution as a vehicle for savings and investment for themselves and their children.
“With a robust spacefaring capacity, we will eventually see trans-generational political entities that form away from Earth and which do not conform to the nation-state paradigm, but this will take time (and probably also conflict).”
The only transgenerational institutions we knew of that would be considered stable by a sufficient number of persons (other than governments) would be the Catholic and Christian Orthodox churches. Other religions have been in existence and reasonably stable for such periods, but aren’t hierarchically-based and therefore wouldn’t qualify as institutions for our purposes. It’s possible that some European universities might qualify as institutions for this purpose, but we had some difficulty considering them stable in so far as they all seem much too “influenceable” by political and philosophical fads.
From our discussions it seemed to us that no currency would be accepted as a long-term carrier of value unless it’s associated with a trusted institution that is widely depended upon to guarantee its value, whether that’s a nation, a religion, a corporation, or whatever. So we’d have basically two possibilities. One would be to base our longue durée interstellar funding organization on some accepted stable currency; the other would be to create our organization and somehow have it acquire enough value over a long enough period to be able to create its own currency. We could only see the first as a viable possibility.
The important questions are how we could structure our organization so its primary purpose would be the long-term increase in value of the held assets, this purpose couldn’t be changeable by subsequent generations of managers, and that it would meet all the legal requirements of whatever organization form we decide on. If anyone has knowledge of other organizational types that might be worth consideration, please let us know.
Dr. Papazian had some further advice for us:
“Changing money mechanics, i.e., the physical, accounting, institutional, legal, and technological methodology of money creation on Earth, even though it is our primary and most serious challenge to our spatial evolution, should not be chosen as a ‘Funding Strategy’ for any group, or organisation. Unless, of course, its NASA and the Fed government we are talking about. I have tried this when the likelihood was very high (2012-13), when Quantitative Easing in US actually changed money mechanics, but without changing the DEBT logic, they just ‘expanded’ the TYPE of Debt instruments used. I do not plan on doing or trying it again. It needs a change on the thought/imagination level first, i.e., finance and economics.
“Having said that however, personally, my focus is on changing the value framework we have built for ourselves in finance and economics, which is the first step towards a transformed monetary architecture, and eventually, the first step towards a transformed money mechanics. This is a ‘core software’ issue, and however distant or impossible, I am convinced it must be addressed first, if we are ever going to have access to the type of funds needed to actually create the technologies of the first starship, the first ship, the first hangar, transit station, and launch pad on the moon, etc…
“Also, I am not comfortable with any assessment that considers ‘working within the current monetary system as the right current strategy’ ….. even though it may appear to be a rational, pragmatic, realistic approach, it is not correct – it is a mortal’s approach…. and we don’t have time to think like mortals ;-)”
Nick Nielsen then came up with a new perspective on the problem:
“I have come to realize that there is more than one way to conceptualize interstellar exploration (or other spacefaring initiatives) in financial terms. I recently participated in an episode of The Unseen Podcast (my blog post on the podcast is here) in which the economics of space exploration was discussed. Here is my summary of my recent views:
“We don’t have to treat space development as a self-justifying economic enterprise if we think of it as a beau geste, as a scientific endeavor, a charitable undertaking, or a vacation opportunity for billionaires. However, if we do think of space development in economic terms that does not necessitate that the only economic way of thinking about space is as a place for the production or consumption of unique goods and services that can be sold as a profit, although this is certainly the most obvious way to think of the economics of space development. I can think of three ways in which space development can be conceived in economic terms:
in the sense mentioned above, of the production or consumption of goods or services at a profit
as insurance, i.e., existential risk mitigation insurance
as research and development toward the production of goods and services that may someday be sold at a profit
“I don’t maintain that this list is exhaustive, but it is a way to at least begin distinguishing among economic models of space development.
“It would be possible to elaborate on this in some detail. What price would we be willing to put on the survival of civilization or the survival of humanity? A good way to think about this question is in terms of the theory of diminishing marginal utility. In most cases, water is freely available to anyone who wants a drink. But if you were in the desert and about to die for lack of water, what would you be willing to pay for a glass of water? This question under these circumstances equates to what you would be willing to pay for your life. Once your life is secure, what would your pay for the next glass of water, or the one after that? Each of these glasses of water has diminishing marginal utility. But for the water that can save a life, you can charge whatever the market will bear.
