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What The SpaceX Landing Says About Elon Musk—And Federal Regulators

This article was originally published on April 20, 2016 in The Daily Caller.

Elon Musk and SpaceX landed on a drone ship – finally. After four failed attempts to navigate his SpaceX Falcon 9 rocket onto a drone pad in the middle of the Atlantic, Musk and his engineers pulled off the feat last Friday. Many people are celebrating what is no doubt an incredible technological achievement; one headline even called it a “moon walk for new space age.”

It’s certainly a giant leap for the private space program, as it allows SpaceX to re-use rocket fuselages in delivering payloads to outer space. But the question remains: Why a drone ship in the ocean? Isn’t it enough to land on the ground, as SpaceX has already managed to master?

Musk has justified the drone ship landing by saying that he didn’t want to endanger civilian life. In 2013, when asked about landing on terra firma instead of the ocean, he said, “As far as the safety aspect of the return to launch site of the first stage, that’s part of why we want to do it first in the ocean, just to make sure that things will be fine.”

Nonetheless, SpaceX first successfully landed a rocket at a Landing Zone in Cape Canaveral, despite prior attempts at drone ship landings, which required approval from the Federal Aviation Administration (FAA). SpaceX eventually received the necessary license and last December successfully landed a Falcon 9 first-stage rocket along the Space Coast.

Yet Musk still insisted on landing a rocket on a drone ship. Why? A drone ship operates on 360 degrees of variability, moving on all axes as the ocean churns. With clearance and ability to land at Cape Canaveral, why continue to refine a costly and difficult drone ship landing capability?

As Loren Grush posits at The Verge, there are financial and logistical benefits to a water-based landing, which uses less fuel — and are in some ways less complicated — than their ground-based counterparts.

But I suspect there’s more to Musk’s rationale: the ambitious entrepreneur may be preparing to land rockets with greater independence from the FAA. It may be difficult to justify the FAA’s jurisdiction with an internationally-launched payload that lands in the ocean halfway around the world.

Musk has a unique relationship with the United States federal government. On the one hand, as the LA Times pointed out last year, his business ventures — including SpaceX, Solar City, and Tesla — “have benefited from an estimated $4.9 billion in government support.” One the other hand, when talking about crypto-currency, he sounds downright libertarian. He once said that“Bitcoin is probably a good thing. It’s primarily going to be a means of doing illegal transactions but that’s not necessarily, entirely bad because some things shouldn’t be illegal.”

A recent biography depicts Musk as a skeptic of regulatory efficiency. “There’s a fundamental problem with regulators,” he’s quoted as saying. “It’s … very easy to understand why regulators resist changing the rules. It’s because there’s a big punishment on one side and no reward on the other.” And with Tesla Motors, he’s proven himself capable of circumventing rules that he finds onerous, such as those regulating autonomous cars.

Musk understands the consequences of over-regulation. He must know, for example, that the high cost of Phase III drug trials by the FDA makes it more expensive and risky to bring a new drug to market. He is probably aware that high banking regulations imposed by Dodd-Frank lead to increased compliance costs for financial institutions. Over time, all of these costs are passed on to consumers.

In response to the likelihood of regulation and the costs it entails, Musk is practicing “permissionless innovation,” which involves establishing a practice or method that regulators haven’t yet anticipated. Permissionless innovation means disrupting first and asking for permission later, exploiting regulatory blind-spots as major innovators like Airbnb and Uber have done.

Businesses as well as consumers have blow-off valves that help them circumvent regulations. The feds banned hoverboards, so American retailers stopped selling them. Today, you can buy completely unregulated hoverboards on Alibaba for $90. Tomorrow, banned products may be able to be built at home on 3-D printers. Companies can flee a high-tax environment for a lower-tax one—or they can land rockets in the ocean, out of the regulatory reach of American federal agencies. That could one day give Musk’s SpaceX a major advantage over competitors like Lockheed and the United Launch Alliance.

That is, until regulators put on their wetsuits and join Musk in the water.