On June 4, 1965 the Pilot of Gemini 4, Ed White, performed the first spacewalk by an American. When the time came to come back aboard the spacecraft, White described it as the saddest moment of his life.
Besides being an important technological achievement, it was an enormous national investment. By 1969, the total cost for the Gemini space program came in at around $1.3 billion, or .18% of US GDP which at that time stood at around $740 billion. Were the Gemini space program to occur today, now inflation adjusted to $9.5 billion, it would account for .055% of current GDP. To put this into further perspective, the cost of NASA’s Curiosity Rover currently exploring the surface of Mars is only costing about $2.5 billion.
At the time of the spacewalk, Federal revenue was $117 billion, and Federal debt was about $320 billion. Today, GDP is somewhere in the neighborhood of $16 – $17 trillion and Federal debt is, you guessed it, around $17.5 trillion. In 1965, US GDP was over twice the Federal debt. What’s more amazing is that Federal spending was under $120 billion, or about 16% of GDP.
Today, 49 years later, Federal expenditures are about $3.5 trillion, or 20% of GDP. This represents a 25% increase in the rate of spending against our national production. Worse, the Federal government’s direct revenue is currently in the neighborhood of $2.7 trillion … so the government is spending about 130% of its income and, obviously, the nation is far deeper in debt than it was in the 1960’s.
It’d be nice to be able comfort ourselves with the notion that we’re more financially responsible and sophisticated today, that we’re somehow smarter, but I don’t believe it. True, there’s no doubt that with time we’ve become a little bit shrewder, constructing complicated new products and schemes to make investment bets and maybe save a few bucks to the taxman on the backend, but it’s hard to see how we’re more responsible or prudent today than we were half a century ago. On the whole, it seems that we’re now far too quick to run up credit debt, buy expensive cars based on a monthly payment, over-buy a house, and indulge daily on $5 espresso drinks… a vice I admit having fallen prey to myself.
Personal coffee consumption is a great example. In 1965, a cup of joe cost about 10¢. Adjusted for inflation, that’s around 75¢ today. But consider our typical working, gourmet espresso customer today. He may spend $5 per day, 20 times a month. That’s $100 a month, or $1,200 a year. After five years, that expenditure grows to $6,000. If this goes unchanged for another 15 years, $24,000 will be spent on coffee over the 20 year period. Alternatively, $100 invested every month, earning a total return of 7%, will grow to around $30,000 over that same period of time. Is fancy coffee really worth the outlay of $24,000 plus the lost opportunity of $30,000 worth of potential returns? As I sit here sipping my Earl Grey with lemon I can say with confidence, no, it isn’t.
The sad thing is that almost everyone intuitively knows this, and it seems that so few do what their higher brains tell them to. The process of digging oneself out of years (or decades) of poor financial practices is usually a long and difficult one, comprising hard adjustments and sacrifices. But when we consider the future people that we are accountable to, our future selves and our future beneficiaries, it’s usually clear that setting new goals and making those necessary corrections to our current financial behavior is the right thing to do. It’s the right investment to make.
With sound, disciplined financial practices one might honestly afford to accomplish great things, things that we’ve not done before, things that will cause us to weep with satisfaction and wonder when achieved. It took thoughtful planning, work, and sacrifice to develop the resources necessary to put Ed White into orbit, and what he was doing when he stepped off the orbiter spacecraft was more than merely falling through space.