“Most people would beg, borrow, or steal whatever it took to keep themselves alive. But that is the perspective of someone who knows their life is on the line. When we talk about space exploration in terms of existential risk mitigation, most people are unable to put themselves in the position of taking seriously human extinction. If, however, we were confronted with the possibility of human extinction in a sufficiently vivid way, the willingness to pay whatever price was necessary would probably rapidly become a reality. (Cf. the classic ExRisk film, “When Worlds Collide”) In other words, human survival today seems to have a very low marginal utility, whereas human survival under dire conditions would suggest a high marginal utility to saving human life.
“If we find ourselves in circumstances in which there is a high marginal utility for saving every possible life that can be saved, there would be an incentive to invest in enterprises that could mitigate existential risk. However, no one wants to see us as a species backed into a corner and desperate to survive. Also, this is, by definition, not a long-term, multi-generational undertaking planning and organizing for the longue durée. However, if a few investors could be convinced of the virtues of existential risk mitigation, specifically, the technological solution of redundancy through spacefaring, enough seed money might be obtained to begin the process of long term planning and organization. Acted upon as a plan, this would involve outreach to investors who could be convinced that their money could be best spent by ensuring the long term future of humanity.”
Doug Loss thought there was a distinction that needs to be made here, between space (and here we’re talking primarily interplanetary within our system rather than interstellar) development and interstellar exploration. The justifications for each of these are very different from the other. Nick’s points about space development are well taken, but they really don’t apply to interstellar exploration, at least not until solar system development is well underway. Doug had an idea that the funding for space development will be forthcoming as the capability is demonstrated by commercial entities, as is beginning to happen. No funding mechanism for interstellar exploration (which has no realistic possibility of economic return in the short or medium term, and possibly not in any term) exists or is being posited currently so far as we know.
What we’re thinking about isn’t a central organizational paradigm for a civilization, but something more along the lines of the monastic preservation of knowledge and information during the “dark ages.” Something of a (likely) non-governmental organization dedicated to developing and preserving the assets necessary to create, launch, and support interstellar exploration missions as such missions become possible. We aren’t convinced that this (or these) organizations require entire civilizations or governments to succeed. But they will require some method of guaranteeing their existence for the long term. It’s possible that structures existing under societies other than the US or western Europe would provide greater possibilities of success. We don’t know that to be true, but when you look at the Wikipedia list of the oldest companies in the world you’ll find an inordinate number of them are in Japan.
We started talking about real-world similarities to Allen Steele’s “Arkwright” foundation (from the novel of the same name). Does anyone know of any other organizations of this sort in existence? These might provide useful examples, or models, for the sort of organization that could accumulate assets and reserve them for interstellar exploration. Such an organization might also be the type that could be a recipient of Armen’s equity instruments to be used in money creation if some of the central banks decide to move in that direction.
Some examples of possible real-world analogues were suggested:
Institute for Advanced Studies
IAS is all about academic independence — there are no classes, no tuition, no fees, and no degree programs. Funded by “endowments, grants, and gifts,” the IAS seems to have been founded by a act of conventional philanthropy. While it collaborates closely with Princeton, it is nevertheless independent from Princeton also, and was not established by Princeton.
Stanford Research Institute
The SRI was created specifically to facilitate the commercialization of scientific knowledge generated at Stanford, and was founded by Standord University itself — thus by an act of institutional philanthropy. Rather than having a budget or an endowment, SRI produces revenue — about a half billion dollars in 2014. That’s a lot better than merely being self-supporting.
Santa Fe Institute
SFI is particularly interesting as a think tank with a particular focus — complex adaptive systems — which would presumably be something like what one would want from an interstellar research institute. Wikipedia says it is funded by, “a combination of private donors, grant-making foundations, government science agencies, and companies affiliated with its business network.” Wikipedia does not say what these companies are or how it acquired a business network. SFI emphasizes rapid turnover of ideas and people my minimizing permanent staff and emphasizing visiting scholars. Unlike IAS and SRI, SFI was founded by a group of Los Alamos scientists.
United States Naval Institute
The Naval Institute is a similar organization, also closely aligned with a larger entity but independent from it. And it’s been around for more than a hundred years.
As must be clear from all this, the effort to create some kind of financial organization to enable interstellar exploration is in its formative stage. We would welcome any input from interested parties on how to achieve the goal we’re reaching for, and would greatly welcome assistance in the endeavor!